(Bloomberg) -- A marijuana banking measure was left out of a must-pass defense bill, significantly narrowing the chances that legislation to clear the way for legal cannabis businesses to use the financial system can get passed before Democrats lose control of the House in January.
A bipartisan group of senators had been negotiating to include a version of a bill known as the SAFE Banking Act in the annual National Defense Authorization Act, but the attempt ran into stiff opposition from Republican leaders.
The bill, introduced by Senators Jeff Merkley, an Oregon Democrat, and Steve Daines, a Montana Republican, would prohibit federal banking regulators from penalizing banks and other depository institutions for providing services to legal cannabis businesses.
Senate Republican leader Mitch McConnell on Tuesday expressed opposition to using the defense bill, enacted annually for more than 60 years, as a vehicle for a host of other priorities including “making our financial system more sympathetic to illegal drugs.”
This is the second failed attempt in months to get the measure approved in a larger package.
With time running out in this session of Congress the chances to pass the legislation are slim, though lawmakers could potentially attempt to attach the measure to a government funding package being debated.
Many banks eschew marijuana businesses because while the drug is legal in many states it remains illegal at the federal level. Access to the banking system would be a boon for the industry, with companies struggling to compete with a thriving illicit market. At the same time, state regulators are expressing concern about the health risks of THC, and a workaround to the banking system known as cashless ATMs has just begun to shut down.
Proponents of the legislation also have argued that blocking financial service access to cannabis business owners creates a safety risk because these businesses are forced to deal in cash.
The House passed its version of the SAFE Banking Act last year with bipartisan support, but it has not been taken up in the Senate despite having nine Republican co-sponsors.
--With assistance from Roxana Tiron and Tiffany Kary.
©2022 Bloomberg L.P.