The new $3 trillion coronavirus relief package approved by the U.S. House on Friday includes legislative language that would allow banks to service cannabis businesses.
A provision that would permit banks to provide financial services to cannabis businesses without fear of federal interference was approved by the United States House on Friday, as part of the new $3 trillion coronavirus stimulus bill.
The 1,800-page stimulus bill, known as The Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, aims to provide relief for businesses impacted by the current public health crisis. It was unveiled by House Speaker Nancy Pelosi early last week.
At the heart of the bill is COVID-19 relief meant to help struggling Americans amid the pandemic. It would send a second $1,200 payment to most taxpayers, offer hazard pay to health care workers, provide college debt relief, support state budgets struggling with pandemic costs, and extend the weekly $600 payment for unemployed workers through January 2021.
Also in the bill is a cannabis banking provision that utilizes language from the SAFE Banking Act, which the U.S. House strongly approved with bipartisan support in September but then never progressed beyond the Senate Banking Committee. The provision would mainly provide a safe harbor for banks that work with state-legal cannabis businesses.
The new bill does not include small business relief for cannabis companies, which have also been left out of previous rounds of coronavirus relief funding.
“The inclusion of the SAFE Banking Act in the CARES 2 package is a positive development, but one that’s akin to applying a band-aid to a gaping wound,” said NORML Political Director Justin Srekal, in response to the unveiling of the bill. “In the majority of states, these cannabis businesses have been deemed essential during this pandemic. But at the federal level, they are being cast aside by Congress. Those small cannabis businesses facing tough economic times are essentially being told by Congress to shutter their doors and fire their employees.”
Why Include Marijuana Banking Reform in a Pandemic Relief Bill?
Several Republican lawmakers protested the inclusion of the cannabis banking reform, arguing that it was irrelevant to pandemic relief. Senate Majority Leader Mitch McConnell (R-KY) called out the bill’s requirement to study diversity in the marijuana industry.
The Democrats’ supposed coronavirus bill includes taxpayer-funded studies to measure “diversity and inclusion” in the cannabis industry. It’s a parade of absurdities that can hardly be taken seriously. pic.twitter.com/2aCyOEnnAZ
— Leader McConnell (@senatemajldr) May 15, 2020
Ahead of Friday’s vote, Rep. Ed Perlmutter (D-CO), chief sponsor of the legislation, argued that the cannabis banking provision would help reduce the risk of virus transmission by limiting cash transactions. State-legal marijuana businesses, which are now largely unable to obtain financial services due to marijuana’s Schedule I status, operate on a cash-only basis.
“The SAFE Banking Act would address the increased health risk of spreading COVID-19 on bank notes and coins as well as the increased public risk in this cash-only industry,” said Perlmutter. “This bill will help protect jobs and safe lending in our communities.”
For years, state-legal marijuana businesses have faced challenges acquiring traditional financial services and loans, which has hindered their growth. Since marijuana remains illegal under federal law, banks have refused to work with cannabis companies for fear the federal government would go after them for laundering, so the industry has been cash-only from the beginning.
The HEROES Act now heads to the U.S. Senate, where its fate is uncertain. The Senate has never before approved cannabis reform legislation, and the Senate’s Republican leaders have been steadfast that another round of pandemic relief is not yet needed.
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Over recent weeks, we’ve explored how the coronavirus is impacting cannabis sales, how COVID-19 is influencing cannabis use behaviors and campaigns to legalize marijuana, and the potential long term impacts of the pandemic on the cannabis industry.