April 23, 2021

House Approves Cannabis Banking Legislation

This week, the House voted 321-101 to approve legislation that would help state-legal cannabis and ancillary businesses gain improved access to financial services. Specifically, the bill (HR 1996) would exempt depository institutions and their employees from federal prosecution or investigation solely for providing banking services to a state-legal cannabis-related business. In addition, the measure would clarify that the safe harbor protections would extend to hemp and cannabidiol (CBD) companies.

Despite its status as a legal drug in California, one of the most significant hurdles for the cannabis industry continues to be access to traditional banking services. Due to the conflict between state and federal law, banks have generally been reluctant to open accounts for such businesses out of fear that the transactions may be flagged by federal regulators. This essentially forces legal cannabis operators to conduct all of their transactions in cash, including payroll, property tax payments, local regulatory fees and taxes, and other typical business transactions. Moreover, the disconnect between state and federal law makes it extremely difficult for local governments to audit these companies for taxation purposes. The all-cash nature of the industry also poses a significant public safety risk for business owners, their employees, and their customers.

The vote this week marks the fourth time that the chamber has approved the legislation, which is known as the SAFE Banking Act. The bill was cleared as a standalone measure in 2019 and then twice more as part of coronavirus relief legislation. However, the legislation has yet to move forward in the Senate. Earlier this year, newly installed Banking Committee Chairman Sherrod Brown (D-OH) announced that he was willing to advance the bill in committee, but would only do so if it was accompanied by sentencing reform for drug offenses. At the same time, Chairman Brown has indicated that his panel has a number of other priorities.

Senate Republicans Unveil Infrastructure Counteroffer

On April 22, senior Senate Republicans unveiled the framework of a five-year, $568 billion infrastructure proposal, which will serve as a counteroffer to President Biden’s eight-year, $2.25 trillion American Jobs Plan. Unlike the president’s plan, the GOP alternative focuses more on traditional infrastructure. Specifically, the proposal would dedicate $299 billion to roads and bridges – more than double what was proposed under the American Rescue Plan – $61 billion to transit, $44 billion to airports, $20 billion to rail, and $17 billion to ports. It also would invest $65 billion into broadband, $35 billion into drinking water and wastewater projects, and $14 billion into water storage.

While Democrats will seek to increase corporate tax rates to pay for new infrastructure spending, GOP senators have indicated their opposition to rolling back any of the 2017 tax cuts. However, aside from references to taxing electric cars and repurposing unspent funds, the Republican plan includes few specifics on pay-fors, although it does offer support for extending the cap on state and local tax deductions.

For their part, Democrats are divided on the Republican offer. While some are viewing the proposal as an opening bid in bipartisan negotiations, others have called it a nonstarter. Looking ahead, it’s unclear if Democrats will choose to engage with their colleagues across the aisle or if they will attempt to go at it alone via the budget reconciliation process.

Congressman LaMalfa Introduces Bill to Improve Forest Health, Mitigate Wildfire Risk

Congressman Doug LaMalfa (R-CA) recently introduced legislation – the Restoring Environments, Soils, Trees, and Operations to develop the Rural Economy (the RESTORE Act; HR 2612) – that would provide new tools for the U.S. Forest Service to work with states on landscape-scale management projects to prioritize reduction of wildfire risk. Specifically, HR 2612 would authorize the Forest Service to conduct projects on up to 75,000 acres, at the request of the state’s Governor. The bill also would streamline the environmental review process by allowing USDA to only consider an “action” and a “no action” alternative in preparing an Environmental Assessment or Environmental Impact Statement pursuant to the National Environmental Policy Act.

A summary of the bill can be found here.