Democrats in the Senate will push to liberalize banking access to the cannabis industry during the lame duck session, it was reported on Saturday, in moves being watched closely by the Department of Justice which is concerned that reforms could ‘complicate’ the industry’s legal status.
A justice department memo, obtained earlier this week by Punchbowl News, outlines how implementation of a bill to reform the banking rules for cannabis companies “could significantly complicate law enforcement investigations and prosecutions”, though it also notes that the department believes that subject to minor changes “it can effectively implement the legislation”.
The legislation, titled the Secure and Fair Enforcement Banking Act, would provide a “safe harbor” for regulated banks to work with cannabis firms in states where it’s legal. While that would not legalize cannabis at a federal level, it would release the industry from a key limitation to its growth.
The passage of the bill through the Senate has become a priority for Senate majority leader Chuck Schumer ahead of the new session in January, Axios reported on Saturday.
In July, the New York democratic senator, along with Senators Cory Booker of New Jersey and Oregon’s Ron Wyden introduced the Cannabis Administration and Opportunity Act that would decriminalize cannabis at the federal level.
The bill’s sponsors argued that the cannabis industry, which employs nearly 430,000 workers and generated over $25bn in sales last year, “presents a significant opportunity for entrepreneurship and economic empowerment”. By 2025, the bill said, “it is estimated that the cannabis industry could exceed $45bn in annual sales”.
It said that nearly all Americans live in a state with some form of legal cannabis, including 19 states that have legalized adult-use cannabis – reaching over 40% of Americans – and that 91% of adult Americans believe that cannabis should be legal for either adult or medical use.
“The ‘war on drugs’ has failed, and it’s time for lawmakers in Washington to respect the rights of states that have chosen to legalize cannabis,” they argued. Despite bi-partisan support, the bill stalled.
Legalization of the industry’s access to the banking system is an incremental work-around to federal prohibition, which came into effect across the US a century ago.
Most of the changes suggested by the justice department revolve around language relating to “cannabis-related legitimate businesses” that it said “could create an immunity shield around activities of cannabis businesses that involve other illicit drugs or activities”.
Other potential complications in the wording could complicate enforcement of anti- money laundering efforts, the DoJ said.