Courting Crapo: Today’s Senate Banking Hearing Was All for One Man

Published on July 23, 2019 · Last updated July 28, 2020
(Phototreat, khvost)

The struggle to provide basic banking services to America’s legal cannabis companies got its first full airing before a US Senate committee this morning, and it proved to be a short and oddly lopsided affair.

Sen. Crapo made no secret of his distaste for cannabis. But will he let the banking bill go through?

Most state-legal cannabis companies are unable to use traditional banks and credit unions because of federal anti-money laundering laws. This forces them to operate as all-cash businesses, exposing their employees to risk of robbery and increasing opportunities for theft and tax evasion. Bank loans for cannabis companies are nonexistent. This is the fastest growing industry in America and it can’t open a checking account.

Congress’ proposed SAFE Banking Act would remove most of the federal barriers and allow banks to work with state-legal cannabis companies.

Meet Sen. Mike Crapo

The most powerful barrier standing in the way of that bill is Sen. Mike Crapo, the Idaho Republican who chairs the Senate Committee on Banking, Housing, and Urban Affairs. Crapo, a longtime prohibitionist, represents one of the only three states that continue to outlaw cannabis in any form. And the SAFE Banking Act will not emerge from his committee until Crapo allows it.

So today’s hearing, while open to all members of the Senate committee, was subtly aimed at a single member of the forum.

Crapo made no secret of his distaste for cannabis. In his opening statement, the Idaho senator spoke of “recreational marijuana” with the long face of a disappointed parent. No fellow Republican even showed up for the hearing, which Crapo seemed to schedule as a courtesy to the Democrats on his panel.

Several witnesses aimed several points directly at Crapo, suggesting ways in which the SAFE Banking Act might align with his political beliefs. Sen. Jeff Merkley (D-OR), one of the bill’s sponsors, suggested that “the federal government is exercising a heavy hand” with its near-prohibition of banking in the cannabis sector. Legal cannabis states are “exercising their states’ rights,” Merkley said, and then repeated the phrase—“Their states’ rights”—just in case Crapo didn’t hear him the first time.

Local Credit Unions Pressing Ahead

A handful of financial firms have already dipped a toe into banking the industry. Rachel Pross, chief risk officer for Maps Credit Union, based in Salem, Oregon, testified about her institution’s decision to service state-licensed cannabis companies.

Under current banking law, Pross noted, “even financial institutions that choose not to bank the cannabis industry risk unknowingly banking this business.” Thousands of businesses unrelated to cannabis nevertheless conduct transactions with the cannabis industry every day. As an example, Pross pointedly referenced a regional supermarket chain based in Crapo’s home state. “Albertson’s, based in Idaho, has stores in Washington, Oregon, California, and Nevada,” she said. Whether the supermarket knows it or not, “it is serving cannabis businesses and employees across those states.”

SAM’s Stump Speech

Also playing to Sen. Crapo was the lone prohibitionist on the witness list, Garth Van Meter, government affairs director for the anti-cannabis group Smart Approaches to Marijuana (SAM), which has opposed cannabis reform in virtually every state to consider it. Van Meter spent his microphone time playing a greatest-hits compilation of horror story half-truths in an attempt to scare Crapo away from even considering the issue at hand. Which was banking.

Adopting the SAFE Banking Act would allow cannabis companies to “push new, more exponentially powerful forms of marijuana,” Van Meter said. The SAM official accused the cannabis industry of marketing gummies to children and providing cover for “international cartels to infiltrate legalized states.” (Most legal states actually have specific regulations prohibiting gummy products that might in any way be attractive to children. Illegal states have no such restrictions and have become dumping grounds for now-prohibited products.) “There is a marijuana concentrate called ‘shatter,’” Van Meter said. “Notice the name of the strain: Thin Mint Girl Scout Cookies. Let that sink in for a minute.”

California’s New Edibles Limits Will Ban Popular Products

Crapo seemed concerned about what he called “these high-intensity products,” which are safely and commonly consumed in 11 legal states and 34 medical states across America. Van Meter told Crapo that “the most common effect is that someone coughs until they vomit, and then they pass out.” (This is, in fact, not the most common effect of cannabis concentrates.) “These are tremendously damaging products, with very damaging effects on the brain, and these are the products the marijuana industry wants people to graduate to.”

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Other senators on the panel mostly ignored Van Meter, focusing instead on solving the banking issues that their state-licensed constituents are dealing with on a daily basis.

Sherrod Brown Likes Unions

Sen. Sherrod Brown (D-OH), the banking committee’s minority leader, made a point of emphasizing his “concern for the workers” in the cannabis industry. Brown several times made supportive reference to unions in the cannabis industry, and pointedly asked witness John Lord, CEO of the Colorado cannabis retailer LivWell Enlightened Health, if his operation was union or non-union. “Non-union,” Lord answered.

Other Democratic senators filtered in and out of the short two-hour hearing. Not coincidentally, all represented adult-use or medical marijuana states: Sens. Bob Menendez of New Jersey, Jon Tester of Montana, and Catherine Cortez Masto of Nevada.

Hemp Adds to the Pressure

The recent legalization of hemp via the 2018 farm bill has added pressure on Congress to act to solve the state–federal conflict over cannabis. Sen. Mark Warner of Virginia, a non-legal state, said he’s heard from farmers and bankers in his state eager to jump into the booming hemp business. “I’ve heard concerns” about keeping the THC levels in check, Warner said. “I’ve heard of some bankers going into the fields and doing testing on their own, which seems crazy to me.”

In terms of intensity and firepower, today’s session paled in comparison to the House Judiciary Committee’s hearing on cannabis legalization earlier this month. The Senate hearing seemed more like an initial exploratory conversation. Whether it did anything to change Sen. Crapo’s view of the issue is unclear.

What is clear is that Crapo may soon find himself representing thousands of Idaho constituents whose jobs depend on medical cannabis. Advocates are working hard this summer to gain enough signatures to put a medical legalization measure on the statewide ballot in 2020. Current polls indicate the measure would likely pass.

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Bruce Barcott
Bruce Barcott
Leafly Senior Editor Bruce Barcott oversees news, investigations, and feature projects. He is a Guggenheim Fellow and author of Weed the People: The Future of Legal Marijuana in America.
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