Daines bill would allow cannabis businesses to bank

Montana Republican Sen. Steve Daines on Tuesday introduced a Senate bill to grant banks permission to provide services to cannabis businesses, aptly timed for wider participation in Montana’s upcoming recreational marijuana market.

Movement on the federal legislation comes as Montana lawmakers are preparing to heave a 264-page piece of legislation through the remaining weeks of the legislative session. As marijuana remains illegal at the federal level, banks are prohibited by federal law from providing cannabis companies with any financial service, including bank accounts, credit cards and business loans. That means businesses are cash-only, which can lead to additional accounting costs and occasional security issues.

The draft that surfaced at the Montana Legislature last week was written to allow banks to work with marijuana businesses, although it would require a change at the federal level, which supersedes state law, for banks to get involved. 

The Secure and Fair Enforcement (SAFE) Banking Act first passed the House in 2019, but had stalled in the GOP-controlled Senate without ever getting a vote. Last November cannabis stocks soared as Montana and four other states passed legalization measures.

Daines signaled support for the legislation in February, announcing he would co-sponsor the SAFE Banking Act, filling a support role on the GOP side for former U.S. Sen. Cory Gardner, a Republican from Colorado who co-sponsored the SAFE Banking Act last year. As Gardner had, Daines will co-sponsor the legislation with a Democrat to give the bill legs as a piece of bipartisan legislation. Montana Democratic Sen. Jon Tester has co-sponsored the bill, as well.

Daines announced in a press release Tuesday morning he would co-sponsor the bill with Sen. Jeff Merkley, a Democrat from Oregon. In the release issued through Daines’ office, the Montana Independent Bankers Association and the Montana Credit Union Network hailed the SAFE Act as a safety net for businesses who would be able to secure accounts.

“Montana businesses shouldn’t have to operate in all cash, they should have a safe way to conduct business,” Daines said in an emailed statement. “My bipartisan bill will provide needed certainty for Montana businesses and give them the ability to freely use banks, credit unions and other financial institutions without the fear of punishment. This in turn will help increase public safety, reduce crime, support Montana small businesses, create jobs and boost local economies. A win-win for all.”

The Montana Banking Association last year opposed the ballot initiative to legalize marijuana because banks would be barred from servicing businesses. At the time Cary Hegreberg, the association’s president and chief executive officer, said a lot of cash flowing around without accounts would “invite mischief.” Hegreberg said before the election his association would remain opposed to legalization until Congress allowed banks to provide services to marijuana-related businesses or legalized cannabis. 

In November, 57% of Montana voters passed legalization. Fourteen states have now legalized cannabis, while another 16 have decriminalized it. Thirty-three states have enacted medical marijuana laws.

The federal legislation would provide legal protections against criminal prosecution for banks that provide services to fully licensed cannabis businesses. It would also prohibit federal banking regulators from prohibiting banks or lawyers or landlords from providing services to cannabis businesses that are fully licensed with the state. 

Rep. Mike Hopkins, the Missoula Republican who will carry the implementation bill in the Montana Legislature, said Tuesday federal legislation would help the industry develop into a healthy business landscape.

“I’m looking at it as going in to the future, adult-use marijuana in the state of Montana deserves to be, and as has been demonstrated through the medical program, to be part of the regular business community,” Hopkins said. “Getting that wrapped up makes sure folks who are doing good business … have the opportunity to grow their business just like any sector.”

In January, the Montana Department of Revenue requested from the Legislature $250,000 to construct a secure cash room to safely handle tax revenues from the upcoming businesses. That request was part of a broader bid for funding to start up the department’s new recreational marijuana program, but lawmakers rejected the initial ask, stating in committee hearings that it was too early to know how much to spend on the program. 

Richard Abromeit, chief executive officer of Montana Advanced Caregivers in Billings, said Tuesday in a phone interview the bill could reduce the burden on marijuana businesses.

“There’s so much labor in being a cash-only business, I see no downfalls in being able to be allowed to bank,” Abromeit said. “I see it as finally bringing transparency to the cannabis industry.”

Banking records lend credibility to any industry, and by banking as a regular business the upcoming recreational market will have a degree of accountability that could build trust in the new industry, Abromeit said.

Tester, who also co-sponsored the legislation when it was passed to the Senate in 2019, acknowledged the safety concerns associated with cash-only businesses.

“Forcing legal, fast-growing Montana industries to operate in all cash raises serious public safety concerns, which is why financial institutions should be allowed to provide services to legitimate Montana businesses,” Tester said in an emailed statement. “This bill will give these Montana-owned businesses certainty, and ensure they have access to the financial services they need to thrive.”