Cannabis News of Note for the Week:
The Dales Report: Saphira Galoob: Cannabis Raised During Bank Hearing
Cannabis Wire: Senate Committee Hearing on Debanking Turns, Inevitably, to Cannabis (paywalled, full text below)
Cannabis Reports of Note for the Week:
Congressional Research Service: De-Banking/De-Risking: Issues for the 119th Congress
—
Cannabis Wire: Senate Committee Hearing on Debanking Turns, Inevitably, to Cannabis
While the hearing was meant to be focused on federally legal businesses, the cannabis industry serves as an example of the issue.
February 5, 2025
A Senate committee hearing on debanking on Wednesday centered on industries like firearms and crypto, but also touched upon cannabis.
The Committee on Banking, Housing and Urban Affairs hosted the
hearing, titled “Investigating the Real Impacts of Debanking in America.” When announcing the hearing, Republican Committee Chair Tim Scott accused “Biden regulators” of forcing “financial institutions to cut off services to digital asset firms, political figures, and conservative-aligned businesses and individuals.”
Scott emphasized the hearing was only regarding “federally legal businesses,” but cannabis business owners swiftly took to social media to share all the ways in which they’ve struggled to access banking services and to mobilize people to reach out to Scott. Ahead of the hearing, a new Congressional Research Service publication on “de-banking” even included cannabis as an example of the issue.
Some cannabis businesses face ongoing hurdles with access to financial services because cannabis remains federally illegal. A bill that would allow the industry to access financial services, the SAFE Banking Act, has repeatedly passed out of the House when Democrats were in control, and has never cleared a Republican-controlled chamber. The bill has yet to be introduced in this Congress.
During the hearing, Sen. Elizabeth Warren took the opportunity to reference the cannabis industry’s struggles with banking.
Warren said that, among those debanked, are “lawful cannabis businesses have been unable to open accounts, and employees of those businesses have been debanked.”
Sen. Thom Tillis, a Republican, later returned to the issue.
“The last time I checked, the cannabis business is illegal at a federal level. I, for one, think we should reexamine that, but we damn sure shouldn’t do it,” he said, “before we’ve taken any firm position here that provides the industry with clarity.”
“Somebody wants to work on rules of the road and do that and bank the industry in a cohesive, sustainable way that doesn’t kind of skirt around the fact that it’s still illegal at the federal level, count me in. Happy to do it,” he continued.
Aaron Klein, a senior fellow in economic studies at Brookings Institution, brought up Suspicious Activity Reports. The Bank Secrecy Act (BSA) requires these reports to be filed with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) if banking services include transactions “suspected to be derived from illegal activities, including marijuana sales,” according to a recent report for Congress.
“I don’t understand who’s reading all of these SAR reports and this gets to the point about state licensed cannabis that was raised earlier. That’s federally illegal. If the DEA wants to go in and shut down any cannabis company in a state, they can. But you don’t need a bank report to tell you where the cannabis shop is. It’s called Google Maps. It’ll work really well. Why are we forcing the banks to continue to file all of these?” Klein said.
His written testimony included eight recommendations to make banking services more accessible and affordable, while also reducing the risk of a customer being debanked. One of those recommendations was to “improve and pass the SAFE Banking Act.” Because the latest version of the federal cannabis banking bill doesn’t address the SAR requirements, Klein wrote that he fears the bill’s “impact would likely underwhelm what its proponents have argued.”
The conversation about debanking isn’t over, Sen. Scott said at the end of the hearing. Questions for the witnesses can still be submitted for one week, and witnesses have 45 days to respond.