It is beyond disappointing that Congress once again dropped the Secure and Fair Enforcement (SAFE) Banking Act—bipartisan legislation that would prevent the federal government from punishing banks and credit unions that deal with marijuana-related businesses following the laws of the states in which they operate—from a broader legislative package.
Politico Pro reports (subscription required) that the House-Senate conference committee trying to reconcile two bills that aim to boost U.S. competitiveness has dropped the provision, which had been added to the House bill, the America COMPETES Act (H.R. 4521). The House added the measure to its bill after a standalone version of the SAFE Banking Act passed the House in 2021 by an overwhelming margin of 321 to 101, gaining the support of nearly all Democrats and 106 House Republicans.
As my CEI colleagues and I have previously written, passing the SAFE Banking Act would have multiple benefits. Today, banks and credit unions are reluctant to offer basic financial services to legal marijuana firms—from holding deposits to issuing credit and debit cards—because marijuana is still illegal under federal law, even if it is allowed under state law. Thus, the financial institutions fear that they could be charged with money laundering or otherwise violating federal law if they serve firms engaged in any type of commerce involving marijuana.
The most harmful effect of this de-banking of cannabis businesses that are lawful in the states where they operate is the violet crime that results from the firms holding large amounts of cash. As the Associated Press reported in April, there has been “a surge in robberies at licensed cannabis shops—including a pistol-whipping, gunshots and killings in Washington state last month.” The article linked to an industry tracker database showing more than 80 pot shop robberies so far this year in Washington state alone.
The cannabis de-banking has other negative effects on U.S. economic performance. Ironically, as I noted in Forbes, unlike many of the measures in the competitiveness bills, the SAFE Banking Act “actually would increase U.S. competitiveness by cutting red tape that hobbles exports from a growing American industry.” As I wrote: “Knocking down federal red tape hobbling marijuana firms would indeed make the U.S. economy more competitive through greater economic/employment opportunity as well as giving us a leg up in the sizable and growing markets for marijuana exports. According to an article in Kaiser Health News, global trade for marijuana reached an estimated $14.9 billion for 2019.”
As I concluded in the Forbes piece, “In this new era of global competition, we can’t let antiquated policies of the Drug War that Americans have overwhelmingly rejected keep American entrepreneurs from capturing a burgeoning global export market.” And we can’t let the de-banking of lawful cannabis businesses cause more violent crime.
CEI Research Associate Josh Rutzick contributed to this post.