A Democratic senator’s attempt to attach a controversial provision from a marijuana banking bill to a broader financial regulation package ended in failure on Thursday. The proposal, which focused more on limiting regulatory actions against banks rather than helping the cannabis industry gain access to financial services, fell short in a committee vote.
Banking Reform Hits a Roadblock
Sen. Jack Reed (D-RI) filed an amendment to the Financial Integrity and Regulation Management (FIRM) Act, seeking to integrate Section 10 of the Secure and Fair Enforcement Regulation (SAFER) Banking Act. This section does not directly impact cannabis businesses but instead aims to restrict regulators from using reputational risk to target businesses—something that has implications beyond the marijuana sector.
Reed defended his amendment, arguing that it would keep banking regulators in check while still allowing them to intervene when necessary. “This measure would place guardrails around the regulators’ use of reputational risk, without eliminating the concept entirely,” he stated during the Senate Banking Committee hearing. However, the proposal failed along party lines, with a 13-11 vote.
Why the SAFER Banking Act Matters
The SAFER Banking Act has been a key focus for marijuana industry advocates, as it aims to prevent federal regulators from punishing banks that serve cannabis businesses. Right now, many banks refuse to work with legal marijuana companies out of fear of federal repercussions, leaving these businesses to operate largely in cash—a security risk that has led to robberies and other criminal activities.
Despite this, Reed’s amendment only included a narrow portion of the bill, rather than the full measure that could have addressed banking issues for cannabis businesses. The decision not to push for the entire bill left industry stakeholders frustrated.
The Broader Impact
- The failed amendment did not directly benefit cannabis businesses, which still struggle with banking restrictions.
- Reed’s effort focused on limiting regulatory oversight of banking institutions, particularly for industries like firearms and cryptocurrency.
- The committee’s rejection signals continued resistance to changing federal cannabis banking policies.
Missed Opportunity for Broader Reform
What’s striking is that no senator, Republican or Democrat, moved to attach the full SAFER Banking Act to the FIRM Act. Given the ongoing bipartisan discussions about marijuana banking reform, some advocates had hoped for a stronger push at this stage.
The FIRM Act is primarily designed to address concerns over banks “debanking” clients based on reputational risk rather than legal violations. While the issue is a serious one, it does not directly deal with the cannabis industry’s struggles with financial access.
Many in the marijuana sector feel that Congress has been dragging its feet on meaningful reform. Lawmakers have frequently acknowledged the issue, but each effort to resolve it has either stalled or been diluted.
What Happens Next?
For now, the cannabis industry remains stuck in a financial grey zone. Without federal protections, most banks are still hesitant to offer services to marijuana-related businesses. Meanwhile, lawmakers are expected to continue debating various financial regulations, but there is no clear path for the SAFER Banking Act to advance on its own.
The rejection of Reed’s amendment is just the latest setback for cannabis banking reform. While discussions are still ongoing, the road ahead remains uncertain for those pushing for change.
