A.J. Herrington ,

A bill to give the regulated marijuana industry access to basic banking services was amended before being approved by a Senate legislative panel last week, with several of the changes designed to appease opposition from Republican lawmakers. The legislation, known as the Secure and Fair Enforcement Regulation (SAFER) Banking Act, was introduced on September 21 and was approved by the Senate Committee on Banking, Housing and Urban Affairs with amendments on Wednesday.

Originally titled the Secure and Fair Enforcement (SAFE) Banking Act, the new version of the bipartisan legislation was introduced by Sen. Steve Daines, a Republican from Montana, and Oregon Democratic Sen. Jeff Merkley. If passed, the legislation would ease access to traditional banking services to cannabis companies operating legally under state or tribal law. Under current federal law, providing such services is strictly regulated, leaving many businesses—particularly small, independent operators—without access to bank accounts, credit card processing and other financial services. As a result, many businesses operate strictly in cash, leaving operators, their customers and staff vulnerable to crime.

The new SAFER Banking Act is the result of months of negotiation between senators over several provisions of the original SAFE Banking Act. Under the measure, federal regulators would be required to “develop uniform guidance and examination procedures – including legacy cannabis-related deposits” and “update guidance related to hemp-related businesses and service providers.” Regulators would be prohibited from ordering banks to close an account “unless there is a valid reason.” The legislation also includes language to protect employees of state-legal cannabis businesses attempting to obtain residential mortgages funded by federal programs.

SAFER Banking Act Amended Last Week

Less than a week after it was introduced, the SAFER Banking Act was the subject of a markup hearing by the Senate Banking Committee on September 27. After approving a new amendment to the bill from committee Chairman Sherrod Brown, an Ohio Democrat, the committee voted 14-9 to advance the legislation to the Senate floor for consideration by the full chamber. The text of the new amendment has not yet been made available publicly. But the amended language of the bill was shared with Marijuana Moment, according to a report from the online cannabis news source on Friday.

The amendment is described as a mix of revisions requested by members of both parties and technical changes to the legislation. Among its provisions are changes to federal guidance for financial institutions that serve the marijuana industry and reframed protections for banks and enforcement discretion for federal banking regulators.

The newly revised legislation gives the Treasury secretary one year to publish updated guidance for banks that serve the cannabis industry. The previous version of the SAFER Banking Act allowed only 180 days for the update to the guidance, which was first issued under the Obama administration in 2014. The guidance requires banks, credit unions and depository institutions that serve marijuana businesses to submit Suspicious Activity Reports (SARs) about their cannabis clients. The bill was also amended with technical changes that revised language on how cannabis-related financial transactions should not be considered “proceeds from an unlawful activity.”

New provisions of the bill mandate that the director of the Financial Crimes Enforcement Network (FinCEN) testify before Congress about efforts to thwart money laundering within one year of enactment of the legislation. The amended bill also adds federal home mortgage banks to a list of financial institutions that would be protected from being sanctioned by federal banking regulators solely for providing services to marijuana businesses operating legally under state or tribal law.

The amendment also revises text related to a required federal report on the “availability of access to financial services for minority-owned, veteran-owned, women-owned, Tribal community-owned, and small State-sanctioned marijuana businesses.” But the change also removes a subsection favored by equity advocates that would have required financial institutions to establish policies on increasing access to banking services for rural, tribal and low-income or middle-income communities.

Marijuana Moment also reports that several changes were made to Section 10 of the SAFER Banking Act, which bars federal banking regulators from taking discriminatory enforcement action against any industry. The provisions are favored by Republicans seeking protections for businesses that pose a potential reputational risk, including the firearm, energy and cryptocurrency industries.

A key change to Section 10 eliminates language that would have given federal regulators the discretion to impose or request penalties for a reason “determined to be valid in the discretion of the agency.” Another revision adds businesses operated by agents of China and Russia to a list of possible “national security and illicit finance threats” that might require increased scrutiny by banking regulators.

More Changes To Cannabis Banking Bill Likely Coming

Senate Majority Leader Chuck Schumer, a New York Democrat, has said he plans to bring the SAFER Banking Act up for a vote by the full Senate “as quickly as possible.” He has also promised to attach new criminal justice-related amendments that would allow for the expungement of past marijuana offenses and protect the gun rights of marijuana users.

However, the amended bill faces opposition in the House of Representatives, where the SAFE Banking Act was approved several times, either as a stand-alone bill or attached to other legislation. Rep. Blaine Luetkemeyer, a Missouri Republican and a member of the House Financial Services Committee, told Punchbowl News that the newly revised Section 10 still gives banking regulators “broad discretion” that could lead to discrimination against controversial businesses.

“In its current state, the SAFER Banking Act will not make it through the House,” Luetkemeyer said.

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