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Marijuana Legislation Could Be Scheduled for a Congressional Vote to Decriminalize the Drug

Terri Luttrell, CAMS-Audit, CFCS
November 19, 2019
Read Time: 0 min

Many financial institutions across the country continue to resist providing traditional banking services to marijuana-related businesses (MRBs) due to the legislative gray area facing the industry. Marijuana is currently federally illegal under the Controlled Substances Act (CSA), regardless of any state legislation that has passed. This makes the financial industry, particularly federally insured and regulated financial institutions, cautious when opening their doors to MRB clients, either direct or indirect.

With the passing of the 2018 Farm Bill, hemp and hemp-derived CBD have been removed from the CSA, and the cultivation and distribution of hemp will be federally legal once the United States Department of Agriculture (USDA) finalizes their interim rule, planned by the end of 2019 in time for the 2020 growing season. However, marijuana legislative reform, for which many bills have been drafted, has not moved far in the legislative process until recently. Marijuana and hemp are both subspecies of the cannabis plant. Marijuana contains the psychoactive chemical tetrahydrocannabinol (THC), generally 10% or greater, and hemp by law contains 0.3% THC or less and does not get the user high.

What does the SAFE Banking Act propose for institutions?

The Secure and Fair Enforcement (SAFE) Banking Act of 2019, H.R. 1595, was introduced into the House of Representatives in March and passed by a large margin in September to advance it to the Senate. This legislation has gained more traction than any other marijuana-related legislation to date. The SAFE Banking Act would give safe harbor for financial institutions wishing to provide traditional banking services to MRBs but would not remove marijuana from the CSA, thus maintaining the status of federally illegal.

What bills are currently proposed to decriminalize or legalize marijuana?

The traditionally more conservative Senate could prove to be a roadblock for this legislation. Some legislators want a more robust version of the SAFE Banking Act passed, including removing marijuana and THC from the CSA and bringing it to the same playing field as hemp. The proposed Marijuana Opportunity Reinvestment and Expungement (MORE) Act, H.R. 3884, which has not yet been approved in the House of Representatives, would not only decriminalize marijuana and remove it from the CSA, but would also:

  • Expunge and resentence prior convictions;
  • Prevent agencies from using cannabis as a reason to deny access to benefits or citizenship status;
  • Provide for a 5% federal tax on marijuana product sales;
  • Create an Opportunity Trust Fund for supporting grant programs to provide job training and legal aid for people impacted by prior marijuana prohibition;
  • Allow states to regulate marijuana use, cultivation, and distribution;
  • Provide loans for certain small MRBs.

It is clear the MORE Act is just that, much more overreaching legislation, which means it is also more controversial. A third bill that may be a compromise to the SAFE and MORE Acts is the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act, H.R. 2093. The STATES Act is similar to the MORE Act without the social justice aspect and also has not been approved in the House of Representatives. It would remove marijuana from the CSA and allow states or tribes to regulate the growth, distribution, and sale of the plant.

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What is expected from these bills?

On Nov. 20, in a groundbreaking move, the House Judiciary Committee passed the MORE Act in a 24-10 vote to move it to a full floor vote. To date, the SAFE Act is the only marijuana legislation to pass the House vote and move to the Senate, and it was expected to come to a vote by the end of 2019. Financial institutions are waiting for guidance and safe harbor in order to move forward with providing services to MRBs. Certain aspects of the other proposed legislation may stall the SAFE Act until there is time for more debate around removing marijuana from the CSA, which is the only true measure of safety for the financial industry wanting to do business with marijuana-related businesses.

Are you still confused on the rules and regulations around banking cannabis-related businesses? What about hemp? Have you put any thought into the updates you need to your policies and procedures to ensure you're actively monitoring for CRBs or MRBs? We can help.

Register for our free upcoming webinar "Starting 2020 on a High Note: Cannabis-Related Banking Explained." 

About the Author

Terri Luttrell, CAMS-Audit, CFCS

Compliance and Engagement Director
Terri Luttrell is a seasoned AML professional and former director and AML/OFAC officer with over 20 years in the banking industry, working both in medium and large community and commercial banks ranging from $2 billion to $330 billion in asset size.

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