[Congressional Record Volume 167, Number 67 (Monday, April 19, 2021)]
[House]
[Pages H1915-H1924]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SECURE AND FAIR ENFORCEMENT BANKING ACT OF 2021
Mr. PERLMUTTER. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 1996) to create protections for financial 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. 1996
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS; PURPOSE.
(a) Short Title.--This Act may be cited as the ``Secure And
Fair Enforcement Banking Act of 2021'' or the ``SAFE Banking
Act of 2021''.
(b) Table of Contents.--The table of contents for this Act
is as follows:
Sec. 1. Short title; table of contents; purpose.
Sec. 2. Safe harbor for depository institutions.
Sec. 3. Protections for ancillary businesses.
Sec. 4. Protections under Federal law.
Sec. 5. Rules of construction.
Sec. 6. Requirements for filing suspicious activity reports.
Sec. 7. Guidance and examination procedures.
Sec. 8. Annual diversity and inclusion report.
Sec. 9. GAO study on diversity and inclusion.
Sec. 10. GAO study on effectiveness of certain reports on finding
certain persons.
Sec. 11. Application of this Act with respect to hemp-related
legitimate businesses and hemp-related service providers.
Sec. 12. Banking services for hemp-related legitimate businesses and
hemp-related service providers.
Sec. 13. Requirements for deposit account termination requests and
orders.
Sec. 14. Definitions.
Sec. 15. Discretionary surplus funds.
(c) 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 (where such
cannabis-related legitimate business operates 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) or a
service provider (wherever located), 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 (where such cannabis-
related legitimate business operates 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) or
service provider (wherever located), 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
[[Page H1916]]
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.
(c) Business of Insurance.--Nothing in this Act shall
interfere with the regulation of the business of insurance in
accordance with the Act of March 9, 1945 (59 Stat. 33,
chapter 20; 15 U.S.C. 1011 et seq.) (commonly known as the
``McCarran-Ferguson Act'') and the Dodd-Frank Wall Street
Reform and Consumer Protection Act (12 U.S.C. 5301 et seq.).
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. Not later than the end
of the 180-day period beginning on the date of enactment of
this paragraph, the Secretary shall update the February 14,
2014, guidance titled `BSA Expectations Regarding Marijuana-
Related Businesses' (FIN-2014-G001) to ensure that the
guidance is consistent with the purpose and intent of the
SAFE Banking Act of 2021 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 2021.
``(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 2021.
``(vi) Service provider.--The term `service provider' has
the meaning given that term in section 14 of the SAFE Banking
Act of 2021.
``(vii) State.--The term `State' means each of the several
States, the District of Columbia, the Commonwealth of 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. APPLICATION OF THIS ACT WITH RESPECT TO HEMP-RELATED
LEGITIMATE BUSINESSES AND HEMP-RELATED SERVICE
PROVIDERS.
(a) In General.--The provisions of this Act (other than
sections 6 and 10) shall apply with respect to hemp-related
legitimate businesses and hemp-related service providers in
the same manner as such provisions apply with respect to
cannabis-related legitimate businesses and service providers.
(b) Definitions.--In this section:
(1) CBD.--The term ``CBD'' means cannabidiol.
(2) Hemp.--The term ``hemp'' has the meaning given that
term under section 297A of the Agricultural Marketing Act of
1946 (7 U.S.C. 1639o).
(3) Hemp-related legitimate business.--The term ``hemp-
related legitimate business'' means a manufacturer, producer,
or any person or company that--
(A) engages in any activity described in subparagraph (B)
in conformity with the Agricultural Improvement Act of 2018
(Public Law 115-334) and the regulations issued to implement
such Act by the Department of Agriculture, where applicable,
and the law of a State or political subdivision thereof or
Indian Tribe; and
(B) participates in any business or organized activity that
involves handling hemp, hemp-derived CBD products, and other
hemp-derived cannabinoid products, including cultivating,
producing, extracting, manufacturing, selling, transporting,
displaying, dispensing, distributing, or purchasing hemp,
hemp-derived CBD products, and other hemp-derived cannabinoid
products.
(4) Hemp-related service provider.--The term ``hemp-related
service provider''--
(A) means a business, organization, or other person that--
(i) sells goods or services to a hemp-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 hemp,
hemp-derived CBD products, or other hemp-derived cannabinoid
products; and
(B) does not include a business, organization, or other
person that participates in any business or organized
activity that involves handling hemp, hemp-derived CBD
products, or other hemp-derived cannabinoid products,
including cultivating, producing, manufacturing, selling,
transporting, displaying, dispensing, distributing, or
purchasing hemp, hemp-derived CBD products, and other hemp-
derived cannabinoid products.
SEC. 12. BANKING SERVICES FOR HEMP-RELATED LEGITIMATE
BUSINESSES AND HEMP-RELATED SERVICE PROVIDERS.
(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 CBD
products are particularly affected, due to confusion about
the legal status of such products.
(b) Federal Banking Regulators' 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 update their existing guidance, as applicable,
regarding the provision of financial services to hemp-related
legitimate businesses and hemp-related service providers to
address--
(1) compliance with financial institutions' existing
obligations under Federal laws and implementing regulations
determined relevant by the Federal banking regulators,
including subchapter II of chapter 53 of title 31, United
States Code, and its implementing regulation in conformity
with this Act and the Department of Agriculture's rules
regulating domestic hemp production (7 C.F.R. 990); and
(2) best practices for financial institutions to follow
when providing financial services, including processing
payments, to hemp-related legitimate businesses and hemp-
related service providers.
[[Page H1917]]
(c) Definitions.--In this section:
(1) Financial institution.--The term ``financial
institution''--
(A) has the meaning given that term under section 5312(a)
of title 31, United States Code; and
(B) includes a bank holding company, as defined under
section 2(a) of the Bank Holding Company Act of 1956 (12
U.S.C. 1841(a)).
(2) Hemp terms.--The terms ``CBD'', ``hemp'', ``hemp-
related legitimate business'', and ``hemp-related service
provider'' have the meaning given those terms, respectively,
under section 11.
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).
(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), regardless if the
customer receiving the product or service is a consumer or
commercial entity;
(B) means a financial product or service, or any
combination of products and services, permitted to be
provided by--
(i) a national bank or a financial subsidiary pursuant to
the authority provided under--
(I) the provision designated ``Seventh'' of section 5136 of
the Revised Statutes of the United States (12 U.S.C. 24); or
(II) section 5136A of the Revised Statutes of the United
States (12 U.S.C. 24a); and
(ii) a Federal credit union, pursuant to the authority
provided under the Federal Credit Union Act;
(C) includes the business of insurance;
(D) 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;
(E) 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
(F) 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.
[[Page H1918]]
(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, the Commonwealth of 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 reducing the dollar figure by
$6,000,000.
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 include extraneous materials on H.R. 1996.
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 cannabis,
including CBD products. 318 million people live in those 47 States.
That is 97.7 percent of the population of America.
However, because cannabis remains illegal under Federal law, the
Controlled Substance Act, businesses in these States are forced to deal
in cash; and the businesses, their employees, and ancillary businesses
can't access the banking system.
The fact is that the people in States and localities across the
country are voting to approve some level of cannabis use, and we need
these cannabis businesses and employees to have access to checking
accounts, payroll accounts, lines of credit, credit cards, 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, this will reduce the risk of violent crime in our
communities. These businesses and their employees become targets for
crime, robbery, assault, and more by dealing in all cash, and this puts
the employees and the store owners at risk.
Over the last year in Oregon alone, a string of more than 100
robberies and burglaries at cannabis businesses culminated in a murder
when Michael Arthur, a dispensary employee, was shot to death during a
robbery.
Just last week in Colorado, an innocent bystander was shot during an
attempted break-in at a medical cannabis business. And in Colorado, we
are always reminded of Travis Mason, the young father and Marine Corps
vet, who was murdered while working as a security guard for a cannabis
business.
We must do better for these employees, their families, and all our
communities.
The SAFE Banking Act will create a safe harbor for financial
institutions and their employees who choose to do business with a
cannabis company. Section 3 of the bill is particularly important to
not only cannabis businesses, but everyone who might do business with a
cannabis-related company. This section would protect ancillary
businesses, like real estate owners, accountants, electricians, and
vendors, by clarifying the proceeds from legitimate cannabis businesses
are not unlawful under Federal laws. This proceeds section is the key
provision allowing all cannabis-related businesses and their service
providers and landlords to access the banking system without fear of
reprisal.
This bill now has 177 bipartisan cosponsors, and one-third of the
Senate is cosponsoring the companion bill from Senators Merkley and
Daines.
Last Congress, the SAFE Banking Act passed the House 321-103, with
the support of 91 Republicans. The broad base of support for this
legislation generated a diverse group of cosponsors and endorsing
organizations from banking, credit union, and insurance trade
associations to labor unions, cannabis businesses and advocates, and
State government leaders.
There are, obviously, many more marijuana issues we need to address
working together, including additional research, tax issues, and
criminal justice reforms. Passing this bill will show that Congress can
work together in a bipartisan way to address outdated marijuana laws. I
hope this bill is an icebreaker for the House to take up other reforms
and finally remove the conflict between State and Federal laws.
In summary, even if you are opposed to the legalization of cannabis,
you should support this bill. American voters have spoken and continue
to speak, and the fact is that you can't put the genie back in the
bottle. Prohibition is over. The SAFE Banking Act is focused solely on
taking cash off the streets and making our communities safer, and only
Congress can take these steps to provide this certainty for businesses,
employees, and financial institutions across the country.
Mr. Speaker, I thank Representatives Velazquez, Stivers, Davidson,
Joyce, Correa, and Blumenauer for their partnership on this bill and
their commitment to making our communities safer. I also thank
Representatives Luetkemeyer, Barr, and Porter for their contributions
to the text of this bill and their support. Finally, I thank Chairwoman
Maxine Waters for her support over the years and for continuing to make
this a priority.
Mr. Speaker, I urge my colleagues to join me in voting ``yes'' on the
SAFE Banking Act, and I reserve the balance of my time.
Mr. McHENRY. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I rise in opposition to H.R. 1996.
I want to begin by commending my colleague from Colorado, Mr.
Perlmutter, for the way that he has approached this legislation. He is
incorporating a lot of ideas from Members all across this Chamber and
from across the country. He has doggedly pursued this legislation for
many years, and I want to commend him for that.
I also want to thank my colleagues, Mr. Stivers and Mr. Joyce of
Ohio, for the way they have approached this bill. I think this is a
testament to constructive criticism of a bill and it becoming better as
a result of it.
Let me say, regardless of your position on this bill, I do think the
fact remains that cannabis is a prohibited substance under schedule I
of the Controlled Substances Act.
Let me further state that, by enacting this legislation, we are
effectively kneecapping law enforcement in legalizing money laundering.
These are concerns that I have, that still remain.
By effectively legalizing money laundering, we are inserting a new
level of risk in our financial system. We are preventing our legal
entities from doing their jobs. We are encouraging bad actors and
placing our financial institutions at risk.
Rather than dealing with the issues of cannabis and the question of
its Federal legalization, we are dealing with a component of the
challenge, which is the banking of it, and it is a challenge. I think
we are adding a new risk to our banking system and our anti-money
laundering reforms that we passed just in January of this year. That
seems counterintuitive to me.
For years, Congress has worked to reform our anti-money laundering
laws. Now, in one fell swoop, we are undoing a lot of that hard work
and we are going to make it easier for money launderers.
If you want to help the system, if you want to give financial
institutions the certainty and security they want and need to do the
job with the cannabis industry, where it is legalized in these
[[Page H1919]]
States, we should debate the merits of cannabis remaining a schedule I
substance, not pass a bill that skirts around the substance of the
issue.
This bill we are considering today is one of the biggest changes to
U.S. drug policy, yet it was done with little debate this Congress.
There has been a lot of debate overall in this Congress, far more than
the Senate has even had, on the question of cannabis.
This bill, which is really the first step in legalizing cannabis at
the Federal level, was reported out of the Financial Services Committee
last Congress, and it is a committee that really has no jurisdiction
over the Controlled Substances Act. We only had one hearing featuring
one panel of witnesses. We haven't had a hearing this Congress to
discuss changes over the last 2 years, let alone a markup to discuss
any changes that might strengthen or impact the bill.
For example, late last year, Congress passed a sweeping bipartisan
anti-money laundering piece of legislation. These reforms include
prohibitions on the concealment of sources of assets in monetary
transactions; a prohibition, I will add, that comes with a steep
penalty of up to 10 years in prison and up to $1 million in fines.
If we were doing our due diligence, we would have done a deeper
discussion on how these new AML Act changes would impact banks working
with cannabis industries as clients instead of me raising this issue at
the eleventh hour on the floor, which is what I have got to resort to.
In addition to this concern, I believe I have voiced many other
concerns, including our need to better comprehend and address the
supervisory and regulatory issues that would result from enactment of
H.R. 1996.
Mr. Speaker, I include in the Record a letter from Ranking Member
Luetkemeyer of the Subcommittee on Consumer Protection and Financial
Institutions and myself as ranking member of the full Committee on
Financial Services.
House of Representatives,
Committee on Financial Services,
Washington, DC, March 21, 2019.
Hon. Maxine Waters,
Chairwoman, Committee on Financial Services, Washington, DC.
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. Sec. 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 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 cannibis-related businesses?
13. What are the implications of H.R. 1595 on federal,
state, and local law enforcement, including the Department of
Justice and the Drug Enforcement Agency?
14. How are the 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, this letter raises a number of concerns,
including:
What changes to our banking laws are necessary to implement the SAFE
Banking Act, a number of questions that I have;
What agencies are going to be necessary for this working group to
actually ensure that the letter of this law is adhered to by the
executive branch, that they actually follow it as the writer of the
legislation intends;
How the executive branch will interpret the ``know your customer''
rules enacted in the SAFE Banking Act, compared to what we enacted just
2 months ago, 3 months ago;
How we would deal with suspicious activity reporting requirements
under the new guidelines of the SAFE Banking Act, compared to what we
enacted at the end of last year;
How we deal with currency transaction reports under this law,
compared to what we just passed; and
What are the implications on nonbank financial firms as well, such as
insurers and investment companies.
Mr. Speaker, I think the author of the bill intends for insurers and
investment companies and banks to have the same qualifications when
they are handling money that has touched the cannabis industry. I think
that is the intent.
{time} 1630
Mr. Speaker, I think we need to understand whether or not the
administration would follow that intent that the author has stated
clearly in debates here on the House floor last Congress and this
Congress and, furthermore, whether or not Federal, State, and local law
enforcement will have a similar interpretation that the writer of this
bill says is his intent, that Federal law enforcement should hear the
voice of Congress and hear this step to legalization which is part of
this bill.
I do not think it is the author of the bill's idea to get into sort
of the broader conversation about legalization at the State level and
what we should do at the Federal level in this bill. However, that is a
part of it.
In March of 2019, the National Sheriffs' Association voiced concern
with this bill, saying that it could easily be exploited. They echoed
my concerns that ``allowing banking access for a Schedule 1 drug gives
money laundering access to international drug cartels, which are
already using the cover of legalization.''
Mr. Speaker, I include that letter in the Record.
[[Page H1920]]
National Sheriffs' Association,
March 19, 2019.
Hon. Maxine Waters,
Chairwoman, House of Representatives, Committee on Financial
Services, Washington, DC.
Hon. Patrick McHenry,
Ranking Member, House of Representatives, Committee on
Financial Services, Washington, DC.
Dear Chairwoman Waters and Ranking Member McHenry: On
behalf of the National Sheriffs' Association (NSA) and more
than 3,080 sheriffs nationwide, I write to express our deep
concern and opposition to H.R. 1595, The SAFE Banking Act.
This bill creates protections for depository institutions
that provide financial services to cannabis-related
businesses and service providers for such businesses.
H.R. 1595 will increase the legalization of marijuana
across the Nation, which we understand is an intended
consequence of this bill. Furthermore, allowing banking
access for a Schedule 1 drug gives money laundering access to
international drug cartels, which are already using the cover
of legalization. This will inevitably open the door to other
criminal activity!
NSA is concerned with the welfare and safety of citizens
and works to preserve their rights to live and work in
communities where drug abuse is not accepted and they are not
subjected to the adverse effects of drug abuse. The dangers
of illegal drugs, including marijuana, and the threat to
public safety caused by their use in terms of highway safety,
criminal activity, and domestic violence are well-documented.
NSA believes that any legislation regarding national
legalization must engage the nation's law enforcement
agencies in order to have a comprehensive discussion
regarding the potential implications this bill could have on
our communities. We urge The House of Representatives to
defeat this dangerous bill.
Sincerely,
Jonathan F. Thompson,
Executive Director and CEO.
Mr. McHENRY. Furthermore, we see cannabis-legal States like
California, Washington, and Colorado, as the subject of recent news
reports that 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
that article in the Record, Mr. Speaker.
[From Global Power, May 29, 2018]
Foreign Cartels Embrace Home-Grown Marijuana in Pot-Legal States
(By Dennis Romero, Gabe Gutierrez, Andrew Blankstein and Robert Powell)
Los Angeles.--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 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 Sheriffs 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.
A `MASSIVE' MARIJUANA NETWORK
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.
HOW FOREIGN CARTELS OPERATE IN THE U.S.
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. Furthermore, because of this patchwork at the State
level, I think you are seeing additional concerns at the southern
border right now, and I will include for the Record a letter that the
former Border Patrol chief submitted that in February alone there was
nearly $14 million a day of marijuana caught at the southern border.
Despite these many issues I still have with the SAFE Banking Act, I
do appreciate the work that my colleagues
[[Page H1921]]
have put into this legislative effort, but considering that the larger
issue of cannabis legalization has not yet been debated here on the
House floor, I think it is premature for the Financial Services
Committee to do the full work of this Congress on the question of
cannabis legalization at the Federal level. I think that would be
better left to the Judiciary Committee, with a wider debate here on the
House floor, and I would encourage that wider debate.
Notwithstanding that, I would like to thank my colleagues for the
hard work that they have put into this legislation. Even if I have
concerns, I know that there is more than sufficient support to pass
this under the suspension calendar, and that would not happen were it
not for the good legislative work of my colleague and friend from
Colorado (Mr. Perlmutter).
I do believe that my colleague was quite intentional about the date
that he wanted to actually have the vote here on the House floor. With
that, for those of you who don't know, tomorrow is 4/20/21, 4/20 being
the operative date.
Mr. Speaker, I reserve the balance of my time.
Mr. PERLMUTTER. Mr. Speaker, I thank the gentleman from North
Carolina for his many compliments. I would just remind him, we are the
Financial Services Committee. We have a certain amount of jurisdiction
that deals with financial institutions and financial services, and that
is what this bill is focused on, dealing with so much cash generated by
this industry, whether we do anything or not, and to try to advance
public safety in the process.
Mr. Speaker, I yield 2 minutes to the gentlewoman from New York (Ms.
Velazquez), the chair of the Small Business Committee, who had a lot to
do with writing the Small Business piece of this.
Ms. VELAZQUEZ. Mr. Speaker, I am a proud original cosponsor of H.R.
1996, the SAFE Banking Act, and I rise in strong support.
I would also like to take this opportunity to recognize the gentleman
from Colorado (Mr. Perlmutter) for his extraordinary leadership on this
legislation.
When the pandemic first hit and stay-at-home orders went into place,
many small cannabis businesses were deemed essential. Yet, just as
States recognized these businesses as critical, Federal law still fails
to provide them the same access to key financial services, like banking
and insurance.
H.R. 1996, the SAFE Banking Act, will address this problem, enabling
them to grow and hire more workers. Failing to allow cannabis
businesses to utilize financial products and services not only creates
artificial barriers for these small businesses, it is also an issue of
public safety, as these high-volume cash businesses are frequently the
target of robberies and break-ins.
That is why the SAFE Banking Act is so important and why, as chair of
the House Small Business Committee and senior member of the Financial
Services Committee, I am proud to stand by it since its first
introduction.
I thank Mr. Perlmutter for his leadership. Let's pass this
legislation once and for all.
Mr. McHENRY. Mr. Speaker, I yield 2 minutes to the gentleman from
Ohio (Mr. Stivers), the subcommittee chair on Housing, Community
Development, and Insurance.
Mr. STIVERS. Mr. Speaker, I want to thank Congressman Perlmutter for
his hard work on this. I am an unlikely person to support this bill
because I am opposed to recreational marijuana, but I came to this
because a company that is just outside my district that sells nutrients
now finds themselves in the situation where 25 percent of their profits
come from selling to legal marijuana businesses, and they are being
threatened, a Fortune 500 company, with losing their bank accounts.
We can't let that happen. We have got to make sure that we stand up
for safety and stand up for common sense. That is what this bill does.
Three points about this bill. Number one, it encourages safety
because money that is in a bank account can be frozen and can be
tracked.
By the way, this bill also increases suspicious activity reports, so
this idea about money laundering doesn't work because there are
suspicious activity reports that are expanded under the bill, and you
can freeze and track the money, which is really important. That is why
a lot of folks in law enforcement like this bill.
The final thing is, this bill includes provisions to stop Operation
Choke Point that Republicans couldn't even get passed when we had the
presidency, the Senate, and the House, and we got that negotiated into
this bill. It helps in a big way to make sure that there's not an
Operation Choke Point in the future, so nobody can choke off legal
businesses from their bank accounts and from access to the payments
system. That is a big deal. I want to thank Congressman Perlmutter for
allowing that.
Finally, before my time is up, I want to acknowledge Congressman
Warren Davidson, who isn't going to be able to fly in in time for this.
Congressman Davidson has been working on this bill with me for almost 2
years with Congressman Perlmutter. Warren Davidson has done an amazing
job. I just want to acknowledge his hard work, all his efforts. We
wouldn't be here today but for Congressman Warren Davidson.
I urge my colleagues to support H.R. 1996.
Mr. PERLMUTTER. Mr. Speaker, I would also like to thank Mr. Stivers
for working with me so much over the last few years on this. I am going
to miss him as he chooses to take another path in the near future. I
just want to say on the floor, that he is a real credit to this
institution.
Mr. Speaker, I yield 3 minutes to the gentleman from California (Mr.
Correa).
Mr. CORREA. Mr. Speaker, the SAFE Banking Act can be summarized in
three basic points. First of all, this measure does not legalize
anything at the State level. Today, 47 States, four U.S. territories,
and D.C., representing 98 percent of the U.S. population, have
legalized cannabis in one form or another.
Second, this is essentially a States' rights issue. This measure
essentially says that when a State legalizes cannabis, the Federal
Government will respect that decision when it comes to banking.
Finally, this measure is essentially about helping our local police
officers back home do their job safely and effectively. We already give
our local police officers the impossible job of taking care of the
homeless and the mentally ill, and now we are asking our police
officers to protect the legalized cannabis industry, a cash business,
from those criminals that would prey upon them. This just doesn't make
sense.
Today, because of Federal law, the cannabis industry can only operate
on a cash basis. They pay their Federal, State, and local taxes with
cash. Let me repeat. Today, the cannabis industry pays their Federal
taxes with cash. They pay their employees with cash. They pay their
rent with cash, and they pay their bills with cash. This is no way to
keep our streets safe.
Let's help our local police officers keep our communities safe. Let's
get the cash out of the cannabis industry, and let's pass H.R. 1996.
Mr. McHENRY. Mr. Speaker, I yield 2 minutes to the gentleman from
Kentucky (Mr. Barr), the ranking member of the Subcommittee on
Oversight and Investigations of the House Financial Services Committee.
Mr. BARR. Mr. Speaker, I rise in support of the SAFE Banking Act.
Kentuckians have a deep interest in the production, cultivation, and
sale of nonintoxicating industrial hemp and hemp-derived products,
including CBD. In fact, Kentucky boasts a proud heritage and
agricultural tradition in industrial hemp. Henry Clay, the great
Speaker of the House who once represented the district that I now
represent, was, in fact, an industrial hemp farmer.
More recently, the Commonwealth has seen a revival in the industrial
hemp industry, resulting in much growth and job creation in this area.
Much of the growth of the industry occurred as a result of the
Industrial Hemp Research Pilot Program established under the 2014 farm
bill and the 2018 farm bill, which took it a step further and fully
legalized industrial hemp.
Despite these positive steps forward, hemp businesses still have
trouble accessing certain financial services. Just today I spoke with a
CBD retailer in my district who confirmed that while the situation has
improved somewhat over the last few years, access to card
[[Page H1922]]
processing services is uneven and uncertain. 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
update best practices for serving hemp and CBD businesses.
Since we last debated this bill, conditions have improved for hemp
financing. In December 2019, financial regulators jointly issued
guidance confirming that banks are free to provide banking services to
the hemp industry, just as they are for any other agricultural
commodity. Unfortunately, there is still work to do to ensure that
these legal hemp businesses have full access to the financial system.
There remains some ambiguity, specifically regarding payment
processors' dealings with hemp businesses. This bill makes needed
clarifications.
I want to thank the gentleman from Colorado (Mr. Perlmutter) for
working across the aisle on this bill. He and his team took great care
to ensure that these changes were incorporated into the bill and made
the needed clarifications. I thank him for his cooperation. This will
have a meaningful impact on Kentucky farmers, small businesses, and a
burgeoning industry in Kentucky and across the country.
I urge my colleagues to support this bill.
Mr. PERLMUTTER. Mr. Speaker, I thank the gentleman from Kentucky for
his work on this bill and his input on the card processing piece of the
legislation.
I yield 3 minutes to the gentleman from Oregon (Mr. Blumenauer). He
has put the effort together across a whole range of cannabis issues. I
thank him for his steadfast work on this subject.
{time} 1645
Mr. BLUMENAUER. Mr. Speaker, it is an honor to be here with my
friend, Mr. Perlmutter, and the bipartisan support that we are
receiving from Mr. Stivers. We are going to hear in a moment from the
distinguished gentleman from Ohio (Mr. Joyce), who has been a champion.
Sadly, I feel my good friend from North Carolina could have given his
speech 25 years ago. The legalization train has left the station. This
is a business in the United States that is approaching $20 billion of
revenue this year.
As has been pointed out, 97 percent of the American public has access
to some form of legal cannabis. Medical cannabis, 4 million patients
utilize it.
Mr. Speaker, this is an issue that has arrived, and it is being held
captive of the past practice by pretending that the Federal Government
can wish away the legalization of this subject. They can't. The flawed
Federal policies create serious problems.
As Mr. Perlmutter pointed out, we have had over 100 robberies in my
community, including a fatality. These cash-only enterprises are
sitting ducks for people who have nefarious aims. It is an invitation
for money laundering now because of the vast amount of cash that is
circulated.
It impacts so many legitimate businesses, real estate, insurance,
attorneys, accountants, who get caught up. We already heard reference
to what happened to Mr. Stivers' constituent in Ohio, a business that
provides gardening supplies, that risks losing their bank account.
It is time for us to address this inconsistency. It is time for us to
pass, again, the SAFE Banking Act. And it is time for us to move
forward with legalization on the Federal level with the MORE Act, which
will resolve these inconsistencies.
Once and for all, give the American people what they want and what
they repeatedly vote for across the country. Unleash this State legal
business to realize its full potential for health, the economy, and a
cry for racial justice.
I appreciate us being at this point for a critical first step along
the torturous path to full legalization, which I am confident will
happen this Congress and not a moment too soon.
Mr. Speaker, I rise today to acknowledge the tragic passing of Steve
Fox, a pioneering advocate, strategist, a true leader in the marijuana
cannabis legalization effort.
It is fitting today that we are passing the SAFE Banking Act. We
wouldn't be where we are today without Steve and his amazing efforts.
His life work, leadership, and strategic brilliance are unmatched.
Passing this critical legislation today would be a small part of a
fitting memorial for a man whose efforts made it possible, indeed,
imperative to solve this problem.
I first met Steve as we were strategizing on the Oregon legalization
effort. Back in 2013, after the Colorado legalization campaign that he
orchestrated had passed and before Oregon joined the ranks of
legalization, he was already a legend. He pioneered so much of the
groundwork for the legalization movement that exploded after the
success of the Colorado campaign which owed so much to his strategic
brilliance.
Steve was thoughtful, hardworking, and self-effacing. While this has
become a national movement with many leaders now emerging, none compare
with Steve. Few will fully understand his many contributions and
importance. I for one will miss his genuine, quiet leadership.
As someone who's been working on this longer than anyone in American
politics, I know we are all deeply, deeply indebted to Steve. We mourn
his loss, extend our thoughts to his family and many friends.
This should be the year that we finish the pioneering work of his
career. It would be a fitting capstone to a lifetime of cannabis
leadership, activism, and progress.
Mr. McHENRY. Mr. Speaker, I would say that if we are going to have
legalization of cannabis, let's have legalization of cannabis and do it
in regular order in the House of Representatives, not have it come
through the Financial Services Committee. I wanted to be clear, and I
wanted to make sure my colleague heard that.
But I do commend my colleague, Mr. Perlmutter, for taking every bit
of the jurisdiction that we currently have and using it smartly for the
best outcome possible.
I yield 2 minutes to the gentleman from Ohio (Mr. Joyce), my
colleague and good friend.
Mr. JOYCE of Ohio. Mr. Speaker, I rise in favor of H.R. 1996, the
SAFE Banking Act of 2021, and I am proud to help lead this commonsense,
overdue effort.
The vast majority of States, including my own, have enacted laws
that, to varying degrees, permit their residents to use cannabis.
However, the Federal Government has not only infringed on the inherent
right of these States to implement those laws, but also stifled medical
research, diverted law enforcement resources needed elsewhere, and
hindered legitimate businesses, businesses that provide vital services
to cancer patients, veterans, and those seeking opioid alternatives for
pain management.
Because of the Federal interference in this arena, cannabis companies
are not afforded the same access to financial services as every other
legal business in our country.
With banks refusing to accept their money out of fear of Federal
repercussions, these businesses are forced to operate in all cash. They
pay their workers in cash, store cash in vaults on-site, and hire
armored cars and trucks to transport cash to pay taxes.
As a former prosecutor, I can tell my colleagues that this is a
serious public safety issue.
But it is not just cannabis companies that are paying the price for
this antiquated policy. Small businesses that provide services to
State-legal cannabis companies can also be targeted by the Federal
Government, such as plumbers, electricians, and even soil and
fertilizer businesses.
Regardless of where you stand on the legality of cannabis, I think we
can all agree that it shouldn't be that hard to sell a bag of dirt.
At a time when small businesses are just beginning to recover from
the economic destruction caused by COVID-19, the Federal Government
should be supporting them, not standing in their way. Congress must
provide financial certainty to these businesses and safety to their
employees.
Many of my colleagues have shied away from this issue because they
are under the impression that it doesn't impact their constituents. But
as I have outlined here today, it most certainly does.
The American people across the majority of States, both red and blue,
have voted to enact sensible cannabis reforms. I encourage all of my
colleagues to respect the will of their constituents and the rights of
their States and begin engaging in these reforms.
It is past time we address the antiquated cannabis policies and
remove unnecessary red tape. I strongly urge
[[Page H1923]]
my colleagues on both sides of the aisle to vote in favor of the SAFE
Banking Act so we can take a step in that direction.
The Federal Government can no longer afford to fail on an issue that
our States have taken the lead on.
Mr. McHENRY. Mr. Speaker, may I inquire how much time I have
remaining.
The SPEAKER pro tempore. The gentleman from North Carolina has 5
minutes remaining.
Mr. McHENRY. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman
from Florida (Mr. Gaetz).
Mr. GAETZ. Mr. Speaker, I thank the ranking member of the Financial
Services Committee for yielding.
I rise in support of the SAFE Banking Act, which I am honored to
introduce with my colleagues, Mr. Joyce, Mr. Perlmutter, Mr.
Blumenauer, and others.
It seems the war on drugs is a lot like so many of the other forever
wars that this Congress confronts, deeply unpopular in all parts of the
country except Washington, D.C.
I commend the majority party for bringing this bill to the floor and
allowing businesses that serve particularly medical marijuana patients
the opportunity to access the U.S. financial system.
There is an important part of this legislation that bears note. With
the SAFE Banking Act, we will have an unprecedented opportunity for
research and collaboration, which did not exist previously and which
doesn't exist now.
There are so many universities, medical centers, other research
institutions that would like to partner with and work alongside
marijuana businesses with the opportunity to improve health outcomes
for patients and to bring relief to people who badly need it.
I would implore my colleagues in the majority party to reach out to
President Biden as I did to President Trump. Ask him to take executive
action to remove marijuana from the list of schedule I drugs so that we
can accelerate marijuana reform for the benefit of our fellow Americans
and those who are in need and in pain and are counting on it.
Mr. PERLMUTTER. Mr. Speaker, I include in the Record these
endorsements for the SAFE Banking Act, including from the American
Bankers Association, the American Council of Independent Laboratories,
the American Council of Life Insurers, the American Financial Services
Association, the American Land Title Association, the American Property
Casualty Insurance Association, the American Trade Association for
Cannabis and Hemp, the Arizona Dispensaries Association, the California
Cannabis Industry Association, and the National Armored Car
Association. It goes on forever. I am not going to list all of these.
There are about 50 different endorsements.
H.R. 1996, the SAFE Banking Act of 2021--Endorsements
American Bankers Association; American Council of
Independent Laboratories; American Council of Life Insurers;
American Financial Services Association; American Land Title
Association; American Property Casualty Insurance
Association; American Trade Association for Cannabis and
Hemp; Arizona Dispensaries Association; California Cannabis
Industry Association; California and Nevada Credit Union
Leagues; Cannabis Business Association of Illinois; Colorado
Bankers Association; Colorado Municipal League; Credit Union
National Association; Council of Insurance Agents & Brokers;
Electronic Transactions Association; Independent Community
Bankers of America; Independent Insurance Agents & Brokers of
America; Law Enforcement Action Partnership; Mountain West
Credit Union Association; National Armored Car Association;
National Association of Mutual Insurance Companies; National
Association of Professional Insurance Agents; National
Association of Realtors.
National Cannabis Roundtable; National Cannabis Industry
Association; National Medicinal Cannabis Coalition; National
Organization for the Reform of Marijuana Laws; Minority
Cannabis Business Association; Policy Center for Public
Health & Safety; Reinsurance Association of America; Rural
County Representatives of California; The Real Estate
Roundtable; United Food and Commercial Workers; U.S. Cannabis
Council; U.S. Hemp Roundtable; Wholesale & Specialty
Insurance Association; TerrAscend USA; NUG, Inc.; Cresco
Labs; 4Front Ventures; Terrapin Care Station; Full Spectrum
Omega, Inc.; National Association of State Treasurers; Four
Attorneys General from Colorado, the District of Columbia,
North Dakota, and Ohio; 21 Governors from California,
Colorado, Connecticut, Illinois, Louisiana, Maine,
Massachusetts, Michigan, Nevada, Nevada, New Jersey, New
Mexico, New York, Oregon, Pennsylvania, U.S. Virgin Islands,
Utah, Virginia, Washington, West Virginia, and Wisconsin; 51
state and territory banking associations.
Mr. McHENRY. Mr. Speaker, I yield myself such time as I may consume.
I want to repeat this from my earlier remarks. This bill represents
one of the biggest changes to U.S. drug policy. If we want banks to
provide services risk-free, then we should do it thoughtfully and
address the legality of cannabis instead of this workaround. This bill
represents a yeoman's task of a legal framework so that funds from
cannabis in those legalized States can be legally banked.
But that is not a holistic approach to this issue, nor should it be
the Financial Services Committee leading the debate, which we have had
one hearing on in the last 3 years in this committee--actually, you
could say probably one hearing in the last decade on the Financial
Services Committee. Yet, we have this bill, which, frankly, on its face
is a very well-balanced bill to fix a glaring problem that is happening
across the country.
This bill will legalize the banking of a federally illegal product. I
am sure the irony of this is not at all lost on the American public.
The drug cartels, frankly, are keen to this, and other bad actors are
keen to this. They will attempt to take advantage of this if it is not
well-implemented, if it is not thoughtfully implemented, especially if
those things are not the case.
No matter how we spin what is happening right now, we currently have
a crisis at the southern border, and human trafficking is certainly a
part of that; a desire to come to the United States is certainly a part
of that; and the movement of illegal drugs into the United States is
certainly a part of that. This doesn't help with that crisis at the
southern border.
Again, we are the House Financial Services Committee. We are not the
Homeland Security Committee, and we are not the Appropriations
Committee, so we can't fix all things within our jurisdiction.
Let me close with this. I do not support this bill because it
represents a workaround to a much bigger debate that we need to have in
the United States, and that is whether or not cannabis should remain a
schedule I substance under the Controlled Substances Act. This fact is
the bigger issue that I think this Congress should wrestle with, and I
would welcome it. In fact, I think we can have a much more nuanced
debate here.
But I do want to close by thanking my colleagues for creating a very
thoughtful product. This legislative text is much improved upon from
where it was originally. I thank my colleague, Mr. Perlmutter, for
leading that conversation and leading that set of negotiations.
It has taken years to produce this product. It is strong legislative
text. It is a strong legal framework. Even though I have pointed out a
number of its deficiencies and challenges, I do see on its face how
this would resolve a huge problem in a large number of States.
I understand that, and I am inviting the larger discussion about
cannabis, as well. I think we need to have that conversation.
But I do thank my colleague, Mr. Perlmutter, for his leadership
there, and I thank my colleagues, Mr. Stivers, Mr. Davidson, and Mr.
Joyce, on our side of the aisle for engaging in that, as well as Mr.
Luetkemeyer and Mr. Barr who dealt with particular issues in their
States and their jurisdictions, as well.
Mr. Speaker, I urge my colleagues to vote ``no,'' but I understand if
they do vote ``yes.'' I yield back the balance of my time.
Mr. PERLMUTTER. Mr. Speaker, I thank the gentleman from North
Carolina. To his point that there is a broader discussion that has to
take place, the purpose of this bill is a public safety purpose. Its
purpose is to keep people from being killed, from being robbed, and
from being assaulted. That is within the Financial Services Committee
arena because, at this point, the cannabis industry and the people who
serve it in one way or another have to deal in cash, which really
creates the
[[Page H1924]]
potential for the robberies, for the murders, and for the assaults.
We have been able to gather a lot of support for this. I mentioned
the bankers, the credit unions, the insurance industry, the cannabis
industry, obviously, the real estate industry, the armored cars, and
the minority cannabis industry. Law enforcement is supportive of this.
We have the National Treasurers Association, 21 Governors, and
attorneys general because they know this is a public safety matter and
that we really need to address it.
We have been working on it for some time, as the gentleman from North
Carolina mentioned, but we need to get this to the Senate. They need to
take whatever action they want to take, but we have to make our
communities and these businesses safer.
The SAFE Banking Act is about public safety. Our bill is narrowly
tailored to get cash off the streets and improve public safety.
I thank my lead cosponsors on this bill, Representatives Velazquez,
Stivers, and Davidson, and all of my colleagues who have listened to me
talk about the need to address this problem for the last 8 years.
{time} 1700
I also thank the staff of the Committee on Financial Services, the
staff from my lead cosponsors, and my own staff, who put so much time
into this bill.
Mr. Speaker, I urge all of 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. 1996, 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. ROSENDALE. Mr. Speaker, on that I demand the yeas and nays.
The SPEAKER pro tempore. Pursuant to section 3(s) of House Resolution
8, the yeas and nays are ordered.
Pursuant to clause 8 of rule XX, further proceedings on this motion
are postponed.
____________________