[Congressional Record Volume 165, Number 155 (Wednesday, September 25, 2019)]
[House]
[Pages H7962-H7974]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SECURE AND FAIR ENFORCEMENT BANKING ACT OF 2019
Mr. PERLMUTTER. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 1595) to create protections for depository institutions that
provide financial services to cannabis-related legitimate businesses
and service providers for such businesses, and for other purposes, as
amended.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 1595
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; PURPOSE.
(a) Short Title.--This Act may be cited as the ``Secure And
Fair Enforcement Banking Act of 2019'' or the ``SAFE Banking
Act of 2019''.
(b) Purpose.--The purpose of this Act is to increase public
safety by ensuring access to financial services to cannabis-
related legitimate businesses and service providers and
reducing the amount of cash at such businesses.
SEC. 2. SAFE HARBOR FOR DEPOSITORY INSTITUTIONS.
(a) In General.--A Federal banking regulator may not--
(1) terminate or limit the deposit insurance or share
insurance of a depository institution under the Federal
Deposit Insurance Act (12 U.S.C. 1811 et seq.), the Federal
Credit Union Act (12 U.S.C. 1751 et seq.), or take any other
adverse action against a depository institution under section
8 of the Federal Deposit Insurance Act (12 U.S.C. 1818)
solely because the depository institution provides or has
provided financial services to a cannabis-related legitimate
business or service provider;
(2) prohibit, penalize, or otherwise discourage a
depository institution from providing financial services to a
cannabis-related legitimate business or service provider or
to a State, political subdivision of a State, or Indian Tribe
that exercises jurisdiction over cannabis-related legitimate
businesses;
(3) recommend, incentivize, or encourage a depository
institution not to offer financial services to an account
holder, or to downgrade or cancel the financial services
offered to an account holder solely because--
(A) the account holder is a cannabis-related legitimate
business or service provider, or is an employee, owner, or
operator of a cannabis-related legitimate business or service
provider;
(B) the account holder later becomes an employee, owner, or
operator of a cannabis-related legitimate business or service
provider; or
(C) the depository institution was not aware that the
account holder is an employee, owner, or operator of a
cannabis-related legitimate business or service provider;
(4) take any adverse or corrective supervisory action on a
loan made to--
(A) a cannabis-related legitimate business or service
provider, solely because the business is a cannabis-related
legitimate business or service provider;
(B) an employee, owner, or operator of a cannabis-related
legitimate business or service provider, solely because the
employee, owner, or operator is employed by, owns, or
operates a cannabis-related legitimate business or service
provider, as applicable; or
(C) an owner or operator of real estate or equipment that
is leased to a cannabis-related legitimate business or
service provider, solely because the owner or operator of the
real estate or equipment leased the equipment or real estate
to a cannabis-related legitimate business or service
provider, as applicable; or
(5) prohibit or penalize a depository institution (or
entity performing a financial service for or in association
with a depository institution) for, or otherwise discourage a
depository institution (or entity performing a financial
service for or in association with a depository institution)
from, engaging in a financial service for a cannabis-related
legitimate business or service provider.
(b) Safe Harbor Applicable to De Novo Institutions.--
Subsection (a) shall apply to an institution applying for a
depository institution charter to the same extent as such
subsection applies to a depository institution.
SEC. 3. PROTECTIONS FOR ANCILLARY BUSINESSES.
For the purposes of sections 1956 and 1957 of title 18,
United States Code, and all other provisions of Federal law,
the proceeds from a transaction involving activities of a
cannabis-related legitimate business or service provider
shall not be considered proceeds from an unlawful activity
solely because--
(1) the transaction involves proceeds from a cannabis-
related legitimate business or service provider; or
(2) the transaction involves proceeds from--
(A) cannabis-related activities described in section
14(4)(B) conducted by a cannabis-related legitimate business;
or
(B) activities described in section 14(13)(A) conducted by
a service provider.
SEC. 4. PROTECTIONS UNDER FEDERAL LAW.
(a) In General.--With respect to providing a financial
service to a cannabis-related legitimate business or service
provider within a State, political subdivision of a State, or
Indian country that allows the cultivation, production,
manufacture, sale, transportation, display, dispensing,
distribution, or purchase of cannabis pursuant to a law or
regulation of such State, political subdivision, or Indian
Tribe that has jurisdiction over the Indian country, as
applicable, a depository institution, entity performing a
financial service for or in association with a depository
institution, or insurer that provides a financial service to
a cannabis-related legitimate business or service provider,
and the officers, directors, and employees of that depository
institution, entity, or insurer may not be held liable
pursuant to any Federal law or regulation--
(1) solely for providing such a financial service; or
(2) for further investing any income derived from such a
financial service.
(b) Protections for Federal Reserve Banks and Federal Home
Loan Banks.--With respect to providing a service to a
depository institution that provides a financial service to a
cannabis-related legitimate business or service provider
(where such financial service is provided within a State,
political subdivision of a State, or Indian country that
allows the cultivation, production, manufacture, sale,
transportation, display, dispensing, distribution, or
purchase of cannabis pursuant to a law or regulation of such
State, political subdivision, or Indian Tribe that has
jurisdiction over the Indian country, as applicable), a
Federal reserve bank or Federal Home Loan Bank, and the
officers, directors, and employees of the Federal reserve
bank or Federal Home Loan Bank, may not be held liable
pursuant to any Federal law or regulation--
(1) solely for providing such a service; or
(2) for further investing any income derived from such a
service.
(c) Protections for Insurers.--With respect to engaging in
the business of insurance within a State, political
subdivision of a State, or Indian country that allows the
cultivation, production, manufacture, sale, transportation,
display, dispensing, distribution, or purchase of cannabis
pursuant to a law or regulation of such State, political
subdivision, or Indian Tribe that has jurisdiction over the
Indian country, as applicable, an insurer that engages in the
business of insurance with a cannabis-related legitimate
business or service provider or who otherwise engages with a
person in a transaction permissible under State law related
to cannabis, and the officers, directors, and employees of
that insurer may not be held liable pursuant to any Federal
law or regulation--
(1) solely for engaging in the business of insurance; or
(2) for further investing any income derived from the
business of insurance.
(d) Forfeiture.--
(1) Depository institutions.--A depository institution that
has a legal interest in the collateral for a loan or another
financial service provided to an owner, employee, or operator
of a cannabis-related legitimate business or service
provider, or to an owner or operator of real estate or
equipment that is leased or sold to a cannabis-related
legitimate business or service provider, shall not be subject
to criminal, civil, or administrative forfeiture of that
legal interest pursuant to any Federal law for providing such
loan or other financial service.
(2) Federal reserve banks and federal home loan banks.--A
Federal reserve bank or Federal Home Loan Bank that has a
legal interest in the collateral for a loan or another
financial service provided to a depository institution that
provides a financial service to a cannabis-related legitimate
business or service provider, or to an owner or operator of
real estate or equipment that is leased or sold to a
cannabis-related legitimate business or service provider,
shall not be subject to criminal, civil, or administrative
forfeiture of that legal interest pursuant to any Federal law
for providing such loan or other financial service.
SEC. 5. RULES OF CONSTRUCTION.
(a) No Requirement to Provide Financial Services.--Nothing
in this Act shall require a depository institution, entity
performing a financial service for or in association with a
depository institution, or insurer to provide financial
services to a cannabis-related legitimate business, service
provider, or any other business.
(b) General Examination, Supervisory, and Enforcement
Authority.--Nothing in this Act may be construed in any way
as limiting or otherwise restricting the general examination,
supervisory, and enforcement authority of the Federal banking
regulators, provided that the basis for any supervisory or
enforcement action is not the provision of financial services
to a cannabis-related legitimate business or service
provider.
[[Page H7963]]
SEC. 6. REQUIREMENTS FOR FILING SUSPICIOUS ACTIVITY REPORTS.
Section 5318(g) of title 31, United States Code, is amended
by adding at the end the following:
``(5) Requirements for cannabis-related legitimate
businesses.--
``(A) In general.--With respect to a financial institution
or any director, officer, employee, or agent of a financial
institution that reports a suspicious transaction pursuant to
this subsection, if the reason for the report relates to a
cannabis-related legitimate business or service provider, the
report shall comply with appropriate guidance issued by the
Financial Crimes Enforcement Network. The Secretary shall
ensure that the guidance is consistent with the purpose and
intent of the SAFE Banking Act of 2019 and does not
significantly inhibit the provision of financial services to
a cannabis-related legitimate business or service provider in
a State, political subdivision of a State, or Indian country
that has allowed the cultivation, production, manufacture,
transportation, display, dispensing, distribution, sale, or
purchase of cannabis pursuant to law or regulation of such
State, political subdivision, or Indian Tribe that has
jurisdiction over the Indian country.
``(B) Definitions.--For purposes of this paragraph:
``(i) Cannabis.--The term `cannabis' has the meaning given
the term `marihuana' in section 102 of the Controlled
Substances Act (21 U.S.C. 802).
``(ii) Cannabis-related legitimate business.--The term
`cannabis-related legitimate business' has the meaning given
that term in section 14 of the SAFE Banking Act of 2019.
``(iii) Indian country.--The term `Indian country' has the
meaning given that term in section 1151 of title 18.
``(iv) Indian tribe.--The term `Indian Tribe' has the
meaning given that term in section 102 of the Federally
Recognized Indian Tribe List Act of 1994 (25 U.S.C. 479a).
``(v) Financial service.--The term `financial service' has
the meaning given that term in section 14 of the SAFE Banking
Act of 2019.
``(vi) Service provider.--The term `service provider' has
the meaning given that term in section 14 of the SAFE Banking
Act of 2019.
``(vii) State.--The term `State' means each of the several
States, the District of Columbia, Puerto Rico, and any
territory or possession of the United States.''.
SEC. 7. GUIDANCE AND EXAMINATION PROCEDURES.
Not later than 180 days after the date of enactment of this
Act, the Financial Institutions Examination Council shall
develop uniform guidance and examination procedures for
depository institutions that provide financial services to
cannabis-related legitimate businesses and service providers.
SEC. 8. ANNUAL DIVERSITY AND INCLUSION REPORT.
The Federal banking regulators shall issue an annual report
to Congress containing--
(1) information and data on the availability of access to
financial services for minority-owned and women-owned
cannabis-related legitimate businesses; and
(2) any regulatory or legislative recommendations for
expanding access to financial services for minority-owned and
women-owned cannabis-related legitimate businesses.
SEC. 9. GAO STUDY ON DIVERSITY AND INCLUSION.
(a) Study.--The Comptroller General of the United States
shall carry out a study on the barriers to marketplace entry,
including in the licensing process, and the access to
financial services for potential and existing minority-owned
and women-owned cannabis-related legitimate businesses.
(b) Report.--The Comptroller General shall issue a report
to the Congress--
(1) containing all findings and determinations made in
carrying out the study required under subsection (a); and
(2) containing any regulatory or legislative
recommendations for removing barriers to marketplace entry,
including in the licensing process, and expanding access to
financial services for potential and existing minority-owned
and women-owned cannabis-related legitimate businesses.
SEC. 10. GAO STUDY ON EFFECTIVENESS OF CERTAIN REPORTS ON
FINDING CERTAIN PERSONS.
Not later than 2 years after the date of the enactment of
this Act, the Comptroller General of the United States shall
carry out a study on the effectiveness of reports on
suspicious transactions filed pursuant to section 5318(g) of
title 31, United States Code, at finding individuals or
organizations suspected or known to be engaged with
transnational criminal organizations and whether any such
engagement exists in a State, political subdivision, or
Indian Tribe that has jurisdiction over Indian country that
allows the cultivation, production, manufacture, sale,
transportation, display, dispensing, distribution, or
purchase of cannabis. The study shall examine reports on
suspicious transactions as follows:
(1) During the period of 2014 until the date of the
enactment of this Act, reports relating to marijuana-related
businesses.
(2) During the 1-year period after date of the enactment of
this Act, reports relating to cannabis-related legitimate
businesses.
SEC. 11. BANKING SERVICES FOR HEMP BUSINESSES.
(a) Findings.--The Congress finds that--
(1) the Agriculture Improvement Act of 2018 (Public Law
115-334) legalized hemp by removing it from the definition of
``marihuana'' under the Controlled Substances Act;
(2) despite the legalization of hemp, some hemp businesses
(including producers, manufacturers, and retailers) continue
to have difficulty gaining access to banking products and
services; and
(3) businesses involved in the sale of hemp-derived
cannabidiol (``CBD'') products are particularly affected, due
to confusion about their legal status.
(b) Federal Banking Regulator Hemp Banking Guidance.--Not
later than the end of the 90-day period beginning on the date
of enactment of this Act, the Federal banking regulators
shall jointly issue guidance to financial institutions--
(1) confirming the legality of hemp, hemp-derived CBD
products, and other hemp-derived cannabinoid products, and
the legality of engaging in financial services with
businesses selling hemp, hemp-derived CBD products, and other
hemp-derived cannabinoid products, after the enactment of the
Agriculture Improvement Act of 2018; and
(2) to provide recommended best practices for financial
institutions to follow when providing financial services and
merchant processing services to businesses involved in the
sale of hemp, hemp-derived CBD products, and other hemp-
derived cannabinoid products.
(c) Financial Institution Defined.--In this section, the
term ``financial institution'' means any person providing
financial services.
SEC. 12. APPLICATION OF SAFE HARBORS TO HEMP AND CBD
PRODUCTS.
(a) In General.--Except as provided under subsection (b),
the provisions of this Act (other than sections 6 and 10)
shall apply to hemp (including hemp-derived cannabidiol and
other hemp-derived cannabinoid products) in the same manner
as such provisions apply to cannabis.
(b) Rule of Application.--In applying the provisions of
this Act described under subsection (a) to hemp, the
definition of ``cannabis-related legitimate business'' shall
be treated as excluding any requirement to engage in activity
pursuant to the law of a State or political subdivision
thereof.
(c) Hemp Defined.--In this section, the term ``hemp'' has
the meaning given that term under section 297A of the
Agricultural Marketing Act of 1946 (7 U.S.C. 1639o).
SEC. 13. REQUIREMENTS FOR DEPOSIT ACCOUNT TERMINATION
REQUESTS AND ORDERS.
(a) Termination Requests or Orders Must Be Valid.--
(1) In general.--An appropriate Federal banking agency may
not formally or informally request or order a depository
institution to terminate a specific customer account or group
of customer accounts or to otherwise restrict or discourage a
depository institution from entering into or maintaining a
banking relationship with a specific customer or group of
customers unless--
(A) the agency has a valid reason for such request or
order; and
(B) such reason is not based solely on reputation risk.
(2) Treatment of national security threats.--If an
appropriate Federal banking agency believes a specific
customer or group of customers is, or is acting as a conduit
for, an entity which--
(A) poses a threat to national security;
(B) is involved in terrorist financing;
(C) is an agency of the Government of Iran, North Korea,
Syria, or any country listed from time to time on the State
Sponsors of Terrorism list;
(D) is located in, or is subject to the jurisdiction of,
any country specified in subparagraph (C); or
(E) does business with any entity described in subparagraph
(C) or (D), unless the appropriate Federal banking agency
determines that the customer or group of customers has used
due diligence to avoid doing business with any entity
described in subparagraph (C) or (D),
such belief shall satisfy the requirement under paragraph
(1).
(b) Notice Requirement.--
(1) In general.--If an appropriate Federal banking agency
formally or informally requests or orders a depository
institution to terminate a specific customer account or a
group of customer accounts, the agency shall--
(A) provide such request or order to the institution in
writing; and
(B) accompany such request or order with a written
justification for why such termination is needed, including
any specific laws or regulations the agency believes are
being violated by the customer or group of customers, if any.
(2) Justification requirement.--A justification described
under paragraph (1)(B) may not be based solely on the
reputation risk to the depository institution.
(c) Customer Notice.--
(1) Notice required.--Except as provided under paragraph
(2) or as otherwise prohibited from being disclosed by law,
if an appropriate Federal banking agency orders a depository
institution to terminate a specific customer account or a
group of customer accounts, the depository institution shall
inform the specific customer or group of customers of the
justification for the customer's account termination
described under subsection (b).
[[Page H7964]]
(2) Notice prohibited.--
(A) Notice prohibited in cases of national security.--If an
appropriate Federal banking agency requests or orders a
depository institution to terminate a specific customer
account or a group of customer accounts based on a belief
that the customer or customers pose a threat to national
security, or are otherwise described under subsection (a)(2),
neither the depository institution nor the appropriate
Federal banking agency may inform the customer or customers
of the justification for the customer's account termination.
(B) Notice prohibited in other cases.--If an appropriate
Federal banking agency determines that the notice required
under paragraph (1) may interfere with an authorized criminal
investigation, neither the depository institution nor the
appropriate Federal banking agency may inform the specific
customer or group of customers of the justification for the
customer's account termination.
(d) Reporting Requirement.--Each appropriate Federal
banking agency shall issue an annual report to the Congress
stating--
(1) the aggregate number of specific customer accounts that
the agency requested or ordered a depository institution to
terminate during the previous year; and
(2) the legal authority on which the agency relied in
making such requests and orders and the frequency on which
the agency relied on each such authority.
(e) Definitions.--For purposes of this section:
(1) Appropriate federal banking agency.--The term
``appropriate Federal banking agency'' means--
(A) the appropriate Federal banking agency, as defined
under section 3 of the Federal Deposit Insurance Act (12
U.S.C. 1813); and
(B) the National Credit Union Administration, in the case
of an insured credit union.
(2) Depository institution.--The term ``depository
institution'' means--
(A) a depository institution, as defined under section 3 of
the Federal Deposit Insurance Act (12 U.S.C. 1813); and
(B) an insured credit union.
SEC. 14. DEFINITIONS.
In this Act:
(1) Business of insurance.--The term ``business of
insurance'' has the meaning given such term in section 1002
of the Dodd-Frank Wall Street Reform and Consumer Protection
Act (12 U.S.C. 5481).
(2) Cannabis.--The term ``cannabis'' has the meaning given
the term ``marihuana'' in section 102 of the Controlled
Substances Act (21 U.S.C. 802).
(3) Cannabis product.--The term ``cannabis product'' means
any article which contains cannabis, including an article
which is a concentrate, an edible, a tincture, a cannabis-
infused product, or a topical.
(4) Cannabis-related legitimate business.--The term
``cannabis-related legitimate business'' means a
manufacturer, producer, or any person or company that--
(A) engages in any activity described in subparagraph (B)
pursuant to a law established by a State or a political
subdivision of a State, as determined by such State or
political subdivision; and
(B) participates in any business or organized activity that
involves handling cannabis or cannabis products, including
cultivating, producing, manufacturing, selling, transporting,
displaying, dispensing, distributing, or purchasing cannabis
or cannabis products.
(5) Depository institution.--The term ``depository
institution'' means--
(A) a depository institution as defined in section 3(c) of
the Federal Deposit Insurance Act (12 U.S.C. 1813(c));
(B) a Federal credit union as defined in section 101 of the
Federal Credit Union Act (12 U.S.C. 1752); or
(C) a State credit union as defined in section 101 of the
Federal Credit Union Act (12 U.S.C. 1752).
(6) Federal banking regulator.--The term ``Federal banking
regulator'' means each of the Board of Governors of the
Federal Reserve System, the Bureau of Consumer Financial
Protection, the Federal Deposit Insurance Corporation, the
Federal Housing Finance Agency, the Financial Crimes
Enforcement Network, the Office of Foreign Asset Control, the
Office of the Comptroller of the Currency, the National
Credit Union Administration, the Department of the Treasury,
or any Federal agency or department that regulates banking or
financial services, as determined by the Secretary of the
Treasury.
(7) Financial service.--The term ``financial service''--
(A) means a financial product or service, as defined in
section 1002 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act (12 U.S.C. 5481);
(B) includes the business of insurance;
(C) includes, whether performed directly or indirectly, the
authorizing, processing, clearing, settling, billing,
transferring for deposit, transmitting, delivering,
instructing to be delivered, reconciling, collecting, or
otherwise effectuating or facilitating of payments or funds,
where such payments or funds are made or transferred by any
means, including by the use of credit cards, debit cards,
other payment cards, or other access devices, accounts,
original or substitute checks, or electronic funds transfers;
(D) includes acting as a money transmitting business which
directly or indirectly makes use of a depository institution
in connection with effectuating or facilitating a payment for
a cannabis-related legitimate business or service provider in
compliance with section 5330 of title 31, United States Code,
and any applicable State law; and
(E) includes acting as an armored car service for
processing and depositing with a depository institution or a
Federal reserve bank with respect to any monetary instruments
(as defined under section 1956(c)(5) of title 18, United
States Code.
(8) Indian country.--The term ``Indian country'' has the
meaning given that term in section 1151 of title 18.
(9) Indian tribe.--The term ``Indian Tribe'' has the
meaning given that term in section 102 of the Federally
Recognized Indian Tribe List Act of 1994 (25 U.S.C. 479a).
(10) Insurer.--The term ``insurer'' has the meaning given
that term under section 313(r) of title 31, United States
Code.
(11) Manufacturer.--The term ``manufacturer'' means a
person who manufactures, compounds, converts, processes,
prepares, or packages cannabis or cannabis products.
(12) Producer.--The term ``producer'' means a person who
plants, cultivates, harvests, or in any way facilitates the
natural growth of cannabis.
(13) Service provider.--The term ``service provider''--
(A) means a business, organization, or other person that--
(i) sells goods or services to a cannabis-related
legitimate business; or
(ii) provides any business services, including the sale or
lease of real or any other property, legal or other licensed
services, or any other ancillary service, relating to
cannabis; and
(B) does not include a business, organization, or other
person that participates in any business or organized
activity that involves handling cannabis or cannabis
products, including cultivating, producing, manufacturing,
selling, transporting, displaying, dispensing, distributing,
or purchasing cannabis or cannabis products.
(14) State.--The term ``State'' means each of the several
States, the District of Columbia, Puerto Rico, and any
territory or possession of the United States.
SEC. 15. DISCRETIONARY SURPLUS FUNDS.
Section 7(a)(3)(A) of the Federal Reserve Act (12 U.S.C.
289(a)(3)(A)) is amended by striking ``$6,825,000,000'' and
inserting ``$6,821,000,000''.
SEC. 16. DETERMINATION OF BUDGETARY EFFECTS.
The budgetary effects of this Act, for the purpose of
complying with the Statutory Pay-As-You-Go Act of 2010, shall
be determined by reference to the latest statement titled
``Budgetary Effects of PAYGO Legislation'' for this Act,
submitted for printing in the Congressional Record by the
Chairman of the House Budget Committee, provided that such
statement has been submitted prior to the vote on passage.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Colorado (Mr. Perlmutter) and the gentleman from North Carolina (Mr.
McHenry) each will control 20 minutes.
The Chair recognizes the gentleman from Colorado.
General Leave
Mr. PERLMUTTER. Mr. Speaker, I ask unanimous consent that all Members
may have 5 legislative days in which to revise and extend their remarks
and to include extraneous materials on H.R. 1595.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Colorado?
There was no objection.
Mr. PERLMUTTER. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, I am proud we are here today to pass this bill about
public safety, accountability, and respecting States' rights. Forty-
seven States, four U.S. territories, and the District of Columbia have
spoken and legalized some form of recreational or medical marijuana,
including cannabidiol. 318.2 million people live in those 47 States.
That is 97.7 percent of the population.
However, because marijuana remains illegal under Federal law,
businesses in these States are forced to deal in cash. These
businesses, their employees, and ancillary businesses cannot access the
banking system.
The fact is, the people in States and localities across the country
are voting to approve some level of marijuana use, and we need these
marijuana businesses and employees to have access to checking accounts,
lines of credit, payroll accounts, and more.
This will improve transparency and accountability and help law
enforcement root out illegal transactions to prevent tax evasion, money
laundering, and other white-collar crime.
Most importantly, Mr. Speaker, this will also reduce the risk of
violent crime in our communities. These businesses and their employees
become targets for murder, robbery, assault, and more by dealing in all
cash, and this
[[Page H7965]]
puts the employees and store owners at risk. Congressman Heck will
speak directly to this point.
The SAFE Banking Act will create a safe harbor for financial
institutions and their employees who choose to do business with a
marijuana company.
Section 3 of the bill is particularly important to not only marijuana
businesses but everyone who might do business with a marijuana-related
company. This section would protect ancillary businesses like real
estate owners, accountants, electricians, and vendors by clarifying
that the proceeds from legitimate cannabis businesses are not illegal
under Federal laws. This proceeds section is the key provision,
allowing all cannabis-related businesses and their service providers to
access the banking system without fear of reprisal.
We have worked with our Republican colleagues on a few changes to
improve the bill since it was marked up in March.
As Mr. Barr will discuss, the bill now includes protections for
financial institutions to provide financial services to hemp and CBD
businesses since we have learned the provisions from the farm bill last
year did not provide sufficient clarity for banks and credit unions to
provide these services.
At Mr. Stivers' urging, we expanded the protections in the bill for
various insurance products, such as workers compensation.
Additionally, we have added language from Mr. Luetkemeyer's Financial
Institution Customer Protection Act, which passed the House 395-2 last
Congress. This language would prohibit bank regulators from directing a
bank to close an account for reputational reasons.
In summary, if someone wants to oppose the legalization of marijuana,
that is their prerogative. But American voters have spoken and continue
to speak. The fact is that you can't put the genie back in the bottle.
Prohibition is over.
Our bill is focused solely on taking cash off the streets and making
our communities safer. Only Congress can take these steps to provide
this certainty for businesses, employees, and financial institutions
across the country.
Mr. Speaker, I thank Representative Heck for his partnership through
the years on this bill. I also thank Representative Stivers and
Representative Davidson for their support and cosponsorship of the SAFE
Banking Act. Subcommittee Chairman Greg Meeks and Representative Katie
Porter have been very helpful in the process.
Finally, I thank Chairwoman Maxine Waters for shepherding this bill
through the Financial Services Committee and making this a priority.
Mr. Speaker, I urge my colleagues to join me in voting ``yes,'' and I
reserve the balance of my time.
{time} 1630
Mr. McHENRY. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I rise in opposition to H.R. 1595.
Before I go into the contents of my argument against this
legislation, I want to start by commending the bill's sponsor, Mr.
Perlmutter from Colorado, for his tireless advocacy, his reasonableness
in his approach, and his willingness, even in the midst of the toughest
negotiations around the subject matter, to keep his cool, to think
through the import of the bill, and to seek compromise where he could.
It is quite a legislative endeavor that he has taken upon for
himself, for this institution, for his State, and for States around the
country. He has been a fantastic advocate.
And I would say that, standing in opposition to this bill, it is not
because of his lack of good will. It is not for lack of his willingness
to engage, but for a fundamental disagreement in the approach. We have
been able to have real discussions around this that I think would make
the American people more proud or more confident in this institution
and our body politic, more broadly speaking.
I also want to thank my friend and colleague on the committee, Mr.
Stivers from Ohio, for his work on the issue. Together, they have
conducted themselves with wonderful integrity and respect for their
colleagues and their colleagues' views and ideas, especially on an
issue like this where it can create an enormous amount of controversy.
Twenty-one States have legalized medicinal marijuana, and 10 States
have legalized the recreational use of the drug. However, cannabis
remains completely illegal in 19 States. Federal law defines this as a
drug that has ``a high potential for abuse; no currently accepted
medical use in treatment in the United States; and a lack of accepted
safety for use of the drug . . . under medical supervision.'' That is
the current Federal law.
This bill does not change the fact that cannabis remains a prohibited
schedule I substance under the Controlled Substances Act.
To that end, if we seek to give financial institutions certainty, we
should deal with the listing of cannabis as a schedule I substance, not
debating a partial solution for financial institutions to what is a
much larger problem and a larger societal issue that we must wrestle
with.
Should States be allowed to continue to violate Federal law? Does
Federal law need to be changed when it comes to the scheduling of
cannabis?
We have an FDA that regulates cigarettes and e-cigarettes, which, as
we know, there is the recent announcement that they will seek a ban on
flavored e-cigarettes. But the FDA has no regulatory authority to
regulate cannabis.
The bill we are considering today is one of the biggest changes to
U.S. drug policy in my lifetime, yet it was done with little debate.
While our committee has jurisdiction over financial institutions--in
the nature of our debate, it is usually about the nature of regulation
for the capital markets and for banks--we heard little from the
committees of jurisdiction over the Controlled Substances Act or the
Criminal Code. In fact, the Financial Services Committee is the only
one that has held a hearing on the issue of cannabis this Congress.
Now, I would say that is due to the leadership of Mr. Perlmutter and
his tireless advocacy for this, but we only had one panel of witnesses.
I voiced my concerns in our jurisdiction to Chairwoman Waters and to
Congressman Perlmutter about my concerns for this.
In March of this year, I wrote Chairwoman Waters to express my belief
that we need to have a better comprehension of the nature of this
substance and address the supervisory and regulatory issues that would
result from enactment of H.R. 1595. I include in the Record a copy of
that letter.
House of Representatives,
Committee on Financial Services,
Washington, DC, March 21, 2019.
The Hon. Maxine Waters,
Chairwoman, Committee on Financial Services,
Washington, DC.
The Hon. Gregory W. Meeks,
Chairman, Subcommittee on Consumer Protection and Financial
Institutions, Washington DC.
Dear Chairwoman Waters and Chairman Meeks: We write today
to seek your agreement to delay consideration of H.R. 1595,
the SAFE Act, currently scheduled to be marked up on March
26, 2019, until the Committee has a better understanding of
the full range of consequences that enacting such legislation
may trigger. As you know, marijuana is a schedule I
controlled substance as defined in 21 U.S.C. 802. The impact
that many state laws, which have legalized marijuana, have on
the federal laws governing the manufacturing, use, and sale
of marijuana, including proceeds, raise many questions and
concerns. Any change to these statutes, or those that impact
them, has the potential to divide the Congress and the
country. We must ensure that Congress has done its due
diligence, including conducting thorough oversight and
review, before moving such legislation.
The hearing at the Committee on Financial Services on
February 13, 2019, made clear that we need to better
comprehend and address the supervisory and regulatory issues
that would result from enactment of H.R. 1595. Many
outstanding questions remain, which include but are not
limited to the following:
1. What changes to our banking laws are necessary to
implement the SAFE Banking Act or other legislation creating
a safe harbor for cannabis-related businesses?
2. How would individual agencies enforce Bank Secrecy Act
(BSA) requirements following enactment of the SAFE Banking
Act? What changes would be required of BSA requirements?
3. How would individual agencies enforce anti-money
laundering (AML) regulations following enactment of the SAFE
Banking Act? Would AML reforms be necessary?
4. How would individual agencies enforce Know Your Customer
(KYC) rules following enactment of the SAFE Banking Act? What
changes would be required of KYC rules?
5. How would individual agencies enforce Suspicious
Activity Report (SAR) filing requirements and guidelines
following passage
[[Page H7966]]
of the SAFE Banking Act? What changes would be required of
SAR filing requirements and guidelines to ensure illicit
financial activities were not being financed?
6. How would individual agencies enforce Currency
Transaction Report (CTR) filing requirements and guidelines
following enactment of the SAFE Banking Act? What changes
would be required of CTR filing requirements and guidelines?
7. In what ways are agencies working with state
counterparts, including state banking and securities
supervisors, under the existing regime? How would those
cooperative relationships change with enactment of H.R. 1595?
8. Would H.R. 1595 require conforming changes to any of the
statues, rules, and requirements previously listed to ensure
there are no unintended consequences, such as cartels and
other bad actors gaining access to our financial system?
9. Would the safe harbor require any changes to the rules
or processes governing federal deposit insurance systems?
10. What are the implications of H.R. 1595 on nonbank
financial firms, including insurers and investment companies?
11. What are the implications of H.R 1595 on third parties,
including payment processors?
12. What are the implications of H.R. 1595 on individual
and institutional investors of cannabis-related businesses?
13. What are the implications of RR.1595 on federal, state,
and local law enforcement, including the Department of
Justice and the Drug Enforcement Agency?
14. How are proceeds from state licensed growers and
distributers taxed under federal law? Relatedly, what
conforming changes to our tax code are necessary?
15. What are the implications of H.R. 1595 on other
products and services offered by financial institutions,
including but not limited to mortgage products, deposit
advance products or general commercial lending?
As Members of Congress, and the Committee of primary
jurisdiction, we owe it to our constituents and to the public
to fully understand the implications of any legislation
before supporting or opposing it. We urge you to hold H.R.
1595 and any related legislation until we have a full
understanding of the consequences of this bill.
Sincerely,
Patrick McHenry,
Ranking Member.
Blaine Luetkemeyer,
Ranking Member.
Mr. McHENRY. Mr. Speaker, in that letter, I listed a number of
questions that have yet to be answered, including:
What steps will Federal financial regulators have to take to
harmonize standards and protect against illicit activity, including
institutions' obligations with respect to the Bank Secrecy Act, anti-
money laundering requirements, suspicious activity reports, and
currency transaction reports?
What are the implications of this bill on nonbank financial firms,
including investment companies?
I know there have been additions, since we have come to the floor, to
include insurance companies, and I think that is a positive step. But
these are some of the basic questions that still need to be resolved.
It is also important that we understand whether this legislation
could lead to bad actors, like drug cartels, that could more easily
access our banking system in the United States. These concerns have
been echoed by several former Directors of the Office of National Drug
Control Policy and former Administrators of the Drug Enforcement
Administration.
In a July letter from this year, former law enforcement officials
serving from 1981 to 2014 have voiced concerns that the SAFE Banking
Act could be exploited to provide easier, more cost-effective ways for
nefarious groups to launder money. I include in the Record a copy of
that letter.
Hon. Mike Crapo,
Chairman, U.S. Senate Committee on Banking, Housing, & Urban
Affairs, Washington, DC.
Hon. Sherrod Brown,
Ranking Member, U.S. Senate Committee on Banking, Housing, &
Urban Affairs, Washington, DC.
Dear Chairman Crapo and Ranking Member Brown: We write as
former Directors of the Office of National Drug Control
Policy and former Administrators of the Drug Enforcement
Administration to warn about the unintended consequences of
the SAFE Banking Act to legalize the banking of federally
illegal proceeds from the sale of marijuana.
Some Members of your Committee may be familiar with the
Black Market Peso Exchange that has been in operation for
several decades. This scheme has enabled international drug
cartels to launder billions of U.S. dollars through
international monetary exchanges and has ensnared many banks
and mainstream U.S. companies.
The lesson that the Black Market Peso Exchange teaches us
is that cartels will go to enormous lengths and use
sophisticated and complex methods to move cash into banks-
since laundering money is the life-blood of criminal
organizations. It is therefore a virtual certainty that
cartels will seek to exploit the SAFE Banking act if it
provides them with an easier and more cost-effective means to
launder their money.
Because cash made from the sale of marijuana looks the same
regardless of what it was used to pay for, it will be
extremely difficult for banks to know whether large bundles
of cash presented for deposit were made from the sale of
marijuana rather than from the sale of heroin, fentanyl, or
methamphetamine.
In short, the SAFE Banking Act could inadvertently allow
cartels to bring into banks duffel bags of cash made from the
sale of those illicit drugs that are killing tens of
thousands of Americans every year.
Consider the current landscape of offering banking services
to cash-intensive marijuana businesses. Even if customers are
offered the opportunity to pay in credit, many customers will
choose to pay cash to avoid being tracked within, the state
seed-to-sale tracking system.
While banks know how much cash to expect from other cash-
intensive businesses like dry cleaners or convenience stores,
it will be very difficult to figure out when a marijuana
dispensary is participating in a money laundering scheme. The
scale of the marijuana industry is already such that there
are huge opportunities for these dispensaries to be the
destination for cartel cash. Indeed, we have already seen
many cases of cartels using the cover of legalization to
operate illicit marijuana grows and black market activity.
Two recent examples within the past year involved organized
efforts to expel Mexican drug cartels growing marijuana in
Northern California--including a request to use the
California National Guard, and the May 2019 bust of the
largest international drug trafficking organization in
Colorado law enforcement history, with over 80,000 plants in
over 250 locations and 4.5 tons of finished marijuana
products.
We urge the Senate Banking Committee to reject the SAFE
Banking Act and other legislation that would give these
cartels more cover and more access to the U.S. financial
system.
Sincerely,
Mr. R. Gil Kerlikowske, Former Director, May 7, 2009 to
March 6, 2014, Office of National Drug Control Policy;
Mr. John P. Walters, Former Director, December 7, 2001
to January 20, 2009, Office of National Drug Control
Policy; General Barry R. McCaffrey, USA (Ret.), Former
Director, February 29, 1996 to January 20, 2001, Office
of National Drug Control Policy; Mr. Lee P. Brown,
Former Director, July 19, 1993 to January 1996, Office
of National Drug Control Policy; Mr. Robert Martinez,
Former Director, March 28, 1991 to January 20, 1993,
Office of National Drug Control Policy; Mr. William J.
Bennett, Former Director, March 13, 1989 to December
13, 1990, Office of National Drug Control Policy; Ms.
Michele M. Leonhart, Former Administrator, November 10,
2007 to May 14, 2015, Drug Enforcement Administration;
Ms. Karen P. Tandy, Former Administrator, July 31, 2003
to November 9, 2007, Drug Enforcement Administration;
Mr. John C. Lawn, Former Administrator, July 26, 1985
and March 23, 1990, Drug Enforcement Administration;
Mr. Peter B. Bensinger, Former Administrator, February
23, 1976 to July 10, 1981, Drug Enforcement
Administration.
Mr. McHENRY. Mr. Speaker, drug cartels are a significant problem in
cannabis-legal States like California, Washington, and Colorado. As
reported in a May article by NBC News, the cartels have found that it
is easier to grow and process marijuana in legal States like Colorado
and ship it throughout the United States than it is to bring it from
Mexico or Cuba.
I include in the Record a copy of this article, as well.
[From nbcnews.com, May 29, 2018]
Foreign Cartels Embrace Home-Grown Marijuana in Pot-Legal States
Foreign gangs are finding that black-market marijuana is profitable
even in states that have legalized cannabis
(By Dennis Romero, Gabe Gutierrez, Andrew Blankstein and Robert Powell)
Los Angeles.--Attorney General Jeff Sessions called it
``one of the largest residential forfeiture actions in
American History.''
In early April, local and federal authorities descended
upon 74 marijuana grow houses in the Sacramento area they say
were underwritten by Chinese organized crime. They filed
court paperwork to seize the properties, worth millions of
dollars.
Federal officials allege that legal recreational marijuana
states like California, Colorado and Washington, where
enforcement of growing regulations is hit-or-miss, have been
providing cover for transnational criminal organizations
willing to invest big money to buy or rent property to
achieve even bigger returns.
Chinese, Cuban and Mexican drug rings have purchased or
rented hundreds of homes and use human trafficking to bring
inexperienced growers to the United States to tend them,
federal and local officials say.
The suspects are targeting states that have already
legalized marijuana ``in an attempt
[[Page H7967]]
to shroud their operations in our legal environment here and
then take the marijuana outside of the state,'' said Mike
Hartman, executive director of the Colorado Department of
Revenue, which regulates and licenses the cannabis industry.
Authorities say they've seen an increase in these ``home
grows'' since the launch of recreational pot sales in
Colorado.
While California and Washington have mainly seen organized
criminals from China buying homes and converting them into
grow houses, Colorado has largely been grappling with Cuban
and Mexican-led cartels, said Sheriff Bill Elder of the El
Paso County Sheriff's Office in Colorado.
``They have found that it's easier to grow and process
marijuana in Colorado, ship it throughout the United States,
than it is to bring it from Mexico or Cuba,'' Elder said.
In El Paso County, NBC News witnessed firsthand the damage
a commercial-scale cannabis grow can do to a home otherwise
built for an average American family. Growers pose as
legitimate renters, and by the time authorities disrupt their
operation, homes have been gutted and trashed.
``We've fallen through floors,'' U.S. Drug Enforcement
Agency Special Agent Randy Ladd said. ``The electrical
damage, they draw so much current that you'll see, in some
places, the wires are fused inside of the electrical box.
And--a lot of people--they don't wanna pay the high electric
bills. So what they do is they take jackhammers and pickaxes
and they cut through the foundation of the house, so that
they could steal the power.''
One of the biggest busts so far came last June, when the
Colorado attorney general's office announced that ``a massive
illegal interstate marijuana distribution and cultivation
network stretching from Colorado to Texas'' had been
dismantled. It was allegedly Chinese-connected, Ladd said.
Authorities said the network was responsible for securities
fraud, millions of dollars of laundered cash, 2,600
``illegally cultivated'' marijuana plants and 4,000 pounds of
harvested cannabis, according to the Colorado attorney
general's statement.
The operation took place in 18 warehouses and storage units
and 33 homes, mostly in the Denver area, authorities said.
``These seizures are believed to only scratch the surface,''
the office said.
Ladd alleged that some Chinese crews cover immigrants'
costs of traveling to America in exchange for work in the
grow houses. ``It's like indentured servitude,'' he said.
``It is a form of human trafficking.''
The workers often fly from China to Belgium, and from
Belgium to Mexico, before making asylum claims at the border
and then disappearing by the time they're scheduled to tell
their stories in court, Ladd said. Often when grow houses are
raided, immigration fugitives are discovered, he said.
The grow homes are usually purchased by shell property
management companies, Ladd said. ``These growers can hide in
plain sight,'' he said.
The Sacramento-area raids, which also struck Calaveras,
Placer, San Joaquin, El Dorado, Yuba and Amador counties,
shed some light on how many of the foreign rings operate.
Northern California-based DEA Special Agent Casey Rettig
said suspects send cash to the United States in $9,999
increments, just below the mandated reporting threshold, and
receive funds from China that fly under that nation's $50,000
foreign spending limit. They then purchase homes with the
help of cash lenders instead of traditional mortgage firms.
Last fall, a scenario fitting that pattern unfolded in
Grays Harbor County, Washington, southwest of Seattle, as a
drug task force busted an alleged cultivation ring funded by
organized crime in China.
More than 40 suspects were arrested and $80 million worth
of cannabis was seized, the Grays Harbor County Sheriff's
Office said. ``The majority of these homes were purchased
with cash, and information was developed that these purchases
were conducted by Chinese nationals involved in organized
crime,'' according to a statement from the Sheriff's Office.
And just this month, search warrants were served at 19
locations in the Puget Sound area of Washington state, a
federal official who did not want her name used said. The
ring was allegedly run by three Chinese nationals who
produced thousands of pounds of cannabis destined for greater
New York, the U.S. attorney's office in Seattle alleges.
The suspects, who face drug conspiracy charges, purchased
homes with the help of multiple wire transfers from China
that included dollar figures--$2,000 to $5,900--they believed
would fly under the radar, according to a federal complaint.
Ultimately it was the houses' exorbitant electricity use--
up to 38,477 kilowatt hours in one day versus the American
average of just 30--that made them targets of a federal
investigation, according to the filing.
Even a single grow house can contain a large marijuana
operation. In April, police in Pomona, California, an exurb
in Los Angeles County, announced they discovered a 23-room
grow house allegedly run by Chinese nationals. Fifty-five-
hundred marijuana products, including 2,900 plants and nearly
21 pounds of cannabis, were seized, police said.
``The grow operation used advanced systems of lighting, air
conditioning, fans, exhaust blowers and air-filtering systems
to control the climate inside the buildings and the odor of
marijuana,'' according to a Pomona police statement.
Pomona police spokeswoman Aly Mejia said a gun and $6,900
in cash were also found.
The DEA's Rettig, speaking from her base in San Francisco,
said the Chinese operations are ``illegal under state law.''
In California, marijuana growers, producers and retailers
need state and local licenses. Cities can opt out and ban
such businesses altogether.
Rettig said even with the Golden State's sky-high housing
market--the median price of a home is $535,100, according
listings site Zillow--overseas criminals know that
``marijuana can fetch three times as much out of state.''
``There's a great profit motive in it,'' the DEA's Ladd
said. ``In Colorado, marijuana legalization has magnified the
black market. The standard price per pound here is $2,000,
but they can get $3,500 to $4,500 by shipping it back East.
The profits are great there.''
Mr. McHENRY. Mr. Speaker, beyond the regulatory issues, Congress has
yet to examine these potential societal harms and implications for
human health.
In a January article regarding research on the health effects of
marijuana, author Malcolm Gladwell wrote: ``Before any drug gets
permitted to go on the market, basic questions have to be answered
about its safety and efficacy. We don't know relatively basic questions
about marijuana.''
I include this piece from The New Yorker in the Record.
[From the New Yorker, Jan. 7, 2019]
Is Marijuana as Safe as We Think?
(By Malcolm Gladwell)
A few years ago, the National Academy of Medicine convened
a panel of sixteen leading medical experts to analyze the
scientific literature on cannabis. The report they prepared,
which came out in January of 2017, runs to four hundred and
sixty-eight pages. It contains no bombshells or surprises,
which perhaps explains why it went largely unnoticed. It
simply stated, over and over again, that a drug North
Americans have become enthusiastic about remains a mystery.
For example, smoking pot is widely supposed to diminish the
nausea associated with chemotherapy. But, the panel pointed
out, ``there are no good-quality randomized trials
investigating this option.''We have evidence for marijuana as
a treatment for pain, but ``very little is known about the
efficacy, dose, routes of administration, or side effects of
commonly used and commercially available cannabis products in
the United States.'' The caveats continue. Is it good for
epilepsy? ``Insufficient evidence.''Tourette's syndrome?
Limited evidence. A.L.S., Huntington's, and Parkinson's?
Insufficient evidence. Irritable-bowel syndrome? Insufficient
evidence. Dementia and glaucoma? Probably not. Anxiety?
Maybe. Depression? Probably not.
Then come Chapters 5 through 13, the heart of the report,
which concern marijuana's potential risks. The haze of
uncertainty continues. Does the use of cannabis increase the
likelihood of fatal car accidents? Yes. By how much? Unclear.
Does it affect motivation and cognition? Hard to say, but
probably. Does it affect employment prospects? Probably. Will
it impair academic achievement? Limited evidence. This goes
on for pages.
We need proper studies, the panel concluded, on the health
effects of cannabis on children and teen-agers and pregnant
women and breast-feeding mothers and ``older populations''
and ``heavy cannabis users''; in other words, on everyone
except the college student who smokes a joint once a month.
The panel also called for investigation into ``the
pharmacokinetic and pharmacodynamic properties of cannabis,
modes of delivery, different concentrations, in various
populations, including the dose-response relationships of
cannabis and THC or other cannabinoids.''
Figuring out the ``dose-response relationship'' of a new
compound is something a pharmaceutical company does from the
start of trials in human subjects, as it prepares a new drug
application for the E.D.A. Too little of a powerful drug
means that it won't work. Too much means that it might do
more harm than good. The amount of active ingredient in a
pill and the metabolic path that the ingredient takes after
it enters your body--these are things that drugmakers will
have painstakingly mapped out before the product comes on the
market, with a tractor-trailer full of supporting
documentation.
With marijuana, apparently, we're still waiting for this
information. It's hard to study a substance that until very
recently has been almost universally illegal. And the few
studies we do have were done mostly in the nineteen-eighties
and nineties, when cannabis was not nearly as potent as it is
now. Because of recent developments in plant breeding and
growing techniques, the typical concentration of THC, the
psychoactive ingredient in marijuana, has gone from the low
single digits to more than twenty per cent--from a swig of
near-beer to a tequila shot.
Are users smoking less, to compensate for the drug's new
potency? Or simply getting more stoned, more quickly? Is
high-potency cannabis more of a problem for younger users or
for older ones? For some drugs, the dose-response curve is
linear: twice the dose creates twice the effect. For other
drugs, it's nonlinear: twice the dose can increase the effect
tenfold, or hardly at all. Which is true
[[Page H7968]]
for cannabis? It also matters, of course, how cannabis is
consumed. It can be smoked, vaped, eaten, or applied to the
skin. How are absorption patterns affected?
Last May, not long before Canada legalized the recreational
use of marijuana, Beau Kilmer, a drug-policy expert with the
RAND Corporation, testified before the Canadian Parliament.
He warned that the fastest-growing segment of the legal
market in Washington State was extracts for inhalation, and
that the mean THC concentration for those products was more
than sixty-five per cent. ``We know little about the health
consequences-risks and benefits-of many of the cannabis
products likely to be sold in nonmedical markets,'' he said.
Nor did we know how higher-potency products would affect THC
consumption.
When it comes to cannabis, the best-case scenario is that
we will muddle through, learning more about its true effects
as we go along and adapting as needed-the way, say, the once
extraordinarily lethal innovation of the automobile has been
gradually tamed in the course of its history. For those
curious about the worst-case scenario, Alex Berenson has
written a short manifesto, ``Tell Your Children: The Truth
About Marijuana, Mental Illness, and Violence.''
Berenson begins his book with an account of a conversation
he had with his wife, a psychiatrist who specializes in
treating mentally ill criminals. They were discussing one of
the many grim cases that cross her desk--``the usual horror
story, somebody who'd cut up his grandmother or set fire to
his apartment.'' Then his wife said something like ``Of
course, he was high, been smoking pot his whole life.''
Of course? I said.
Yeah, they all smoke.
Well . . . other things too, right?
Berenson used to be an investigative reporter for the
Times, where he covered, among other things, health care and
the pharmaceutical industry. Then he left the paper to write
a popular series of thrillers. At the time of his
conversation with his wife, he had the typical layman's view
of cannabis, which is that it is largely benign. His wife's
remark alarmed him, and he set out to educate himself.
Berenson is constrained by the same problem the National
Academy of Medicine faced--that, when it comes to marijuana,
we really don't know very much. But he has a reporter's
tenacity, a novelist's imagination, and an outsider's knack
for asking intemperate questions. The result is disturbing.
The first of Berenson's questions concerns what has long
been the most worrisome point about cannabis: its association
with mental illness. Many people with serious psychiatric
illness smoke lots of pot. The marijuana lobby typically
responds to this fact by saying that pot-smoking is a
response to mental illness, not the cause of it--that people
with psychiatric issues use marijuana to self-medicate. That
is only partly true. In some cases, heavy cannabis use does
seem to cause mental illness. As the National Academy panel
declared, in one of its few unequivocal conclusions,
``Cannabis use is likely to increase the risk of developing
schizophrenia and other psychoses; the higher the use, the
greater the risk.''
Berenson thinks that we are far too sanguine about this
link. He wonders how large the risk is, and what might be
behind it. In one of the most fascinating sections of ``Tell
Your Children,'' he sits down with Erik Messamore, a
psychiatrist who specializes in neuropharmacology and in the
treatment of schizophrenia. Messamore reports that, following
the recent rise in marijuana use in the U.S. (it has almost
doubled in the past two decades, not necessarily as the
result of legal reforms), he has begun to see a new kind of
patient: older, and not from the marginalized communities
that his patients usually come from. These are otherwise
stable middle-class professionals. Berenson writes, ``A
surprising number of them seemed to have used only cannabis
and no other drugs before their breaks. The disease they'd
developed looked like schizophrenia, but it had developed
later-and their prognosis seemed to be worse. Their delusions
and paranoia hardly responded to antipsychotics.''
Messamore theorizes that THC may interfere with the brain's
anti-inflammatory mechanisms, resulting in damage to nerve
cells and blood vessels. Is this the reason, Berenson
wonders, for the rising incidence of schizophrenia in the
developed world, where cannabis use has also increased? In
the northern parts of Finland, incidence of the disease has
nearly doubled since 1993. In Denmark, cases have risen
twenty-five per cent since 2000. In the United States,
hospital emergency rooms have seen a fifty per-cent increase
in schizophrenia admissions since 2006. If you include cases
where schizophrenia was a secondary diagnosis, annual
admissions in the past decade have increased from 1.26
million to 2.1 million.
Berenson's second question derives from the first. The
delusions and paranoia that often accompany psychoses can
sometimes trigger violent behavior. If cannabis is implicated
in a rise in psychoses, should we expect the increased use of
marijuana to be accompanied by a rise in violent crime, as
Berenson's wife suggested? Once again, there is no definitive
answer, so Berenson has collected bits and pieces of
evidence. For example, in a 2013 paper in the Journal of
Interpersonal Violence, researchers looked at the results of
a survey of more than twelve thousand American high-school
students. The authors assumed that alcohol use among students
would be a predictor of violent behavior, and that marijuana
use would predict the opposite. In fact, those who used only
marijuana were three times more likely to be physically
aggressive than abstainers were; those who used only alcohol
were 2.7 times more likely to be aggressive.
Observational studies like these don't establish causation.
But they invite the sort of research that could.
Berenson looks, too, at the early results from the state of
Washington, which, in 2014, became the first U.S.
jurisdiction to legalize recreational marijuana. Between 2013
and 2017, the state's aggravated-assault rate rose seventeen
per cent, which was nearly twice the increase seen
nationwide, and the murder rate rose forty-four per cent,
which was more than twice the increase nationwide. We don't
know that an increase in cannabis use was responsible for
that surge in violence. Berenson, though, finds it strange
that, at a time when Washington may have exposed its
population to higher levels of what is widely assumed to be a
calming substance, its citizens began turning on one another
with increased aggression.
His third question is whether cannabis serves as a gateway
drug. There are two possibilities. The first is that
marijuana activates certain behavioral and neurological
pathways that ease the onset of more serious addictions. The
second possibility is that marijuana offers a safer
alternative to other drugs: that if you start smoking pot to
deal with chronic pain you never graduate to opioids.
Which is it? This is a very hard question to answer. We're
only a decade or so into the widespread recreational use of
high-potency marijuana. Maybe cannabis opens the door to
other drugs, but only after prolonged use. Or maybe the low-
potency marijuana of years past wasn't a gateway, but today's
high-potency marijuana is. Methodologically, Berenson points
out, the issue is complicated by the fact that the first wave
of marijuana legalization took place on the West Coast, while
the first serious wave of opioid addiction took place in the
middle of the country. So, if all you do is eyeball the
numbers, it looks as if opioid overdoses are lowest in
cannabis states and highest in non-cannabis states.
Not surprisingly, the data we have are messy. Berenson, in
his role as devil's advocate, emphasizes the research that
sees cannabis as opening the door to opioid use. For example,
two studies of identical twins--in the Netherlands and in
Australia--show that, in cases where one twin used cannabis
before the age of seventeen and the other didn't, the
cannabis user was several times more likely to develop an
addiction to opioids. Berenson also enlists a statistician at
N.Y.U. to help him sort through state-level overdose data,
and what he finds is not encouraging: ``States where more
people used cannabis tended to have more overdoses.''
The National Academy panel is more judicious. Its
conclusion is that we simply don't know enough, because there
haven't been any ``systematic'' studies. But the panel's
uncertainty is scarcely more reassuring than Berenson's
alarmism. Seventy-two thousand Americans died in 2017 of drug
overdoses. Should you embark on a procannabis crusade without
knowing whether it will add to or subtract from that number?
Drug policy is always clearest at the fringes. Illegal
opioids are at one end. They are dangerous. Manufacturers and
distributors belong in prison, and users belong in drug-
treatment programs. The cannabis industry would have us
believe that its product, like coffee, belongs at the other
end of the continuum. ``Flow Kana partners with independent
multi-generational farmers who cultivate under full sun,
sustainably, and in small batches,'' the promotional
literature for one California cannabis brand reads. ``Using
only organic methods, these stewards of the land have spent
their lives balancing a unique and harmonious relationship
between the farm, the genetics and the terroir.'' But
cannabis is not coffee. It's somewhere in the middle. The
experience of most users is relatively benign and
predictable; the experience of a few, at the margins, is not.
Products or behaviors that have that kind of muddled risk
profile are confusing, because it is very difficult for those
in the benign middle to appreciate the experiences of those
at the statistical tails. Low-frequency risks also take
longer and are far harder to quantify, and the lesson of
``Tell Your Children'' and the National Academy report is
that we aren't yet in a position to do so. For the moment,
cannabis probably belongs in the category of substances that
society permits but simultaneously discourages. Cigarettes
are heavily taxed, and smoking is prohibited in most
workplaces and public spaces. Alcohol can't be sold without a
license and is kept out of the hands of children.
Prescription drugs have rules about dosages, labels that
describe their risks, and policies that govern their
availability. The advice that seasoned potheads sometimes
give new users--``start low and go slow''--is probably good
advice for society as a whole, at least until we better
understand what we are dealing with.
Late last year, the commissioner of the Food and Drug
Administration, Scott Gottlieb, announced a federal crackdown
on e-cigarettes. He had seen the data on soaring use among
teen-agers, and, he said, ``it shocked my conscience.'' He
announced that the F.D.A. would ban many kinds of flavored e-
cigarettes, which are especially popular
[[Page H7969]]
with teens, and would restrict the retail outlets where e-
cigarettes were available.
In the dozen years since e-cigarettes were introduced into
the marketplace, they have attracted an enormous amount of
attention. There are scores of studies and papers on the
subject in the medical and legal literature, grappling with
the questions raised by the new technology. Vaping is clearly
popular among kids. Is it a gateway to traditional tobacco
use? Some public-health experts worry that we're grooming a
younger generation for a lifetime of dangerous addiction. Yet
other people see e-cigarettes as a much safer alternative for
adult smokers looking to satisfy their nicotine addiction.
That's the British perspective. Last year, a Parliamentary
committee recommended cutting taxes on e-cigarettes and
allowing vaping in areas where it had previously been banned.
Since e-cigarettes are as much as ninety-five per cent less
harmful than regular cigarettes, the committee argued, why
not promote them? Gottlieb said that he was splitting the
difference between the two positions--giving adults
``opportunities to transition to non-combustible products,''
while upholding the F.D.A.'s ``solemn mandate to make
nicotine products less accessible and less appealing to
children.'' He was immediately criticized.``Somehow, we have
completely lost all sense of public-health perspective,''
Michael Siegel, a public-health researcher at Boston
University, wrote after the F.D.A. announcement:
Every argument that the F.D.A. is making in justifying a
ban on the sale of electronic cigarettes in convenience
stores and gas stations applies even more strongly for real
tobacco cigarettes: you know, the ones that kill hundreds of
thousands of Americans each year. Something is terribly wrong
with our sense of perspective when we take the e-cigarettes
off the shelf but allow the old-fashioned ones to remain.
Among members of the public-health community, it is
impossible to spend five minutes on the e-cigarette question
without getting into an argument. And this is nicotine they
are arguing about, a drug that has been exhaustively studied
by generations of scientists. We don't worry that e-
cigarettes increase the number of fatal car accidents,
diminish motivation and cognition, or impair academic
achievement. The drugs through the gateway that we worry
about with e-cigarettes are Marlboros, not opioids. There are
no enormous scientific question marks over nicotine's dosing
and bio-availability. Yet we still proceed cautiously and
carefully with nicotine, because it is a powerful drug, and
when powerful drugs are consumed by lots of people in new and
untested ways we have an obligation to try to figure out what
will happen.
A week after Gottlieb announced his crackdown on e-
cigarettes, on the ground that they are too enticing to
children, Siegel visited the first recreational-marijuana
facility in Massachusetts. Here is what he found on the menu,
each offering laced with large amounts of a drug, THC, that
no one knows much about:
Strawberry-flavored chewy bites
Large, citrus gummy bears
Delectable Belgian dark chocolate bars
Assorted fruit-flavored chews
Assorted fruit-flavored cubes
Raspberry flavored confection
Raspberry flavored lozenges
Chewy, cocoa caramel bite-sized treats
Raspberry & watermelon flavored lozenges
Chocolate-chip brownies. He concludes, ``This is public
health in 2018?''
Mr. McHENRY. Mr. Speaker, I appreciate the gentleman from Colorado's
willingness to work with several of my colleagues on this side of the
aisle. I want to commend him and the gentleman from Ohio (Mr. Stivers),
once again, for their commitment to this effort.
This version of the legislation before us right now is dramatically
improved and includes a number of Republican priorities, such as
language on Operation Choke Point, and a solution that will help
industrial hemp farmers across the country, but most especially in
Kentucky.
Yet, Mr. Speaker, there are many questions left to be answered. We do
not fully understand the sweeping implications of this legislation. We
do not yet know what the resulting regulatory regime will look like,
nor do we have any assurance that it will not expose the current
financial system to illicit activity. In particular, as it is currently
drafted, H.R. 1595 offers insufficient safeguards against drug cartels
accessing the banking system.
What this legislation does is provide a half answer to a much larger
problem than just banking. We owe it to our constituents and to the
public to have a serious debate on the underlying issue, and that is
the issue of whether or not cannabis should be considered a schedule I
substance under the Controlled Substances Act. I know Mr. Perlmutter
and I share that same sentiment that we should have that larger debate.
In the meantime, Congress is working in a bipartisan way to come up
with at least a measure of a solution, but I am hopeful that we can get
the medical research necessary and the FDA processes necessary for us
to have that larger debate as well. I would welcome that debate, as I
know the American people would as well.
Mr. Speaker, I reserve the balance of my time.
Mr. PERLMUTTER. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, I say thank you to my friend for the kind words about
working across the aisle. This has been a partnership in many respects,
lots of interchange.
I would also say to my friend, the Financial Services Committee has
certain jurisdiction. We couldn't take up all of the different things
that the gentleman has suggested, Mr. Speaker, but we were able to take
up this marijuana bill. It is the first time this Congress has done it,
certainly in my terms here, and the reason we did that was because the
chairwoman was a driving force to get this matter in front of the
Congress.
Mr. Speaker, I yield 4 minutes to the gentlewoman from California
(Ms. Waters), chairwoman of the full committee.
Ms. WATERS. Mr. Speaker, I rise in support of H.R. 1595, the SAFE
Banking Act, sponsored by Representatives Ed Perlmutter, Denny Heck,
Steve Stivers, and Warren Davidson. Let me say to all of these
individuals who have worked so long and so hard on this legislation, I
am proud of the work that they have done; I am proud of the cooperation
that they have demonstrated; and I am proud to be on this floor with
them today.
This bipartisan bill addresses a pressing public safety issue for
businesses that legally grow, market, or sell cannabis in States that
have legalized its use and that are currently forced to operate with
cash only. Forty-seven States, three territories, and D.C. have
legalized some form of marijuana, and it is time for Congress to act.
Cannabis-related businesses are locked out of the banking system and
cannot maintain checking accounts, process payroll obligations, or pay
taxes. The Financial Services Committee heard testimony in February
that these cash-only businesses and their employees have become targets
for violent criminals.
The SAFE Banking Act addresses this serious problem by providing a
safe harbor to financial institutions that choose to serve State-
regulated cannabis businesses. The bill would also help others, like
plumbers or electricians who provide services to cannabis businesses,
who face similar challenges with access to banking services. With the
passage of this bill, all of these businesses will gain access to
traditional financial services that most businesses take for granted.
H.R. 1595 also promotes diversity and inclusion, with several
reporting provisions to help Congress monitor that minority-owned and
women-owned cannabis businesses get access to credit they need and have
a fair chance to compete.
As I have said before and I say here on the floor today, this bill is
but one important piece of what should be a comprehensive series of
cannabis reform bills.
I have long fought for criminal justice reform and deeply understand
the need to fully address the historical racial and social inequities
related to the criminalization of marijuana.
I support legislation like Representatives Lee's Marijuana Justice
Act and Chairman Nadler's MORE Act that would de-schedule marijuana
federally and provide assistance, such as job training and reentry
services, for those who have been harmed by the war on drugs.
Let me be clear. It is long overdue for Congress to address the
unjust criminalization of marijuana use. So I eagerly look forward to
the Judiciary Committee sending the legislation to the House floor
soon.
I thank Representatives Perlmutter and Heck for their longstanding
leadership on this issue for the past 6 years.
I urge all Members to vote ``yes'' on the bill and, when we get the
legislation from the Judiciary Committee, to do all of those things
that I have spoken about here, what is considered justice for those who
have been harmed by some of the laws that cause people to
[[Page H7970]]
be incarcerated. We eagerly look forward to that legislation. We urge
the Judiciary Committee to send it to the floor so that we can support
it.
Mr. McHENRY. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman
from Michigan (Mr. Huizenga), the ranking member of the Investor
Protection, Entrepreneurship, and Capital Markets Subcommittee.
Mr. HUIZENGA. Mr. Speaker, I appreciate the ranking member allowing
me this time.
Let's set aside the moral and societal aspects of cannabis and the
debate and acknowledge that we have a problem. We do have a problem. We
have States that have decided to violate Federal law; and within those
States, we have banking institutions and businesses that are operating
within the confines of the State, however, that are still in violation
of the Federal law.
Now, here is what we do agree on: We need to have a goal of
predictability for these financial institutions and for these
businesses. However, I don't believe that this bill will ultimately do
that because the Federal Government still views this as a schedule I
substance.
I had an amendment in committee, as the author of the bill well
knows, that would have forced alignment with all of the various
regulators. I think at the time, my recollection is, we counted 13
different Federal regulators that touch these institutions in one way
or another.
The answer to that was, well, in the bill, we have a requirement that
they are going to agree with each other within 180 days.
Well, this is not going to come as a surprise to those watching on C-
SPAN. We can't collectively tie our shoes here in Washington in 180
days, much less get through something that complicated.
My amendment said that this would go into effect only when and if all
of the regulators could agree to the language of how to deal with it. I
still think that is the right way to go.
{time} 1645
The SPEAKER pro tempore. The time of the gentleman has expired.
Mr. McHENRY. Mr. Speaker, I yield the gentleman from Michigan an
additional 30 seconds.
Mr. HUIZENGA. There is a big difference we know between industrial
hemp and recreational cannabis. The only way for us to really get at
this issue and provide predictability to the companies, to the
financial institutions, and to our citizens is to have the full debate
about whether marijuana and cannabis should be a schedule I substance
or not. It is time for this full debate to happen, and I look forward
to it.
Mr. PERLMUTTER. Mr. Speaker, to my friend from Michigan, I guess I
have more confidence in the Federal employees that they can get
something done in the next 180 days.
Mr. Speaker, I yield 4 minutes to the gentleman from Washington (Mr.
Heck) who has been working on this subject with me for the last 6
years.
Mr. HECK. Mr. Speaker, I thank the gentleman from Colorado for
yielding.
Mr. Speaker, I rise in support of H.R. 1595, the SAFE Banking Act.
Before I do that, I want to acknowledge the leadership of this man
for a very long period of time. The only reason we are standing here
tonight about to vote on this is because of the tireless and brilliant
leadership by the gentleman from Colorado. I thank him for it. It has
been an incredible journey over a long period of time. I thank the
chair of the committee as well for her strong and clear leadership on
this. Lastly, I would like to thank the two gentlemen from Ohio, Mr.
Stivers and Mr. Davidson, who are not just allies, they are friends and
have done excellent work in this regard.
This is a public safety bill pure and simple. If you want your
neighborhoods to be safer, Mr. Speaker, vote ``yes.'' If you want your
communities to be safer, vote ``yes.'' If you want the employees at the
dispensaries throughout the 47 States who have some form of legalized
cannabis, vote ``yes.''
This is a public safety bill, and it is not hypothetical. It is real.
Exhibit A, Travis Mason. June 18 of 2016, Travis Mason got up and went
to work. He was full of optimism about life. He was a marine veteran.
He served this country honorably. He was looking forward to his future,
because he just had been informed that he was approved to take the
Denver Police Department test. He was confident he would pass it. He
had been studying for it.
So he kissed his lovely wife, Samantha, good-bye. They were both
marine veterans, both just 24 with three small children. He kissed
Aidyn and Daisy--they were twins--and little baby Julian good-bye and
went to work where he served as a security guard in a dispensary in
suburban Denver.
Because that was an all-cash settlement, because the Federal law did
not allow for that business to be banked, to be within the guardrails
of the financial system, an evil person walked in that night and shot
Travis dead and left Samantha a 24-year-old widow with three small
children. This was so unnecessary. If we pass this legislation that
does not have to happen. This is not hypothetical.
You can be agnostic on the underlying policy of whether or not
cannabis should be legal for either adult recreational use or to treat
seizures for juvenile epileptics, but you cannot be agnostic on the
need to improve safety in this area.
If you believe that the first two provisions, especially, of the Cole
memorandum, which sets forth: Keep marijuana out of the hands of
children and keep cash out of the hands of the cartels, if you support
that, you must vote ``yes'' on this bill so that we can track this and
so that we can monitor this.
If we do nothing, bad things will again happen. If we pass this law,
if we pass the SAFE Banking Act, the public safety measure, then we can
avoid another widow, Samantha, and another murdered clerk at a
dispensary. We can make our neighborhood safer, and we can make our
communities safer. Please join us in voting ``yes'' on H.R. 1595.
Mr. McHENRY. Mr. Speaker, how much time remains?
The SPEAKER pro tempore. The gentleman from North Carolina has 9
minutes remaining. The gentleman from Colorado has 8 minutes remaining.
Mr. McHENRY. Mr. Speaker, I yield 1 minute to the gentleman from
Germantown, Tennessee (Mr. Kustoff).
Mr. KUSTOFFF of Tennessee. Mr. Speaker, I want to thank the ranking
member for yielding.
Mr. Speaker, I rise today in opposition to H.R. 1595, the SAFE
Banking Act. I do want to say, I appreciate the debate that we have had
in our Financial Services Committee, but I think that we need to have
the same debate in the Judiciary Committee.
We all know that over the last several years, States across the
country have passed various laws to legalize marijuana for both
recreational and medical purposes. That flawed approach has created a
patchwork of State laws and regulations that have allowed for the
spread of marijuana use across the U.S.
Proponents of this bill claim that it will provide consistent
guidelines for marijuana companies to do business across our national
finance system. However, my concern is that the legalization will only
provide safe harbor while legitimizing and encouraging more widespread
use of this currently illegal drug.
The reality today is that we are voting to nationally legalize
marijuana throughout our banking system rather than taking the correct
approach, which I believe is to take a vote to legalize what is
currently an illegal substance.
I would ask my colleagues who support this bill to think long and
hard about what you are actually voting on today, because the
consequences will be far-reaching beyond the intent of this bill.
Mr. PERLMUTTER. Madam Speaker, I yield 2 minutes to the gentlewoman
from California (Ms. Lee), who is a co-chair of the Congressional
Cannabis Caucus and a sponsor of the Marijuana Justice Act which we
hope to see marked up and brought to the floor.
Ms. LEE of California. First of all, Madam Speaker, let me thank
Congressman Perlmutter for yielding and also for his tireless
leadership. This has taken a heck of a long time. The gentleman has
stayed with it. He has been persistent, and I stand here and salute his
efforts.
I also want to thank Chairwoman Waters for moving this bill out of
the Financial Services Committee and for
[[Page H7971]]
her support for our Marijuana Justice Act. I want to thank Congressman
Heck for his clarity as to why this bill is necessary and for his
support. And then, of course, my partner and friend, who has been on
this issue so many years as co-chair of the bipartisan Congressional
Cannabis Caucus in which I also serve as co-chair, Congressman Earl
Blumenauer. I salute and thank everyone for getting us to this point.
The SAFE Banking Act would explicitly permit banks and other
financial institutions to work directly with State legal cannabis
businesses--legal cannabis businesses--instead of relying on cash
transactions. This bill is not only timely but extremely necessary.
Right now the cannabis industry needs access to safe and effective
banking immediately.
Now, let me be clear. Federal law severely limits access to loans and
capital for the cannabis business, especially, mind you, for those who
have cannabis-related arrests and convictions on their record. That
means that less than one-fifth of the cannabis industry is owned or
operated by people of color, even though African Americans have been
shown to use cannabis at the same rate as White Americans, yet are
incarcerated at about 80 percent more in terms of incarceration rates.
This is just plain wrong. So this bill is a great first start to
addressing all of these issues.
I am telling you, Madam Speaker, communities of color should equally
benefit from all of the laws that have been passed at the State level.
They should have the opportunity to generate generational wealth for
their families, too.
That is why, in addition to this bill, the House must bring forward
legislation like my Marijuana Justice Act and the MORE Act, which
addresses criminal justice reform, restorative justice, and fully
reinvests in communities of color impacted by the failed and racist war
on drugs.
Madam Speaker, I want to thank Mr. Perlmutter, again, for his
leadership and for working with us to get this to the floor.
Mr. McHENRY. Madam Speaker, I yield 3 minutes to the gentleman from
Columbus, Ohio (Mr. Stivers), who is the ranking member of the National
Security, International Development and Monetary Policy Subcommittee of
the Financial Services Committee. He is a great advocate for the bill.
Mr. STIVERS. Madam Speaker, I would like to thank the ranking member
for yielding.
Madam Speaker, I rise in support of H.R. 1595, the SAFE Banking Act.
The bill provides a limited safe harbor for banks and credit unions to
open and maintain accounts for marijuana-related businesses and other
nonmarijuana-related businesses.
I personally oppose recreational marijuana. But for me, this bill has
nothing to do with the larger debate about marijuana and whether it is
a good or bad thing. Instead, I am narrowly focused on the public
safety aspects of this bill. The inconsistencies between State and
Federal law have created a situation where a growing number of State-
regulated businesses are operating on a cash-only basis. As a result,
they sit on large pools of cash that make them a magnet for violent
robberies.
The transactions of cash-only businesses are not subjected to
rigorous anti-money laundering or know your customer requirements that
would be required for bank account holders. This makes it difficult for
regulators and law enforcement to trace transactions or to freeze
money.
The SAFE Banking Act will make our communities safer by getting cash
off the streets and into regulated financial institutions, so we can
root out fraud and other illegal activity. The bill also extends the
safe harbor to any proceeds indirectly received from these businesses
such as a hardware store down the street or the landlord of these
businesses.
Importantly, the SAFE Banking Act does not change the legal status of
marijuana. Additionally, H.R. 1595 also includes provisions that would
prevent financial regulators from denying or discouraging access to the
banking system for other legal businesses as happened in 2014 through
2016. This protection is a major protection for other legal businesses.
I want to thank Mr. Perlmutter and Mr. Heck for their incredible
advocacy on this. I want to thank Chairwoman Waters and Ranking Member
McHenry for their honest and hardworking efforts, even when they
disagree. And I want to thank Senator Cory Gardner who has championed
this bill in the Senate.
Madam Speaker, I urge my colleagues to vote ``yes'' on H.R. 1595.
Mr. PERLMUTTER. Madam Speaker, I include in the Record a list of
supporters for the SAFE Banking Act from a broad coalition, including
the National Association of Attorneys General, including 38 State
attorneys general, 20 State Governors, and 18 State banking
supervisors, the United Food and Commercial Workers, the Credit Union
National Association, the Independent Community Bankers Association,
the American Bankers Association, the Mid-size Bank Coalition of
America, the National Bankers Association, Law Enforcement Action
Partnership, the Minority Cannabis Business Association, the Mayors
Coalition for Marijuana Reform, eight insurance trade associations, the
International Council of Shopping Centers, the National Cannabis
Industry Association, the National Cannabis Roundtable, the Cannabis
Trade Federation, the California Cannabis Industry, the Florida
Agriculture Commissioner, the Safe and Responsible Banking Alliance,
the Electronic Transaction Association, the Real Estate Roundtable, the
National Association of Realtors, Brinks, Inc., the National Armored
Car Association, the American Financial Services Association, and
ScottsMiracle-Gro.
H.R. 1595, the SAFE Banking Act, is supported by a wide
range of national organizations and state officials,
including:
National Association of Attorneys General (NAAG), United
Food and Commercial Workers (UFCW), Credit Union National
Association (CUNA), Independent Community Bankers Association
(ICBA), America Bankers Association (ABA), Mid-size Bank
Coalition of America (MBCA), National Bankers Association
(NBA), 50 State Banking Associations, Electronic Transaction
Association (ETA), Third Party Payment Processors Association
(TPPPA), Law Enforcement Action Partnership (LEAP), The Real
Estate Roundtable (RER), National Association of REALTORS,
Safe and Responsible Banking Alliance (SARBA), American Land
Title Association (ALTA).
American Property Casualty Insurance Association (APCIA),
The Council of Insurance Agents and Brokers (CIAB),
Reinsurance Association of America (RAA), Independent
Insurance Agents and Brokers of America (Big ``I''),
Wholesale Specialty Insurance Association (WSIA), National
Association of Professional Insurance Agents (PIA), National
Association of Mutual Insurance Companies (NAMIC), Rural
County Representatives of California (RCRC), Brinks, Inc.,
International Council of Shopping Centers (ICSC), National
Association of Professional Employer Associations (NAPEA),
National Cannabis Industry Association (NCIA), Minority
Cannabis Business Association (MCBA), National Cannabis
Roundtable (NCR), Cannabis Trade Federation (CTF),
ScottsMiracle-Gro, National Armored Car Association (NACA).
Additionally, the Mayors Coalition to Push for Marijuana
Reform, 38 State Attorneys General, 20 Governors, 18 State
Banking Supervisors, and the Florida Agriculture Commissioner
have endorsed the legislation.
Mr. PERLMUTTER. Madam Speaker, I yield 2 minutes to the gentleman
from Oregon (Mr. Blumenauer), who has been the quarterback of a lot of
this cannabis legislation.
Mr. BLUMENAUER. Madam Speaker, I appreciate the gentleman's courtesy,
the leadership, and you have heard from a number of the champions in
this House fighting for a more rational policy regarding cannabis.
We are in this fix today because Congress has refused to provide the
partnership and the leadership that the States demand. The States
aren't waiting for us. As you have heard, 47 States have taken steps to
legalize some form of State legal cannabis.
One of the most insidious aspects of our being out of sync is what we
have seen in terms of access to banking services. Congressman Heck
elaborated I think very emotionally and effectively about the dangers
that this presents. We have an opportunity to fix that problem.
This is an $11 billion industry and growing, and it is growing
because the people and the States have demanded it. We need to step up
and solve one of the biggest problems, and that is simply they don't
have access to banking services. I have worked on this issue for
decades. I have never met a human being who feels that there is any
good
[[Page H7972]]
purpose served by forcing them to pay their bills with duffle bags full
of $20 bills--not one person. It is an invitation to theft, it is an
invitation to money laundering already, it is an invitation to tax
evasion, and it stifles the opportunities of this business.
I strongly urge our colleagues to vote for this as the next step.
This is an important foundational, but it is not the last step. We have
important legislation that is keyed up and ready to go. This approval
today will provide momentum that we need for further reform that we all
want and will make America safer and stronger.
{time} 1700
Mr. McHENRY. Madam Speaker, I yield 2 minutes to the gentleman from
Kentucky (Mr. Barr), chair of the Subcommittee on Oversight and
Investigations of the Committee on Financial Services.
Mr. BARR. Madam Speaker, I rise in support of H.R. 1595, the SAFE
Banking Act, and I thank the gentleman from Colorado (Mr. Perlmutter),
my friend, for working with me in a bipartisan way to include two
amendments that will allow legal hemp farmers and businesses in my
district to access financial services.
Kentuckians have a deep interest in the production, cultivation, and
sale of industrial hemp, and we have historic connections to this, too.
Many Americans may not know, but my predecessor in the central Kentucky
seat in Congress, Speaker of the House Henry Clay, was once a hemp
farmer. Now, thanks to the farm bill, the hemp industry in the
Commonwealth is booming once again.
Much of the resurgence of the industry occurred under the Industrial
Hemp Research Pilot Program, established by the 2014 farm bill. Since
the program's enactment in 2014, the number of approved acres in
Kentucky increased from 922 to over 50,000. In 2018, sales of hemp
products were three-and-a-half more times than the previous year.
The 2018 farm bill took it a step further and fully legalized
industrial hemp, ending 80 years of prohibition of the plant. Hemp is
now completely exempt from the Controlled Substances Act. Despite these
positive steps forward, hemp businesses still have trouble accessing
financial services like bank accounts, loans, and payment processing.
This bill will provide additional clarity for banks, insurance
companies, and card processors that they can, in fact, do business with
legally operating hemp businesses. It would also direct our Federal
financial regulators to issue joint guidance to financial institutions
on how to serve hemp and CBD businesses without legal risk.
There is amazing potential for hemp and hemp-derived products. One
hemp farmer in my district has an exclusive deal with Patagonia to
provide hemp for farming. Toyota, which has the largest manufacturing
facility in my district, is exploring the use of hemp for car
interiors. Hemp farmers in my district are cultivating hemp to produce
products ranging from nutraceuticals, dietary supplements,
pharmaceuticals, cosmetics, apparel, footwear, fashion, and even
industrial products and construction materials.
But for hemp producers and businesses to fully scale up and take
advantage of the descheduling under the farm bill, they need access to
financial services.
Again, I thank the gentleman from Colorado (Mr. Perlmutter), my
friend, for working with me in a bipartisan way, and I urge support for
H.R. 1595.
Mr. PERLMUTTER. Madam Speaker, may I inquire how much time each side
has remaining.
The SPEAKER pro tempore (Ms. DeGette). The gentleman from Colorado
has 4 minutes remaining. The gentleman from North Carolina has 4
minutes remaining.
Mr. PERLMUTTER. Madam Speaker, I yield 1 minute to the gentleman from
New York (Mr. Meeks), the chair of the Subcommittee on Consumer
Protections and Financial Institutions.
Mr. MEEKS. Madam Speaker, there has been a rapid and dramatic shift
in the legal treatment of cannabis, led by voters at the local and
State levels.
Nearly every American now lives in a State where cannabis has been
decriminalized to some extent and legal business activities permitted
to varying degrees, including in my home State of New York. But Federal
drug laws and bank regulations have not evolved to reflect this new
reality. We need clear, harmonized laws, which the SAFE Banking Act
provides.
Without passage of this bill, the legal cannabis industry is forced
to operate mostly in cash, depriving law enforcement of important
financial data and creating avoidable security risks for companies and
their employees.
With the passage of this bill, entrepreneurs, employees, and
financial institutions operating legally within the bounds of State and
local laws will no longer bear the burden of a punitive Tax Code, high
compliance hurdles, the lack of all basic financial services, and
significant security risks.
I am proud of the work Mr. Perlmutter has done on this bill, and I
compliment him.
Mr. McHENRY. Madam Speaker, I yield 1 minute to the gentleman from
Ohio (Mr. Davidson), a great member of the Committee on Financial
Services.
Mr. DAVIDSON of Ohio. Madam Speaker, I rise today in support of the
SAFE Banking Act.
This is a banking bill. It defends civil liberties with a simple
concept: If it is legal in your State, you should be able to bank it.
No Federal regulator should be able to block an American's lawful
access to the financial system.
In Ohio, legal, State-regulated businesses are being forced into
using cash or intermediaries. This bill will help get cash off our
streets and into the regulated financial system.
I am also pleased the bill includes Mr. Luetkemeyer's legislation to
stop the closing of accounts on the basis of political biases or
motivations.
For far too long, financial institutions have said: You are not going
to bank those people, are you?
It is time to defend civil liberties and pass this important bill.
Madam Speaker, I urge bipartisan, broad support of its passage.
Mr. PERLMUTTER. Madam Speaker, I yield 45 seconds to the gentleman
from California (Mr. Correa).
Mr. CORREA. Madam Speaker, I rise in strong support of this
commonsense legislation, the SAFE Banking Act.
When I was a State senator in California, I was visited by Dr.
Moynihan, who came to visit my office to ask that I do some legislation
to help his daughter. In her short lifetime, she had been tormented by
epileptic seizures. The only drug that worked for her without severe
side effects was cannabis.
It breaks my heart to know that these legit businesses can pay their
taxes with cash, yet customers like Dr. Moynihan can't use a credit
card. He also has to pay with cash to get legitimate products. It
doesn't make sense.
Madam Speaker, I ask my colleagues to please support commonsense
legislation. Please vote ``aye'' on this legislation.
Mr. McHENRY. Madam Speaker, may I inquire how much time I have
remaining.
The SPEAKER pro tempore. The gentleman from North Carolina has 3
minutes remaining. The gentleman from Colorado has 2\1/4\ minutes
remaining.
Mr. McHENRY. Madam Speaker, I yield 1 minute to the gentleman from
Florida (Mr. Gaetz).
Mr. GAETZ. Madam Speaker, I thank the gentleman from North Carolina
(Mr. McHenry) for yielding, and it is on behalf of those cannabis
patients in Fort Walton Beach and across the Sunshine State that I rise
in support of the SAFE Banking Act.
I am proud to have been a part of drafting Florida's medical
marijuana laws, and it is ludicrous that the Congress of the United
States would stand between people operating under the color of State
law and their ability to access the financial system.
It is good for no one to have billions of dollars rolling around
outside of the accountabilities, efficiencies, and safeguards that the
American financial system provides.
A vast majority of States have legalized some form of cannabis, and
if a business is legal in that State, it should have the same financial
protections as any other business.
I am a proud original cosponsor of the SAFE Banking Act, and I thank
my colleagues for their tireless work on this issue. I know the bill is
not perfect. I expect the bill to get better in the Senate, but
hopefully, this will build some commonsense momentum for real cannabis
reform.
[[Page H7973]]
Let's get this drug off the schedule I list and do right for the
great people in the country.
Mr. PERLMUTTER. Madam Speaker, I yield 45 seconds to the gentlewoman
from the Virgin Islands (Ms. Plaskett).
Ms. PLASKETT. Madam Speaker, today, because federally regulated banks
and other financial institutions may face prosecution if they offer
their services to businesses selling legal cannabis products across 47
States, D.C., and four U.S. territories, many legal businesses are
forced to operate in a cash-only business, making them targets for
theft and creating opportunities for tax evasion and money laundering.
It is simply unfair to deprive legal, State-approved businesses of
financial services any longer. Social equity will go further by
allowing businesses to come out of the shadows.
As chair of the House Committee on Agriculture's Subcommittee on
Biotechnology, Horticulture, and Research, I am pleased that this
legislation was made inclusive of hemp as it moved through the process.
I have heard from a number of legal hemp businesses that have
experienced similar issues.
Madam Speaker, I thank the gentleman from Colorado (Mr. Perlmutter),
my colleague, for the inclusion of the territories.
Mr. PERLMUTTER. Madam Speaker, I yield 45 seconds to the gentlewoman
from New York (Mrs. Carolyn B. Maloney).
Mrs. CAROLYN B. MALONEY of New York. Madam Speaker, I strongly
support this bill and congratulate the gentleman from Colorado (Mr.
Perlmutter) and the gentleman from Washington (Mr. Heck) for their hard
work.
We have to pass this bill because it is a public safety issue. Banks
can't serve marijuana businesses, an $11 billion business, because it
is still illegal at the Federal level, which means that legal marijuana
businesses around the country operate in all cash.
This is a huge public safety issue because storing huge piles of cash
in warehouses is a magnet for criminal activity. But it also means that
companies that just provide services to marijuana businesses, like
electric or water utilities, are also getting cut off from the banking
system. Undermining people's access to basic utilities creates yet
another public safety problem.
Madam Speaker, I urge support for this bill.
Mr. McHENRY. Madam Speaker, may I inquire how much time I have
remaining.
The SPEAKER pro tempore. The gentleman from North Carolina has 2
minutes remaining. The gentleman from Colorado has 45 seconds
remaining.
Mr. McHENRY. Madam Speaker, I am prepared to close, and I yield
myself such time as I may consume.
Madam Speaker, let me begin as I did with my opening statement. I
commend the gentleman from Colorado (Mr. Perlmutter) for how he has
managed this bill and brought it to the floor.
What we have here on the House floor, and we are debating now, is a
much broader bill and, therefore, will have a much broader vote than
what we had in committee, however limited we were in committee
jurisdiction.
Madam Speaker, I know if the gentleman from Colorado (Mr. Perlmutter)
were on the Appropriations Committee, he would have worked for medical
research funding. I know that if he were on the Energy and Commerce
Committee, he would have worked for an FDA process on cannabis. And if
he were on the Committee on the Judiciary, he would have worked to
deschedule the drug.
However, we find ourselves on the Financial Services Committee, and
this is not a normal conversation that we have on the committee. But
this is addressing a key issue that many States are facing, and many
financial institutions, credit unions, and banks are facing, which is
how to bank people with a lot of cash, with a product that is legal at
the State level but defined at the Federal level as an illicit
substance that is harmful for human consumption.
While Congress is taking this half-measure, it doesn't resolve the
issue. It does not resolve the issue of medical research or
understanding the brain science and how cannabis affects the adolescent
brain. There are enormous questions there. There are enormous questions
about the Federal Criminal Code. But these are things that we should be
debating rather than this half-measure on banking.
While this is an important step on the question of the overall
legalization of this drug, it still doesn't resolve the issue fully.
Madam Speaker, I ask my colleagues for a ``no'' vote, but I expect
this vote will pass on the suspension calendar today. I thank my
colleague for his handling of this important issue and the wise nature
of how he has approached the amendment process to address many
different equities across the country. I yield back the balance of my
time.
Mr. PERLMUTTER. Madam Speaker, I yield myself the balance of my time.
Madam Speaker, I thank the gentleman from North Carolina (Mr.
McHenry). As I said at the top of this debate, this bill is about
public safety, accountability, and respecting States' rights.
Our bill is narrowly tailored to get cash off the streets and improve
public safety in communities across the country.
I thank my cosponsors. They have heard from me. They have been
working with me for years, and I really appreciate that. Especially, I
thank the staff of the Committee on Financial Services, the staff of my
cosponsors, and my own staff for the work they have done to put this
bill and coalition together.
There are many marijuana issues that remain, but this one gets the
cash off the streets. This is about public safety.
Madam Speaker, I urge all my colleagues to vote ``yes'' on the SAFE
Banking Act, and I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Colorado (Mr. Perlmutter) that the House suspend the
rules and pass the bill, H.R. 1595, as amended.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds
being in the affirmative, the ayes have it.
Mr. McHENRY. Madam Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The vote was taken by electronic device, and there were--yeas 321,
nays 103, not voting 9, as follows:
[Roll No. 544]
YEAS--321
Adams
Aguilar
Allred
Amash
Amodei
Armstrong
Axne
Bacon
Baird
Balderson
Banks
Barr
Barragan
Bass
Beatty
Bera
Beyer
Bishop (GA)
Bishop (UT)
Blumenauer
Blunt Rochester
Bonamici
Bost
Boyle, Brendan F.
Brindisi
Brooks (AL)
Brown (MD)
Brownley (CA)
Bustos
Butterfield
Carbajal
Cardenas
Carson (IN)
Cartwright
Case
Casten (IL)
Castor (FL)
Castro (TX)
Chu, Judy
Cicilline
Cisneros
Clark (MA)
Clarke (NY)
Clay
Cleaver
Cohen
Cole
Collins (GA)
Collins (NY)
Comer
Connolly
Cooper
Correa
Costa
Courtney
Cox (CA)
Craig
Crenshaw
Crist
Crow
Cuellar
Cunningham
Curtis
Davids (KS)
Davidson (OH)
Davis (CA)
Davis, Danny K.
Davis, Rodney
Dean
DeFazio
DeGette
DeLauro
DelBene
Delgado
Demings
DeSaulnier
Deutch
Dingell
Doggett
Doyle, Michael F.
Emmer
Engel
Escobar
Eshoo
Espaillat
Estes
Evans
Ferguson
Finkenauer
Fitzpatrick
Fleischmann
Fletcher
Flores
Foster
Frankel
Fudge
Gabbard
Gaetz
Gallego
Garamendi
Garcia (IL)
Garcia (TX)
Gibbs
Golden
Gomez
Gonzalez (OH)
Gonzalez (TX)
Gooden
Gottheimer
Graves (GA)
Green (TN)
Green, Al (TX)
Griffith
Grijalva
Grothman
Haaland
Hagedorn
Harder (CA)
Hastings
Hayes
Heck
Hern, Kevin
Herrera Beutler
Higgins (NY)
Hill (AR)
Hill (CA)
Himes
Hollingsworth
Horn, Kendra S.
Horsford
Houlahan
Hoyer
Huffman
Hunter
Jackson Lee
Jayapal
Jeffries
Johnson (GA)
Johnson (OH)
Johnson (TX)
Joyce (OH)
Kaptur
Katko
Keating
Keller
Kelly (IL)
Kelly (PA)
Kennedy
Khanna
Kildee
Kilmer
Kim
Kind
King (NY)
Kinzinger
Kirkpatrick
Krishnamoorthi
Kuster (NH)
Lamb
Langevin
Larsen (WA)
Larson (CT)
Lawrence
Lawson (FL)
Lee (CA)
Lee (NV)
Levin (CA)
Levin (MI)
Lewis
Lieu, Ted
Lipinski
Loebsack
Lofgren
Long
Loudermilk
Lowenthal
Lowey
Luetkemeyer
Lujan
Luria
Lynch
Malinowski
Maloney, Carolyn B.
Maloney, Sean
Massie
Mast
[[Page H7974]]
Matsui
McAdams
McBath
McCarthy
McClintock
McCollum
McGovern
McKinley
McNerney
Meeks
Meng
Meuser
Miller
Mitchell
Mooney (WV)
Moore
Morelle
Moulton
Mucarsel-Powell
Murphy (FL)
Nadler
Napolitano
Neal
Neguse
Newhouse
Norcross
Norman
Nunes
O'Halleran
Ocasio-Cortez
Olson
Omar
Pallone
Panetta
Pappas
Pascrell
Payne
Perlmutter
Perry
Peters
Peterson
Phillips
Pingree
Pocan
Porter
Pressley
Price (NC)
Quigley
Raskin
Reed
Reschenthaler
Rice (NY)
Rice (SC)
Richmond
Riggleman
Rodgers (WA)
Roe, David P.
Rogers (AL)
Rooney (FL)
Rose (NY)
Rouda
Roybal-Allard
Ruiz
Ruppersberger
Rush
Ryan
Sanchez
Sarbanes
Scanlon
Schakowsky
Schiff
Schneider
Schrader
Schrier
Schweikert
Scott (VA)
Scott, David
Serrano
Shalala
Sherman
Sherrill
Simpson
Sires
Slotkin
Smith (WA)
Smucker
Soto
Spanberger
Spano
Speier
Stanton
Stauber
Stefanik
Steil
Steube
Stevens
Stivers
Suozzi
Swalwell (CA)
Takano
Taylor
Thompson (CA)
Thompson (MS)
Thompson (PA)
Timmons
Tipton
Titus
Tlaib
Tonko
Torres Small (NM)
Trahan
Trone
Underwood
Upton
Van Drew
Vargas
Veasey
Vela
Velazquez
Visclosky
Walden
Waltz
Wasserman Schultz
Waters
Watkins
Watson Coleman
Welch
Wexton
Wild
Wilson (FL)
Womack
Yarmuth
Yoho
Young
Zeldin
NAYS--103
Aderholt
Allen
Arrington
Babin
Bergman
Biggs
Bilirakis
Bishop (NC)
Brady
Brooks (IN)
Buchanan
Buck
Bucshon
Budd
Burchett
Burgess
Byrne
Calvert
Carter (GA)
Carter (TX)
Chabot
Cheney
Cline
Cloud
Conaway
Cook
DesJarlais
Diaz-Balart
Duncan
Dunn
Fortenberry
Foxx (NC)
Fulcher
Gallagher
Gianforte
Gohmert
Gosar
Granger
Graves (LA)
Graves (MO)
Guest
Guthrie
Harris
Hartzler
Hice (GA)
Holding
Hudson
Huizenga
Hurd (TX)
Johnson (LA)
Johnson (SD)
Jordan
Joyce (PA)
Kelly (MS)
King (IA)
Kustoff (TN)
LaHood
LaMalfa
Lamborn
Latta
Lesko
Lucas
Marchant
McCaul
McHenry
Meadows
Moolenaar
Mullin
Murphy (NC)
Palazzo
Palmer
Pence
Posey
Ratcliffe
Roby
Rogers (KY)
Rose, John W.
Rouzer
Roy
Rutherford
Scalise
Scott, Austin
Sensenbrenner
Sewell (AL)
Shimkus
Smith (MO)
Smith (NE)
Smith (NJ)
Stewart
Thornberry
Turner
Wagner
Walberg
Walker
Walorski
Weber (TX)
Webster (FL)
Wenstrup
Westerman
Williams
Wilson (SC)
Wittman
Woodall
NOT VOTING--9
Abraham
Clyburn
Crawford
Cummings
Higgins (LA)
Marshall
McEachin
Torres (CA)
Wright
{time} 1742
Messrs. SENSENBRENNER, BUCHANAN, and Ms. SEWELL of Alabama changed
their vote from ``yea'' to ``nay.''
Messrs. EMMER, NADLER, Mrs. LURIA, Messrs. HUNTER, WOMACK, LONG, Ms.
STEFANIK, Messrs. RESCHENTHALER and TIMMONS changed their vote from
``nay'' to ``yea.''
So (two-thirds being in the affirmative) the rules were suspended and
the bill, as amended, was passed.
The result of the vote was announced as above recorded.
A motion to reconsider was laid on the table.
____________________