Schumer Says Marijuana Banking Is Senate Priority
Learn why Senate Majority Leader Charles Schumer says marijuana banking will be a priority for Democrats between now and August.
Legislation would allow credit unions and banks to serve certain marijuana-related businesses.
Marijuana banking legislation is a priority for Senate Democrats between now and Congress’ August recess, Senate Majority Leader Charles Schumer, D-N.Y., told colleagues in a “Dear Colleague” letter Sunday.
The legislation is one of several priorities Schumer listed; those priorities include legislation to “hold bank executives accountable.”
“Our agenda is ambitious and with a closely divided Senate, we face an uphill battle on many fronts,” Schumer wrote. “It is always my hope that we will be able to find consensus and develop a path forward with our Republican colleagues; but where that is not possible, we must [pursue] all options available for advancing programs to protect and expand America’s middle class.”
Schumer did not elaborate on the legislation to make bank executives accountable.
Backstory and Context
The cannabis legislation would provide credit unions and banks with a regulatory safe harbor if they provide services to marijuana-related businesses in states where cannabis is legal.
The legislation has passed the House several times, although House Financial Services Committee Chairman Rep. Patrick McHenry, R-N.C., has said it is not a high priority during this Congress. The legislation never has passed the Senate, even though House supporters have tried to tuck it into must-pass defense authorization bills.
The marijuana provisions always have been dropped in a House-Senate conference.
And Democratic senators have said in the past that marijuana banking should be considered as part of a larger legalization measure.
Potential Senate Roadblock
Now, the Senate is poised to consider the separate banking legislation. But a provision unrelated to marijuana still could gum up the works.
The provision would prohibit a federal banking agency from formally or informally requesting that a financial institution terminate a specific customer account or a group of customer accounts.
In the past, Republicans have pushed such a plan, referring to “Operation Choke Point,” an Obama Administration effort that critics say allowed financial institutions to decide not to serve specific industries, such as gun manufacturers.
Senate Banking Committee member Sen. Jack Reed, D-R.I., has singled out the provision in the marijuana bill, arguing that it would make it more difficult for federal banking regulators to raise an alarm about a specific customer who poses a risk to a financial institution.
In a May letter to the Banking Committee, Americans for Financial Reform and several other groups, including the National Consumer Law Center, agreed.
“We are concerned that Section 10 is overbroad, with potential repercussions far beyond cannabis banking,” the group stated.
The letter goes on to warn that the provision could “be construed to apply if a bank regulator warns a financial institution about red flags that a customer or group of customers are engaged in unlawful activity, including receiving or laundering stolen funds.”
In the House, Financial Institutions and Monetary Policy Subcommittee Chairman Rep. Andy Barr, R-Ky., has introduced separate legislation that would prohibit financial institutions from denying access to services under “the standards of woke corporate cancel culture and prevent the weaponization for political purposes.”
“Banks should make lending decisions relying on objective, risk-based metrics,” Barr said, as he introduced the legislation in April.
Groups supporting the legislation include the National Rifle Association, the National Mining Association, and the National Pawn Brokers Association.