“Choke Point” Language Added to Cannabis Legislation
The House of Representatives is expected to vote on the Secure and Fair Enforcement (SAFE) Banking Act later this month. To attract Republican support, Democratic leadership has added an amendment targeting the revival of Operation Choke Point.
Currently, cannabis is illegal under federal law, making it difficult for banks and credit unions to provide services, like savings accounts, to cannabis-related businesses. Most financial institutions choose to forgo working with these entities all-together, but the ones that work with them tend to charge a premium in order to cover costly red tape and the potential of future financial penalties.
Back in March, the House Financial Services Committee voted in favor of the SAFE Banking Act of 2019, which would allow banks, credit unions, and insurers to work with cannabis-related businesses without incurring financial penalties from federal regulators. Although this bill is expected to pass the House, it faces uncertainty in the Republican-controlled Senate.
In a surprising move, Senator Mike Crapo (R-ID), chairman of the powerful Senate Banking Committee, announced that the committee would eventually vote on a cannabis-related bill, despite the Senator not personally supporting cannabis legalization.
“We’re working to try to get a bill ready. I’m looking to see whether we can thread the needle,” said Senator Crapo. “We may craft our own bill or we may work with them to craft any amended legislation.”
According to Politico, Democratic leadership added language on Operation Choke-Point – an Obama-era program that targeted legal businesses with negative reputations like payday lenders and gun stores – to the SAFE Banking Act in order to attract Republican support, namely in the Senate. Federal regulators have stated that the program has ended, but the new bill language would statutorily prohibit federal regulators from treating businesses differently solely based on their public reputations.
Experts gave the original bill only a 2 percent chance of being enacted, but the new language on Operation Choke Point will likely increase its chances considerably.