Oklahoma Bankers Association We make bankers better!
In spite of all of the impeachment noise late last month, the industry was successful in obtaining passage of the Secure and Fair Enforcement Banking Act (the SAFE Act) by a strong bipartisan vote: 323-101. While far from perfect, the SAFE Act is at least a step in the right direction for the industry.
While I would have preferred different language, this bill does not address the question of whether the use of marijuana should be legalized under federal law; it merely prohibits federal banking regulators from penalizing a bank for providing its services to a cannabis-related business that’s operating in accordance with state law.
Federal regulators may not:
1. Terminate or otherwise limit a bank’s deposit insurance solely because it provides financial services to a cannabis-related business.
2. Prohibit or otherwise discourage a bank from offering its services to such a business.
3. Recommend, incent or encourage a bank to avoid doing business with an individual solely because the account holder is affiliated with a CRB.
4. Take any adverse or corrective supervisory action on a loan made to a person solely because that person either owns a CRB or owns real estate or equipment leased or sold to one.
5. Penalize a depository institution for processing or collecting payments for any CRB.
In addition, a bank that chooses to do business with a CRB shall not, under federal law, be liable or subject to forfeiture for providing a loan or other financial services to a CRB operating in conformity with state law.
Note the highlighted language above: chooses to do business. This is still America: You always have a choice. There’s no requirement that you bank CRBs or any business that’s connected to or affiliated with such a business.
I suspect there will be more than one bank that decides to serve one of the state’s 1,250 processors, 4,426 growers or the state’s 1,905 dispensaries. But regardless – the SAFE Act will reduce the chance of tax evasion while encouraging the industry to move toward tax compliance.
Importantly, this bill will also enhance efficiencies in the tax collection process while eliminating much of the public risk to businesses and individuals posed by the criminal element with which we’re confronted daily. And by bringing the business out of the shadows, into the light, the processes will be more transparent and we’ll be able to better track its economic impact on local communities and across our state.
So what happens next? Ideally, the Senate Banking Committee will hold a hearing on this measure, approve it, send it to the floor and have the Senate pass it. Then it goes to the President for his signature – assuming he will sign the bill. There’s no guarantee he will do so.
The Chairman of the Senate Banking Committee – Sen. Mike Crapo (R-Idaho) – is now saying he hopes to get a vote on legislation that deals with bringing cannabis businesses into the existing system by the end of this year. Six months ago this issue wasn’t even on his radar, but it is now. I think he recognizes public opposition to cannabis legalization has decreased significantly (now authorized to some extent in 33 states and the District of Columbia), and that’s likely to continue in that vein.
Another thing that’s still uncertain is whether the basics contained in H.R. 1595 need to be expanded. The House author (Rep. Ed Perlmutter [D-Colo.]) agreed to two amendments in an effort to bring more Republican votes to the table. One amendment added language to include protections for industrial hemp businesses. A second amendment was added to formally end “Operation Chokepoint,” a policy implemented in the Obama Administration by the Justice Department to make it more difficult to bank controversial businesses.
Sen. Crapo agrees these amendments are important improvements to the bill, but noted there are other issues that need to be taken up as well in an effort to provide clarity for the banking industry. Issues he cited include avoiding money laundering while at the same time moving legacy cash into the system and making sure the final bill respects the existing interstate commerce aspects of the business.
The Oklahoma Delegation is fairly well entrenched in their positions on the general question about whether current law should be changed in some manner to bring the cannabis businesses into the existing financial services and payments system. Rep. Kendra Horn was a co-sponsor of this bill, and she voted for it along with Reps. Tom Cole (OK-4) and Kevin Hern (OK-1). Reps. Frank Lucas (OK-3) and Markwayne Mullin (OK-2) both voted no.
In the Senate, both Sens. Inhofe and Lankford are likely “no” votes, positions they’ve had forever when it comes to making it easier for Oklahomans to have access to cannabis products. I had hoped I might be able to persuade one or both of them that the SAFE Act is the best “path” to accommodate the will of the people. Oklahomans have spoken on this issue. I wasn’t successful.
So now we wait. I still think it’s possible this concept of creating a “safe harbor” of some sort for banks might be attached to a must-pass appropriations matter and end up in conference with the House later this year. Frankly, it’s not important what the vehicle carrying this language looks like; it just needs to get done.
Yes, I realize the better route would be to amend the Controlled Substances Act. I’m all for doing that, and it would certainly be my recommendation to the OBA Board of Directors. But political reality tells me that’s not going to happen any time soon.
The SAFE Act is the next best alternative for respecting the decision made by Oklahoma voters. It may not be what I want, or what you want, but the people of Oklahoma have spoken. So let’s move on while we make certain that the marijuana business is operating out in the open.