May 11, 2023

At Hearing, Senator Warren Calls for Federal Legalization of Marijuana, Highlights Need for Passage of the SAFE Banking Act

Video of Exchange (YouTube)

Washington, D.C. — At a hearing of the Senate Banking, Housing, and Urban Affairs (BHUA) Committee, U.S. Senator Elizabeth Warren (D-Mass.) highlighted the need for the SAFE Banking Act, which would create a safe harbor from prosecution, asset forfeiture, or other liability for financial institutions that serve cannabis businesses, as a critical step toward helping cannabis businesses access safe banking services and protecting workers from the safety risks of working in cash-only businesses. . Senator Warren also called for the federal legalization of marijuana and the need to update our banking laws to take equity into account. 

Transcript: Examining Cannabis Banking Challenges of Small Businesses and Workers.
U.S. Senate Committee on Banking, Housing, and Urban Affairs
Thursday, May 11, 2023

Senator Elizabeth Warren: Thank you, Mr. Chairman.

I think the SAFE Banking Act is a long overdue step to help legal cannabis businesses in Massachusetts and all across the country be able finally to open bank accounts, accept credit cards, and access other basic banking services. Businesses need these services to operate safely and successfully, and workers need the protection from safety risks of working in cash-only businesses.

I look forward to working with my colleagues to pass this bill, but it cannot be the end of our work on marijuana policy. That’s because, as long as marijuana remains criminalized federally, we’re not fully fixing the problem. If people can still get busted for purchasing marijuana, many banks will find it too risky to serve legal cannabis businesses – no matter whether we tell them it’s technically okay. 

Now, I’ve pushed the Administration to use its administrative authority to deschedule marijuana. Like my friend and neighbor, Mr. Sabet said in his opening testimony: no one should be incarcerated just because they got caught with a joint. The White House has directed HHS and DOJ to review how marijuana is scheduled. That will affect research going forward and what we come to understand about it, but we need to see those agencies act.

Ms. Packer, you have years of experience in the cannabis industry, both as a regulator and as a drug reform advocate. Would fully decriminalizing marijuana at the federal level help ensure that small businesses get full access to safe, formal financial services?

Ms. Cat Packer, Vice Chair, Cannabis Regulators of Color Coalition: Thank you, Senator Warren. I appreciate all the work that you're doing to push the administration to take further acts. Yes, it would certainly help. The reality is that even with a safe harbor, many financial institutions are likely to continue to view the industry as risky due to its Schedule 1 status. And even if cannabis was scheduled, rescheduled, for example, to Schedule 5, the small businesses and workers that we're talking about today, they'd still be criminalized. And so I want to just emphasize this: the only way to eliminate the criminality of small businesses and workers is to completely remove cannabis from the Controlled Substances Schedule. We want to deschedule not reschedule.

Senator Warren: I hear your point and I recognize that descheduling not only helps ensure that small cannabis businesses have access to safe, formal financial services, but it also deals with a bigger problem. And that is, while the SAFE Banking Act is a critical step on cannabis reform, we risk creating a system in which banks enjoy a safe harbor from prosecution for financing marijuana businesses while thousands of people remain incarcerated for marijuana activities.

In my view, the best solution is full federal decriminalization. But we should also make sure that updates to our banking laws take equity into account. 

For example, when banks consider whether to serve a cannabis business, they consider the red flags that are laid out in the 2014 FinCEN guidance. 

One of those red flags is whether the business’s owner has a drug-related conviction, which could include a conviction for something like a marijuana purchase. So even as we try to move away from penalizing nonviolent marijuana activity, a penalty for marijuana activity is baked into lending decisions. And we know that Black Americans are almost four times more likely than White Americans to be arrested for marijuana possession.

So Ms. Packer, would making it clear that financial institutions should not consider a marijuana criminal record an automatic red flag make our banking system more equitable? 

Ms. Packer: Yes, it absolutely would. The reality is that we're in a situation today – it's no longer 2014, right? Since 2014, we've had 25 states. We're at a point now where we have 25 states that have passed laws to expunge records, provide folks second chances. We're also in a situation where we have 15 states that include people with past cannabis criminal records – affirmatively allow these people to participate. We don't want to sit here and tell states either that their state policies don't matter and that they can't pick and choose who should be a part of their market. 

Senator Warren: That’s actually a very good point. You know, the SAFE Banking Act requires FinCEN to update its guidance when this bill becomes law, and this change should be at the top of their list. 

We need a comprehensive, all-of-the-above approach to cannabis reform that includes SAFE Banking as well as decriminalization, pardoning and expungement of criminal records, and other steps to begin to address decades of harmful and racially discriminatory cannabis laws.

Thank you, Mr. Chairman.