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A new chair of the U.S. Senate Banking Committee could pump fresh life into stalled cannabis banking reform – even if Republicans maintain control of the upper chamber when the next Congress convenes in January.
Cannabis banking reform would pave the way for marijuana businesses to gain access to traditional financial services, which would be a game changer for the industry. Most marijuana businesses deal primarily with cash.
To that end, marijuana industry officials are heartened that the likely incoming chair of the Senate banking committee, Pennsylvania Republican Pat Toomey, is open to legislation that would allow financial institutions to serve MJ businesses without fear of federal reprisal.
“He provides a much more realistic pathway through that committee than we had with (current Senate Banking Chair) Mike Crapo,” said David Mangone, director of policy and government affairs for The Liaison Group, a Washington DC firm that lobbies for the National Cannabis Roundtable.
Crapo, an Idaho Republican who is term-limited as committee chair, did hold a hearing on cannabis banking access but had issues with the SAFE Banking Act that the House of Representatives passed in 2019.
At one point, Crapo was considering some onerous provisions as part of a potential alternative version, such as a 2% THC potency cap on cannabis products for businesses to be eligible for financial services.
Currently, marijuana products such as flower often hit potency levels of more than 20%.
Toomey’s words provide a more optimistic tone, industry officials agreed.
Toomey told Politico last week that he was “sympathetic to the idea that people who are involved in (the) cannabis industry – in an entirely legal fashion, in the state in which they operate – ought to be able to have ordinary banking services. That’s my starting point, and then there’s a lot of details to work out, but I am open to that.”
The easiest path to cannabis banking reform would be if Democrats won control of the U.S. Senate by winning both Georgia Senate runoff seats on Jan. 5. But it’s unclear whether that will happen.
Toomey reassuring to MJ stakeholders
Industry officials such as Kim Rivers, CEO of Florida-based marijuana company Trulieve and second vice chair of the National Cannabis Roundtable, are encouraged by Toomey’s words.
“It’s clear that cannabis reform can cross party lines and lead to sound, modern approaches to unlocking the industry’s potential,” she said in a news release issued by the National Cannabis Roundtable.
Steve Hawkins, executive director of DC-based Marijuana Policy Project, said in a recent interview that cannabis banking reform is critical to enabling small businesses – including women- and minority-owned enterprises – to get the access to capital they need to operate and grow MJ businesses.
Besides his encouraging comments, Toomey represents Pennsylvania, a state that has a successful, fast-growing medical cannabis program and a governor intent on legalizing adult use.
“(Toomey) recognizes there are legal (marijuana) businesses in his state that are struggling with the financial side of things,” Mangone said.
COVID-19 relief bill could be key
Industry officials still hold out hope that the cannabis banking issue could be settled this year as part of the next coronavirus relief package.
The latest House coronavirus relief measure contains the SAFE Banking Act.
“SAFE is one of the few pieces in the relief bill that actually would decrease the deficit, increase revenues, and help public safety,” Mangone said.
Aaron Klein, policy director at the Brookings Institution’s Center on Regulation and Markets, told the American Banker trade publication that it’s also beneficial that voters in several conservative states passed marijuana legalization initiatives on Election Day.
“Election results showing big wins for cannabis in deep red states like South Dakota and Mississippi are a reminder that cannabis is not a partisan issue,” Klein said.
But Senate Majority Leader Mitch McConnell remains a potential obstacle to any kind of marijuana reform, so Republican colleagues such as Toomey likely would have to put pressure on the Republican senator from Kentucky to allow a floor vote.
McConnell previously was snide about the SAFE Banking Act being included in the $2 trillion-plus House coronavirus relief bill.
He slammed the first House version of the relief bill for using the word “cannabis” 68 times – “more times than the word ‘job’ and four times as many as the word ‘hire.’”
Jeff Smith can be reached at [email protected]