Agriculture Commissioner Nicole “Nikki” Fried’s breakout campaign moment came in the form of a twice-terminated bank account.
In August 2018, Wells Fargo closed Fried’s campaign account due to donations from marijuana-related businesses. One month later, BB&T did the same, citing fear of being punished by federal regulators.
Fried was a prominent marijuana attorney, lobbyist and advocate before she ran for statewide office in Florida and told the Miami Herald then that she felt like she was “specifically targeted” by the bank.
A federal banking bill that would help avoid situations like Fried’s passed off the U.S. House floor Wednesday.
The bill, which would prohibit regulators from punishing banks that serve cannabis companies and clients, passed with 321 members in favor and 103 against. One Democrat joined 102 Republicans to vote against the bill, while 229 Democrats, 91 Republicans and one independent voted in favor.
Miami-Dade Democratic Reps. Donna Shalala, Debbie Mucarsel-Powell, Debbie Wasserman Schultz and Frederica Wilson voted in favor. Miami-Dade’s sole House Republican, Rep. Mario Diaz-Balart, voted against the bill.
It has not yet been heard in the Senate.
The Secure and Fair Enforcement (SAFE) Banking Act, sponsored by Colorado Democrat Ed Perlmutter, also prohibits federal regulators from terminating or limiting deposit insurance, discouraging banks from offering financial services to cannabis or hemp businesses and bars them from incentivizing or encouraging a bank to close accounts solely because a person is affiliated with a cannabis or hemp business.
“My situation showed me firsthand what the rest of the industry across the nation was dealing with,” Fried told the Miami Herald Wednesday. “It really brought to light the impact of not having a stabilized industry.”
In addition to widespread legislative support (and 206 co-sponsors), the bill also has the support of 20 governors, 50 banking associations, top financial regulators and a slew of state attorneys general.
Florida Attorney General Ashley Moody was not included on the list of supporters, but the state’s chief financial officer, Jimmy Patronis, has been a longtime supporter of marijuana banking regulation.
Patronis says banking regulation in Florida is crucial and even wrote a letter to President Donald Trump in February asking him to advise the banks on how they can service the medical marijuana industry without risk of penalty from the federal government before marijuana legislation is potentially passed nationwide.
Patronis said because most Florida banks and credit unions won’t accept medical marijuana businesses as customers, it leads to legitimate medical marijuana treatment centers transporting millions of dollars “in duffel bags of cash and even driving the cash endlessly around in trucks,” he wrote.
Banks have been hesitant to service the medical cannabis industry because it’s still illegal on the federal level, and former U.S. Attorney General Jeff Sessions once indicated that he was going to be stricter than the previous administration on medical pot.
“Many legal Florida businesses in the medical marijuana and hemp industries currently have an alarming lack of banking options causing them to operate in cash-only models,” Patronis wrote in an email. “Floridians can face security threats, such as criminal activity, when financial solutions are not available for businesses. Passage of this bill will alleviate unnecessary confusion and hazards for patients, consumers and entrepreneurs.”
Patronis and Fried sent a joint letter to congressional leadership last week in support of the bill, writing that forcing businesses to operate in cash alone “not only hinders growth, but also causes major public safety issues.”
“Without swift action, the federal government is at risk of stifling what has the potential to be a multi-billion dollar industry in our home state of Florida alone and even creating an environment that allows for the proliferation of criminal activity,” they wrote.
Holly Bell, the state’s first cannabis commissioner, knows the difficulties of banking cannabis well. Before she moved to Florida she worked in Nashville, Tennessee, as a banker and then a consultant for cannabis businesses looking to open accounts at marijuana-friendly banks and gain a better understanding of the regulatory issues the businesses have to address.
She said the bill is necessary for the industry to continue growing in Florida, as the two banks that accept marijuana customers are small and capped at a certain capacity.
“What this bill does first and foremost is give a sense of protection and security to all bank officers and boards of directors that it’s OK to bank in this space,” she said. “When I would go talk to banks and give a presentation in front of their board of directors, a group of people sitting there would say if something went wrong, we could go to jail.”
Richard Blau, a Tampa attorney who heads GrayRobinson’s cannabis law practice, says a lot of his clients are marijuana business leaders in need of legal guidance to what they can and can’t do under federal law. They range from medical marijuana treatment center license holders to hemp farmers to individuals who make a living at marijuana companies and worry about losing access to mortgages or bank accounts.
“Banking is a really important issue to any legal industry,” Blau said. “To really control your money in a safe, efficient, effective manner, you need to rely on banking services of financial institutions.”
Blau pointed out that in states like Florida where marijuana is legal and business is growing, the federal law is hypocritical.
“It creates a solution where an industry that is trying to operate legally can’t use a bank,” he said. “You have to operate with bags of cash. It’s a train wreck and it’s happening.”
Anastasia Stull, who represents smaller banks in the Florida Panhandle and Washington, D.C., says the bill will give attorneys like herself uniform guidance for clients and will help create a safer environment for them to do business. Many of the banks face steep compliance costs and fear facing penalties from federal regulators if they make a misstep in doing business.
Her firm, Clark Partington, represented the first bank client to serve marijuana-related businesses in Florida, First Green Bank.
The bill is a “good step forward,” said Stull, who works with banks to develop regulatory compliance platforms, enabling them to accept deposits from cannabis-related businesses.
She added that the bill will also help cannabis industry workers who are unable to get loans, deposit earnings or even get a mortgage on their homes. It will also help other workers who get paid by marijuana companies, like plumbers, electricians or other contractors.
“For Florida, is this pro-marijuana? Maybe,” she said. “The most important issue is definitely the public safety aspect.”
Medical marijuana treatment centers in Florida laud the bill, too. The businesses have to operate without bank accounts, can’t process credit cards and can’t take standard business deductions on their federal taxes. The cash-only model also makes it difficult to audit the businesses.
A spokeswoman for Trulieve, the largest license holder in Florida, called the SAFE act a “major milestone” for the industry. Treatment centers deal only with cash, which can be dangerous for the businesses and burdensome for customers, who often buy medicine worth hundreds of dollars at a time.
“The SAFE Banking Act would further legitimize one of the fastest-growing industries in the United States,” Lynn Ricci wrote in an email. “Creating safe, secure banking relationships is a logical step forward and we are hopeful to see legislators vote in support of this rapidly expanding industry.”
Surterra, the second-largest license holder, agreed.
“We strongly support Congress’ bipartisan action today, taking this historic step forward to fix our outdated federal cannabis laws,” Surterra Vice President Andrew Smith wrote in a statement. “Normal access to banking services is a major step out of the shadows for the regulated cannabis industry, establishing it as a legitimate, transparent and tax-paying sector of the U.S. economy.”
While support for the bill has grown in Congress since it was introduced in March, it’s also faced a fair share of criticism. In the Senate, Majority Leader Mitch McConnell (R-KY) regularly says he doesn’t support hemp’s “illicit cousin” marijuana.
Republicans on the House floor objected to the bill because marijuana according to federal law is considered a drug that has no currently accepted medical use and a high potential for abuse.
They argued that marijuana’s classification under federal law should change before banking regulations are changed.
“This bill does not change the fact that cannabis remains a prohibited, schedule one substance under the Controlled Substances Act,” Rep. Patrick McHenry, R-N.C., said on the House floor. “To that end, if we seek to give financial institutions certainty, we should deal with the listing of cannabis as a schedule one substance, not debating a partial solution for financial institutions to what is a larger problem and a larger societal issue that we must wrestle with.”
But other Republicans favor the bill.
Rep. Steve Stivers, R-Ohio, said the bill makes business safer for cannabis companies because they don’t need to rely on cash.
“I personally oppose recreational marijuana but for me this bill has nothing to do with the larger debate on marijuana and whether its a good or bad thing,” Stivers said. “Instead, I’m narrowly focused on the public safety aspects of this bill. The inconsistencies between state and federal law have created a situation where a growing number of state-regulated businesses are operating on a cash-only business. As a result they sit on large pools of cash that make them a magnet for violent robberies.”
Rep. Matt Gaetz, R-Fort Walton Beach, agreed that operating businesses outside the federal banking system is unsafe. He said “it’s good for no one to have millions of dollars rolling around.”
“If the business is legal in that state they should have the same financial protections as any other business,” said Gaetz, who has been supportive of marijuana issues for years.
Republicans weren’t the only ones critical of the bill. Industry blog Marijuana Moment reported last week that advocacy groups like the ACLU and Human Rights Watch are also wary.
The groups, among others, wrote a letter to leadership asking that the vote be postponed until wide-ranging legislation can end federal cannabis prohibition and “repair the harms of the war on drugs.”
Senators and presidential candidates Cory Booker (D-New Jersey), Kamala Harris (D-California), Bernie Sanders (I-Vermont) and the party’s top Senate leader Chuck Schumer (D-New York) have also shown public support of legislation that prioritizes reforms like expunging criminal records, restoring justice to those harmed by the “War on Drugs” and providing a path for people of color to access the industry.
Fried said she agrees with the Democrats’ criticism of the bill.
She hopes that in the future, Congress will approve legislation that incentivizes banks to award small business loans to minority- and women-owned cannabis businesses. She also expects that the health insurance companies and credit card companies get involved, so patients can get coverage for medical marijuana and pay in a secure manner.
“The SAFE Banking Act is just the first step to regulate the market,” Fried said. “A stabilized market provides more safety for patients and for businesses.”