Cannabis Banking Bills Face Slow Progress and Disappointment

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Passing uniform regulation on cannabis banking has been a much-talked-about topic over the last few years. With recreational cannabis legal in 19 states and medicinal cannabis legal in 37, (and both of those numbers expected to rise in the coming years), banks and credit unions alike are needed to offer loans and accounts to legal cannabis businesses.

These accounts have proven to be profitable for financial institutions and many are eager to join in. However, due to marijuana still not being legal at a federal level while legal or partially legal in states, there is regulatory confusion on whether or not having such accounts is legal and what oversight there needs to be for them.

Supporters have worked to correct this several times, the most recent attempts being the SAFE Act of 2021which has passed in the House six times but has yet to do so in the Senateprovisions included in the much larger FY23 defense authorization legislation, which were removed in the Senate version of the legislation (though they could be added later should the bill pass), and a recently introduced bill which seeks to decriminalize cannabis on a national level and allow the states to make their own regulations.

Despite bipartisan support on the issue, cannabis banking legislation faces slow progress and uncooperative legislative calendars. NCUA board member Rodney Hood, an advocate for regulatory clarity on cannabis banking, recently expressed his doubts and subsequent disappointment that any kind of measure would be passed within the year. The delay, he argues, is keeping cannabis businesses from planning for the future and the financial institutions that serve them from adapting a method for handling these accounts.

“We do have to face the reality of the legislative calendar,” Hood stated at the annual PBC Conference. “At this point, I would be surprised if Congress moved on this issue this year—it’s not impossible, but the available time grows short. We’re just a few weeks away from midterm elections, so we’re very likely looking at next year, at the earliest. And if you’re like me, on the regulatory side of things, the lack of clarity is making it hard for us to tell you all what you need to be doing.”

Senate Finance Committee Chairman Senator Ron Wyden (D-OR), a cosponsor on the most recent bill introduced in July of this year, which seeks to decriminalize cannabis, expressed his frustration with the lack of action as well.

“By failing to act, the federal government is empowering the illicit cannabis market, it’s ruining lives and propping up deeply rooted racism in our criminal justice system, it’s holding back small cannabis businesses from growing and creating jobs in their communities,” he said. “Cannabis legalization is here, and Congress needs to get with the program.”

Whatever legislation and regulation are decided, Hood calls for them to be clear and consistent across the board. He also noted that to reach that goal, the NCUA has put together an internal group meant to work on cannabis banking, and in the future, they hope to form an interagency group to further this effort.

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