Full Committee Markup of S.2860, the SAFER Banking Act
Senate Committee on Banking, Housing, and Urban Affairs
Full Committee Markup
Wednesday, September 27, 2023
Topline
- The Senate Committee on Banking, Housing, and Urban Affairs favorably reported 2860, the SAFER Banking Act, by a vote of 14-9.
- Raphael Warnock (D-Ga.) was the lone Democratic nay vote. He was joined by Republican Senators Scott, Crapo, Rounds, Tillis, Hagerty, Kennedy, Vance, and Britt.
Legislation
- 2860, the SAFER Banking Act.
Opening Statements
Chairman Sherrod Brown (D-Ohio)
In his opening statement, Brown emphasized that cannabis banking is just one part of the necessary conversation about marijuana policy. He explained that cannabis policies differ by state, yet small cannabis businesses and their employees encounter the same issue accessing financial services. Brown noted that regardless of one’s feelings toward state efforts to legalize marijuana, this bipartisan bill is necessary because it will make it safer for legal cannabis providers to operate and protect their workers. He said he would not let this legislation advance if it would weaken regulators’ ability to do their jobs. Brown concluded that he remained committed to finding a bipartisan path forward, and said he looked forward to sending bipartisan legislation to the Senate.
Senator Steve Daines (R-Mont.)
In his opening statement, Daines explained that he is opposed to the legalization and decriminalization of marijuana, but supports the SAFER Banking Act because it promotes public safety. Daines called the bill a step in the right direction toward curtailing theft, tax evasion, and organized crime has targeted small cannabis businesses because of their dependence on an “all cash” financial model. He emphasized the importance of ensuring that the banking system remains accessible to all legal businesses, a reform proffered by the bill, which tackles financial account closures. Daines concluded that the SAFER Banking Act would ensure regulators refrain from targeting any account operated by legal businesses, including gun manufacturers, distributors, and energy companies because of political differences. He said he looked forward to sending the bill to the President’s desk.
Consideration of Legislation
S.2860, the SAFER Banking Act
Sen. Brown introduced Brown Amendment #1, which makes technical changes to the bill and incorporates Brown #2, portions of Scott #30, Cramer #34, Sinema, Lummis, and Daines #35 and #36. The amendment was agreed to, with Sens. Raphael Warnock (D-Ga.), Mike Rounds (R-S.D.), Bill Hagerty (R-Tenn.), Katie Britt (R-Ala.), Tim Scott (R-S.C.), John Kennedy (R-La.), and Thom Tillis (R-N.C.) in opposition.
Crapo Amendment #1 – Operation Chokepoint
Sen. Mike Crapo (R-Idaho) introduced Crapo Amendment #1, which would remove and replace the bill’s current Section 10. Crapo explained that his amendment deals with Operation Chokepoint, and would ensure that a financial regulator could not force a bank or any other financial institution to cease doing business with a client unless certain conditions are satisfied. Those conditions would require a financial regulator to support its claim that the depository institution is engaging in an unsafe or unsound practice by showing that the depository institution’s relationship to a specific client violates a rule, law, or other condition imposed in writing. He added that the current Section 10 inadequately safeguards legal industries, stating that reputational risk is something financial regulators should not be able to utilize to debank or refuse service to any company in any industry.
Sen. Jack Reed (D-R.I.) said Crapo’s amendment was well-intentioned and thoughtful but would undermine regulators’ ability to effectively anticipate and correct problems within banks. He added that there is a much better, bipartisan version of Section 10 already included in the bill.
Crapo’s amendment was not agreed to (8 ayes, 15 nays.)
Warnock Amendment #27 – Sunset Clause Contingent On Restorative Justice Progress
Sen. Raphael Warnock (D-Ga.) introduced Warnock Amendment #27, which would establish a five-year sunset on the Act’s policies contingent upon the millions of families and communities being harmed by the war on drugs having made life better. Warnock said he was deeply troubled that the Committee considered this bill, explaining that it will worsen the pursuit of equity, justice, and safety. He lamented that the bill did not include provisions to suggest that the cannabis industry will be less consolidated than any others. Warnock concluded that he would support the legislation if it was paired with broader cannabis reforms that substantively provide restorative justice.
Brown said he supported the goals of Warnock’s amendment, but would oppose it because it would create an extended period of uncertainty for small financial institutions and small businesses. He said he would ensure that the bill is implemented with equity in mind.
Sen. Elizabeth Warren (D-Mass.) said the bill is a good step in the right direction but agreed with Warnock’s concerns. She explained that the bill does little to address the harms of marijuana criminalization. Warren noted that marijuana sales are estimated to reach over $31 billion this year and that cannabis business owners who will profit from those sales are 80% white. She emphasized that the SAFER Banking Act cannot be the only legislative action the 118th Congress takes on marijuana. Warren called on FinCEN to update its red flags guidance to ensure that past cannabis convictions cannot be used to deny financial services.
Sen. Chris Van Hollen (D-Md.) called the bill an important step forward in limiting the potentially dangerous cash economy of the current marijuana industry but indicated that he shares Warnock’s views on the issue of equity. Van Hollen noted that if the Committee had jurisdiction over criminal justice matters, he would not vote for the bill today. He explained that he would support moving this bill out of committee, but how he votes on the floor will depend on whether these matters are addressed.
Warnock’s amendment was not agreed to (3 ayes, 20 nays.)
Rounds Amendment #32
Sen. Rounds said the SAFER Banking Act is fundamentally flawed, explaining that if it were to become law, it would give special protections to businesses conducting a federally illicit activity. He began to bring up Rounds Amendment #32, but then said that even if his amendment was included, the legislation would not be acceptable for him. He withdrew his amendment.
Hagerty Amendment #29 – Illicit Drug Anti-Money Laundering Penalties
Hagerty introduced Hagerty Amendment #29, which would prevent fentanyl and methamphetamine proceeds from being laundered as marijuana sales. Daines said the amendment was not germane to the Committee, but that he would work with Hagerty on it when the bill comes to the floor. Hagerty explained that the amendment is germane because it creates civil penalties for anyone who commingles fentanyl with state-sanctioned marijuana proceeds, and the civil penalties support the stated intent of the bill.
Brown said he agreed with the sitting ranking member, Daines, that the amendment was not germane and ruled it out of order.
Warnock Amendment #19 – Racial Wealth Gap In Cannabis Business Study
Warnock introduced Warnock Amendment #19, which would allow the Government Accountability Office to conduct a study on the racial wealth gap and the percentage of minority-owned cannabis businesses before and after the passage of the SAFER Banking Act. He cautioned that racial disparities would be exacerbated should the legal cannabis economy become dominated by a few major power players and exclude small, minority-owned businesses.
Brown ruled the amendment out of order.
Motion to Report S.2860
Brown moved that the Committee favorably report S.2860, the SAFER Banking Act, as amended. A roll call vote was called, and S.2860, as amended, was favorably reported to the Senate by a vote of 14-9.
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