Lawyers' Perspectives on Historic Cannabis Banking Vote
We reached out to attorneys in the cannabis space for their views on the U.S. House vote backing a landmark bill.
September 26, 2019 at 06:08 PM
4 minute read
In a historic vote, the U.S. House of Representatives on Wednesday approved legislation to shield banks that serve state-licensed cannabis and hemp operators—as well as businesses and insurers that serve those industries—from federal regulators.
The Secure and Fair Enforcement Banking Act passed on a bipartisan 321-103 vote, marking the first time a stand-alone cannabis policy bill advanced from the House. That it passed so overwhelmingly with significant support from Republicans speaks volumes about the seismic shift in public opinion, and politics, surrounding marijuana.
"This bill is about public safety, accountability and protecting states' rights," the bill's author, Rep. Ed Perlmutter, D-Colorado, said.
We reached out to lawyers in the cannabis space for some of their early observations, and universally the legislation was hailed as "significant." Of course, there's no certainty the bill will ever become law, as it goes over to the Senate. Here are some early reactions from lawyers:
>> Jason Horst, Horst Legal Counsel: "It certainly is significant. Insurance protections were not originally included in the SAFE Banking Act, but were added in June. If it becomes law, I do think that you will see the dam break a great deal with regard to the number of insurers entering the cannabis insurance markets. The changes may not happen overnight in the way that they might with banking, though. Each new carrier will have to do its due diligence to understand how cannabis risks differ from other risks they insure. But, over time, competition in the markets will increase greatly, and prices and terms of available insurance should improve steadily."
>> Rachel Gillette, chairwoman of Greenspoon Marder's cannabis practice: "All-cash business operations are not only a safety issue, but they are a tremendous challenge, and the lack of available banking in a multibillion-dollar industry makes little sense. The lack of banking has only served to undermine states that have chosen the alternative path to end marijuana prohibition. Normalized banking relationships between licensed cannabis businesses and financial institutions adds the level of transparency states have needed in their regulatory efforts to quash the marijuana black market."
>> Anita Boomstein, partner, Manatt, Phelps & Phillips: "Under the bill, banks still would need to have robust compliance procedures in place to ensure that their cannabis customers are, in fact, operating legally under the relevant state law. But assuming the bank can satisfy that hurdle, the bill would remove the threat of criminal liability, adverse supervisory action by its federal regulator, or seizure of funds from cannabis-related transactions, all of which have haunted banks up until now."
>> Jonathan Havens, partner, Saul Ewing Arnstein & Lehr: "The bill is significant for a few reasons. First, this is the first stand-alone cannabis reform bill that has reached the House floor. Second, this legislation would help address one of the cannabis industry's primary challenges: Finding financial institutions that will take them on as customers. Third, once implemented, the bill could pave the way for commercial lending and capital markets opportunities for plant-touching U.S. entities. Now, the bad news: Our take is that the SAFE Act will not become law this year. Senate Majority Leader Mitch McConnell, while a strong proponent of hemp, has not yet signaled a willingness to take up the marijuana—hemp's 'illicit cousin,' as McConnell calls it—reform measure in the Senate."
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