Senators in both parties championed a bill Thursday that would give the cannabis industry access to banking without fear of penalties or high fees, saying financial rules must adjust with marijuana laws so that businesses are treated equally and workers are no longer paid in cash and exposed to robbery.
The push to connect the pot industry with banking services underscores the unusual and rapidly shifting landscape around cannabis, which remains illegal under federal law, and is hurtling forward over objections from experts who say the measure will spur investment in addictive and hazardous products.
Sen. Steve Daines, Montana Republican, is sponsoring the Secure and Fair Enforcement Banking Act to ensure that state-approved marijuana businesses have access to banks, credit unions and other financial institutions. He said only 9% of financial institutions in the U.S. have provided services to cannabis companies, pushing back on those who say banking is readily available to the industry.
The legislation would prohibit federal bank regulators from penalizing a bank for providing financial services to a legitimate state-sanctioned and regulated cannabis business. It would also stop regulators from terminating a bank’s federal deposit insurance solely because it provided services to a state-sanctioned cannabis business or associated business.
Supporters of the bill say many legal cannabis businesses must conduct their business in cash, exposing them to theft, tax evasion and organized crime.
“Legal businesses are facing a public safety crisis. These businesses, often forced to deal in all cash, are appealing targets for robbers,” said Mr. Daines, who appeared as a witness before the Senate Banking Committee.
Mr. Daines said the bill would help law enforcement distinguish between legal and illegal pot businesses and focus resources on prosecuting the illicit side while ensuring proper tax compliance and revenues for states.
Colorado and Washington state in 2012 became the first states to legalize recreational marijuana. Since then, 19 states and the District of Columbia have joined them, though states have varying approaches to sales. Montana legalized cannabis use among those 21 and older at the start of 2022.
Mr. Daines, who opposed the voter initiative in his state, said 47 states and D.C. have decriminalized marijuana in some form and senators must confront the reality that the landscape around marijuana has changed.
“This bill does not legalize marijuana. I personally do not support federal legalization of marijuana,” Mr. Daines said. “I recognize and appreciate the reality we face, and that reality is a legal patchwork that just doesn’t work for banks, for businesses or for law enforcement.”
Witnesses said cannabis workers in states that legalized marijuana have struggled.
Many workers are paid in cash and struggle to show proof of employment or get mortgages because their industry lacks banking services, “even though they work in a perfectly legal industry in their state,” said Ademola Oyefeso, international vice president and director of legislative and political action at the United Food and Commercial Workers International Union.
Cat Packer, vice chairwoman of the Cannabis Regulators of Color Coalition, said the lack of access to banking and loans is often the top barrier to businesses hoping to enter the cannabis industry or being able to compete once they get in.
Yet Kevin A. Sabet, CEO of Smart Approaches to Marijuana, said the bill will fuel the growing legal market of cannabis products with high levels of tetrahydrocannabinol, or THC — the psychoactive substance in cannabis.
Research shows an increased risk of psychosis, schizophrenia or issues like frequent vomiting from frequent use of high-THC products.
Support for the safe-banking bill is creating strange political bedfellows.
Mr. Daines recently endorsed former President Donald Trump’s 2024 presidential bid while Sen. Jeff Merkley, an Oregon Democrat who also testified in support of the safe-banking bill Thursday, has called Mr. Trump “completely unfit to be president.”
Mr. Merkley said three-quarters of the cannabis economy works entirely in cash and the few banks that do work with cannabis businesses charge high fees. He said the dynamic also affects suppliers who support marijuana operations by providing fertilizer or greenhouses.
Mr. Merkley said banks will not be forced to provide services to cannabis businesses under the bill. It will remain a choice.
Senate Majority Leader Charles E. Schumer said Thursday he wants to get the bill to the floor.
Mr. Schumer, New York Democrat, applauded sponsors for strengthening protections for minority-owned businesses and cannabis workers who want access to federally backed mortgages.
“We look forward to watching this legislation progress through the Banking Committee and working with bipartisan partners to include additional improvements, such as the Harnessing by Pursuing Expungement (HOPE) Act, which would support states that want to expunge cannabis record with grants,” he said in a statement with Senate Finance Committee Chairman Ron Wyden, Oregon Democrat, and Sen. Cory Booker, a New Jersey Democrat and key figure on marijuana policy.
Mr. Sabet, however, scolded lawmakers for spending its time on the issue while the U.S. is on the cusp of debt default, the Biden administration is promoting National Prevention Week and “suicides are off the charts.”
“The idea that this committee decided to spend its time turbocharging the marijuana industry right now, given everything else going on, I think is unfortunate,” he said. “Why would we normalize and commercialize today’s super-strength marijuana?”
• Tom Howell Jr. can be reached at thowell@washingtontimes.com.