With a Senate committee set to take up the issue of debanking next week, congressional researchers have released a report detailing the subject—while making a point to address how the marijuana industry’s financial services access problem “sits at the nexus” of a state-federal policy conflict that complicates the debate.
The Congressional Research Service analysis explains reasons a particular bank could terminate a customer’s account. These include suspicions that the client has engaged in illicit activity. For companies in the cannabis or marijuana industry, even in states that have legalized the drug, banks’ risk assessments are often affected by the federal prohibition of marijuana.
CRS reported that, “While most banks are chartered by state, all federally-insured banks have a federal primary regulator and these regulators typically expect banks not to bank with clients who break federal law.” Cannabis businesses are one example.
Cannabis is illegal at the federal government level, but legal in many states. It says that a bank chartered under a state cannabis law may have the ability to offer banking services to companies operating within state law but could violate federal laws. The report states that banks might choose to avoid banking with firms in certain industries which are only legal at a state-level due to the potential legal risks.
CRS stressed that “cannabis-banking is the crux of this problem, as state chartered banks can provide banking services for companies operating legally in state law and illegally on the federal level.”
Because each bank is regulated by a federal agency, there’s a conflict between federal agencies and state regulators. They must avoid condoning illegal activity at the federal level while also not affecting commerce in the states that goes beyond the regulatory authority. Some regulators took enforcement actions in connection with cannabis banking.
In the report, it is also noted that Congress tried to deal with cannabis banking issues with a bipartisan Bill, Secure and Fair Enforcement Banking Act. This bill would prevent financial institutions being penalized for simply working with marijuana industries.
Under Democratic control, the Senate Banking Committee approved a draft of this legislation in September 20,23. The issue is expected to be brought up again by the committee when they discuss debanking next week.
The Banking Committee chairman Tim Scott (R – SC) has been contacted by marijuana workers, industry associations, and others who have lost bank accounts due to their involvement with cannabis. However, it remains unclear if this will compel him to take action, given that he is opposed to SAFE Banking Act.
This is very simple. People can select their challenges and then we’ll automatically generate an email on their behalf. pic.twitter.com/aVXJSW9CT9
— Kyle Sherman (@KyleSherman) January 28, 2025
The SAFE Banking Act is expected to be filed again this session—but that introduction is “not imminent” as some recent reports have suggested, a spokesperson for the GOP House sponsor of the last version told MEDCAN24 last week.
Staffer Dave Joyce’s (R-OH), said, “Although the timing is not yet finalized, we will have a better idea in the weeks to come.”
With Republicans now in control of the House and Senate—and leadership having historically opposed even modest cannabis legislation, including the banking bill—there are open questions about the prospects of advancing marijuana reform this session.
Despite this, there are some who still hold out hope for a bill that would allow the cannabis industry to have access to banking, particularly given the fact President Donald Trump has endorsed it on the campaign trails.
Separately, the Government Accountability Office (GAO) announced last month that it’s convening focus groups comprised of marijuana businesses to better understand their experiences with access to banking services under federal prohibition.
Industry remains disappointed with lack of progress made on cannabis banking under the previous administration.
A Senate source told MEDCAN24 last month that Republican House and Senate leadership “openly and solely blocked” then-Senate Majority Leader Chuck Schumer’s (D-NY) attempt to include the bill in a government funding bill as the session came to a close.
Sens. Elizabeth Warren (D-MA) and Tommy Tuberville (R-AL) had challenged the idea that there was enough GOP support for the SAFER Banking Act to pass on the Senate floor during the lame duck session.
Warren accused certain Republican members of overstating support for the legislation within their caucus, while also taking a hit at Trump for doing “nothing” on cannabis reform during his time in office as he makes a policy pivot ahead of the election by coming out in support of the marijuana banking bill and federal rescheduling.
John Hickenlooper, a Democratic Senator from Colorado (USA), said in an interview recently with MEDCAN24 the primary obstacle in passing the Marijuana Banking Bill is the insufficient Republican support. And he said if Trump is serious about seeing the reform he recently endorsed enacted, he needs to “bring us some Republican senators.”
Prior to becoming House speaker, Rep. Mike Johnson (R-LA) consistently opposed cannabis reform, including on incremental issues like cannabis banking and making it easier to conduct scientific research on the plant.
Meanwhile, on the one-year anniversary of a Senate committee’s passage of the SAFER Banking Act in September, the Congressional Budget Office (CBO) released an analysis on the economic impact of the reform, including the likely increase in federally insured deposits from cannabis businesses by billions of dollars once banks receive protections for servicing the industry.
Separately, the CEO of the financial giant JPMorgan Chase said recently that the company “probably would” start providing banking services to marijuana businesses if federal law changed to permit it.
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