Cannabis: In Focus
- Cannabis Banking Reform Possible During Lame-Duck Session
- Nevada Court Removes Cannabis from State’s Controlled Substances List
Cannabis Banking Reform Possible During Lame-Duck Session
The SAFE Banking Act has passed the House in some form seven times, only to stall in the Senate, but some hope that recent positive momentum for the cannabis industry might lead to the passage of banking reform in the forthcoming session of Congress after the midterm elections.
Senate Majority Leader Chuck Schumer (D-NY) says Congress is making progress towards introducing and passing a much-anticipated bipartisan SAFE Banking Plus package, which merges restorative justice components with protections for financial institutions that work with regulated cannabis companies.
As we have noted previously, the SAFE Banking Act would enable financial institutions to support the cannabis industry by eliminating two major risks of adverse government action. The proposed law explicitly permits financial institutions to do business with cannabis companies and prohibits the government from terminating or limiting a financial institution’s deposit or share insurance solely because the institution works with a cannabis business. In addition, the bill would provide protections for other financial service providers, such as payment processors, from liability solely because of their activities providing services to legitimate cannabis businesses and investing income derived from such services. Currently, federal restrictions on cannabis have prompted only a limited number of financial institutions to take on the risk of providing banking services to cannabis companies. And those that do charge exorbitant fees and costs that foreclose the services to many—predominately affecting small and diversity-owned entities. As a result, the economic development of cannabis businesses, and especially small and diversity-owned entities, has been impeded through reduced liquidity, heightened entry barriers, and heightened security issues for some businesses forced to depend on cash transactions.
Many stakeholders have announced support for SAFE Banking. A recent poll conducted by the American Bankers Association showed that two in three Americans would like Congress to pass a bill that would allow state-legal cannabis businesses to access traditional banking services. The NAACP also recently announced its support for SAFE Banking. Earlier this year, the Conference of State Bank Supervisors released open letters to the House and Senate calling for the SAFE Banking Act to not only be retained but also be expanded. Coalitions of state governors, attorneys general, and treasurers previously announced their support of SAFE Banking’s protections (here, here, and here).
Nevada Court Removes Cannabis from State’s Controlled Substances List
On October 26, 2022, a Nevada state court ordered that cannabis be removed from Schedule I of Nevada’s Uniform Substances Act. As we previously reported, the court ruled in September that the Nevada Board of Pharmacy’s classification of cannabis as a Schedule I substance violated the state constitution but reserved ruling on whether the Board of Pharmacy has the authority to regulate cannabis—until last week, when the court found the Board did not have such authority.
After Nevadans voted twice to legalize cannabis (first for medical use in 1998, and then for adult use in 2016), the state’s constitution was changed to acknowledge that cannabis has a medical use, but the Board of Pharmacy did not change the state’s designation of cannabis as a Schedule I substance, which is reserved for substances that have no medical benefits and high risk of abuse.