It won’t be long before federal officials penalizing banking institutions onboarding cannabis merchants will not be able to do so. This sigh of relief comes after the release of the annual spending bill by a team of Congress officials last month.
The proposed bill would also lift off a longstanding rule that restricts Washington, D.C. from investing its own finances in legalization and control of recreational cannabis sales.
Though more and more states are pacing the shift towards legalization, most banks are still unwilling to onboard licensed merchants in the sector out of fear of rubbing shoulders with the law. Illinois was the latest to join the list ten states to become the eleventh State in the U.S. to legalize marijuana.
These uncertainties among banking firms could be alleviated in part by the recently released House bill.” The law includes wordings prohibiting federal regulators from penalizing banking institutions for working with state-legal marijuana retailers or businesses.
SEC. 633 literally prohibits the use of the ACT’s funds to penalize a financial service provider solely because the firm onboards a company that is a producer, manufacturer, or an individual that takes part in any trade or planned activity that involve dealing with cannabis, cannabis products, or cannabis proceeds as long as they operate in line with the laws stipulated by the State, section of a State, or Indian Tribe.
This law only is relevant only to spending laws under the Treasury Department. Nevertheless, it will not protect banks from penalization by the Department of Justice, which is financed by a different bill. Plus, it is also linked to the yearly appropriations process, which means it will be subject to proactive renewal year-over-year after it passes.
In the meantime, though, Congress is discussing a more permanent and comprehensive proposal to cover banks from facing the law for offering services to perfectly legal marijuana businesses.
Those efforts began in March when the House Financial Services Committee approved the proposition referred to as the Secure And Fair Enforcement (SAFE) Banking Act. Proposers are positive the House Democratic leaders will table the bill— cosponsored by 191 members—almost half of the chamber—in the coming few weeks.
A comparable proposal is catching fire in the Senate with 30 lawmakers behind it—nearly a third of the division’s membership. Banking Committee Chairman Mike Crapo who has been reluctant to table the bill for a hearing will now be forced to give in to the mounting pressure.
The legalization agenda is getting louder and louder as more bills are being scheduled in front of different lawmakers at both state and federal levels. Banking institutions will no longer have to fear onboarding merchants from the multi-billion cannabis sector.