House Passes SAFE Banking Act, Which Includes Provisions to Stop ‘Operation Choke Point’

Apr 28, 2021Congressional Legislation, News

, Last week, the U.S. House of Representatives passed the SAFE Banking Act, legislation that would allow banks and other financial institutions to serve cannabis companies in states where cannabis has been legalized. It clarifies that proceeds from cannabis transactions would be considered legal, and it guides federal regulators in drafting rules for how they intend to supervise such banking activity.

The bill also included language on Operation Choke Point, an Obama-era program that targeted legal businesses with negative perceptions. Although federal regulators say the program is no longer operating, the language originally added to the bill in the last Congress would statutorily prohibit federal regulators from treating businesses differently solely based on their public reputations.

“This bill includes provisions to stop Operation Choke Point (OCP) that Republicans couldn’t even get passed when we had the presidency, the Senate and the House,” said Representative Steve Stivers (D-Ohio). “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 payment system.”

Operation Choke Point formally ended in 2017 after Republican lawmakers charged that it was hurting legitimate businesses, according to Politico. “Law abiding businesses should not be targeted simply for operation in an industry that a particular administration might disfavor,” the lawmakers wrote.

The American Bankers Association (ABA) has diligently lobbied for the SAFE Banking Act, according to an article from Reuters. Banks have been hesitant to do business with companies that sell cannabis, which have left those companies with few banking options.

“Banks find themselves in a difficult situation due to the conflict between state and federal law, with local communities encouraging them to bank cannabis businesses and federal law prohibiting it,” the ABA wrote to lawmakers. 36 states have legalized medical cannabis, while 17 states have legalized adult use.

Chuck Schumer, Senate Majority Leader, recently stated that he would try to advance legislation to legalize marijuana for adults, and would like to see the SAFE Banking Act progress as a more comprehensive measure.


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