In a landmark move, U.S. House lawmakers on Wednesday approved overwhelmingly by a 321-103 vote legislation that would pave the way for financial institutions and insurance companies to serve state-legal marijuana businesses without fear of federal reprisal.

Ninety-one Republicans voted for the measure known as the SAFE Banking Act in a showing of strong bipartisan support.

The bill – the first piece of cannabis legislation passed by either the full House or Senate – needed a two-thirds majority of those present and voting.

While Wednesday’s vote is a huge historic step for the marijuana industry, this move alone isn’t expected to substantially change MJ businesses’ financial situations as they relate to banking – unless the Republican-controlled Senate follows suit.

Senate approval is expected to prove a higher hurdle, although Senate Banking Chair Michael Crapo, an Idaho Republican, recently said he is committed to having his committee vote on a cannabis banking measure. The strong Republican vote in the House bill also may bode well.

Marijuana industry reactions

“We applaud the House for approving this bipartisan solution to the cannabis banking problem, and we hope the Senate will move quickly to do the same,” Neal Levine, CEO of the Cannabis Trade Federation, which lobbied in support of the bill, said in a statement.

“Allowing lawful cannabis companies to access commercial banking services and end their reliance on cash will greatly improve public safety, increase transparency and promote regulatory compliance.”

The House vote alone may encourage smaller financial institutions to serve the cannabis industry, Morgan Fox, media relations director of the National Cannabis Industry Association (NCIA), wrote in an email to Marijuana Business Daily this week.

But approval in one chamber of Congress likely doesn’t provide the assurances that larger risk-averse banks require, he noted.

Support from bankers’ association

A number of banking organizations, most notably the American Bankers Association (ABA), have been in strong support of cannabis banking reform.

But the ABA also has been clear that explicit protection and guidance is needed from federal banking regulators so financial institutions don’t run the risk of being punished under federal laws, such as money-laundering statutes.

MJ industry looks to move beyond mostly cash operations

The vote marked the culmination of a six-year effort by a group of lawmakers led by U.S. Rep. Ed Perlmutter, a Colorado Democrat, to push for cannabis banking reform.

Over time, politicians, prosecutors and financial industry associations increasingly advocated for reform, recognizing that the mostly cash industry not only poses public safety risks but also increases the likelihood for financial crimes.

Major industry associations – the Cannabis Trade Federation, the National Cannabis Industry Association and the National Cannabis Roundtable – all lobbied hard in recent months to assure Wednesday’s passage.

Provisions and moving forward

The amended bill includes provisions aimed at making financial institutions more comfortable serving the now-legal hemp and hemp-derived CBD markets.

Some civil rights groups wanted Congress to address comprehensive reform with social justice provisions first, rather than cannabis banking, which is seen as mostly an issue benefiting the marijuana industry.

But strategists saw cannabis banking reform as an easier victory, and one that can build the momentum for more comprehensive reform.

David Mangone, policy director for The Liaison Group, a federal cannabis lobbying group, noted that passage of cannabis banking reform will help individuals and communities that were victims of the war on drugs.

“Having access to traditional banking services goes a long way toward addressing those wrongs,” he said.

Steven Hawkins, executive director of the Marijuana Policy Project, concurred in a statement, noting that the legislation will help “provide resources for those with limited access to capital and increase the chances of success for state-level social equity initiatives.”

Matt Markiewicz, managing director of The Cannabis ETF, a cannabis exchange-traded fund, said in a statement Wednesday that cannabis banking reform, if it passes both congressional chambers, would represent a “transformational event” for the industry in terms of expanding access to much needed capital.

“However, from what I am hearing, full-blown capital markets access may have to wait for passage of more comprehensive legislation,” he wrote.

Meanwhile, Rep. Jerrold Nadler, a Democrat from New York and the chair of the House Judiciary panel, said he is committed to working to advance his comprehensive marijuana bill that includes social and criminal justice provisions.

Nadler made the statement on Tuesday in advance of the vote on the SAFE Banking Act.

He recently introduced the sweeping reform bill dubbed the Marijuana Opportunity Reinvestment and Expungement (MORE) Act of 2019 that would legalize marijuana nationally.

Jeff Smith can be reached at [email protected]