Senate Majority Leader Chuck Schumer, D-NY, said the chamber is “making good progress” on a bipartisan bill that would make it easier for banks to serve legal cannabis businesses, adding the legislation has “always been a priority,” for him.
Schumer on Thursday included the bipartisan Secure and Fair Enforcement (SAFE) Banking Act on a list of several bills he said the Senate will tackle when it returns from its August recess.
“There’s a lot to do when we get back,” he said during a press conference focused on the passage of the National Defense Authorization Act.
“We’ve been working very diligently on [legislative priorities] during this time – including $35 insulin where we’re making great bipartisan progress, including the rail bill where we’re making progress, including SAFE Banking where we’re making progress, including FAA where we’re making progress,” Schumer said. “We’re making progress on a whole lot of these, and I think you’re going to find a very, very productive fall in the Senate.”
Schumer said lawmakers are close on “a few of them.”
“You don’t always have a final handshake,” he said. “On a few of them, we have agreement on the concept.”
There may be bipartisan agreement on SAFE Banking’s goal to help the cannabis industry enter the banking fold, but lawmakers are reportedly haggling over some of the bill’s details.
The bill has passed in the House seven times, but has yet to pass in the Senate, where, according to Politico, Republican and Democratic lawmakers are currently in a stalemate over language that addresses requirements for deposit account termination requests and orders.
Sen. Jack Reed, D-RI, has raised concerns that Section 10 is too broad and should only address cannabis-related businesses.
The text was added to SAFE Banking in 2019 to curry favor with Republicans who feared the bill could be used by banks to deny lending to borrowers connected to controversial industries such as gun manufacturers and payday lenders, according to Politico.
However, the broad nature of the text, according to Reed, would prevent regulators from cracking down on bad actors who pose actual risks to banks, he said.
“[Section 10 is] not limited to the marijuana or cannabis industry, so it could allow permit schemes or all sorts of other interesting activity to go on without an effective response by the regulator,” Reed said during a hearing in May. “Section 10 will require a bank to provide a notice to a customer when the federal government suspects they may be engaging in illegal activity. That’s like warning people to get out of town and take the money and run.”
Gutting Section 10, however, would be a deal breaker for Republicans, according to Politico, which cited a Republican aide working on the bill.
The cannabis and banking sectors have been pushing for SAFE Banking since the legislation was first introduced 10 years ago.
While 21 states and Washington, D.C. have legalized cannabis for recreational use and 37 states allow it for medical use, cannabis is still listed as a Schedule 1 drug under the Controlled Substance Act, along with ecstasy, heroin and LSD.
Because most banks are reluctant to service the sector, many cannabis businesses are cash only, making them targets for criminals.
Mastercard blocks pot purchases
Meanwhile, the cannabis industry and its consumers were dealt a setback last week when payment processor Mastercard instructed U.S. banks to stop allowing purchases of cannabis on its debit cards.
“As we were made aware of this matter, we quickly investigated it,” a spokesperson for Mastercard, said on Friday, according to the New York Times. “In accordance with our policies, we instructed the financial institutions that offer payments services to cannabis merchants and connects them to Mastercard to terminate the activity.”
The move by Mastercard serves as yet another example of why the cannabis industry has been pushing for the passage of SAFE Banking, a bill many proponents believe would encourage more firms to service the space.
“We’ve also seen this over the years where a payment solution starts to take shape in our industry and then they get shut down,” Morgan Paxhia, a co-founder of Poseidon Investment Management, which oversees AdvisorShares Poseidon Dynamic Cannabis, told the Times on Friday. “It’s really because we have not seen federal laws changed that gives the banking industry confidence to bank.”