Pot banking backers push hemp, 'Choke Point' plans to lure GOP votes

By ZACHARY WARMBRODT
Source: politico.com



A bill that would protect banks doing business with the cannabis industry in states where the drug is legal already has significant bipartisan support. | Richard Vogel/AP Photo

Backers of landmark legislation that would empower banks to enter the cannabis industry are considering expanding the bill to win over skeptical Republican lawmakers.

Among their pitches: offering greater protection for products derived from hemp, a cannabis plant used to make textiles as well as cannabidiol — a growing industry in Sen. Mitch McConnell's Kentucky — and preventing any revival of an Obama-era program that GOP lawmakers say targeted payday lenders and gun retailers.

With the House expected to vote on the bill in the coming weeks, Democrats and Republicans who support the banking overhaul are talking with GOP lawmakers who are uncomfortable with easing federal restrictions on marijuana but say they may come around if these other issues are addressed in the legislation.

The bill, which would protect banks doing business with the cannabis industry in states where the drug is legal, already has significant bipartisan support. But running up the number of Republican votes could bolster efforts to sell the legislation in the GOP-led Senate, where senior Republicans are wary of taking it up because federal law lists marijuana as a controlled dangerous substance.
"The stronger showing we have in the House, the better our chances in the Senate," said Rep. Ed Perlmutter (D-Colo.), the lead sponsor of the legislation.

The fact that greater numbers of Republicans may be in play, including those who previously opposed the bill, illustrates how fluid the politics around marijuana have become as states across the country legalize cannabis products. The struggle to win over more Republicans for a narrow, industry-backed bill also underscores the obstacles looming for cannabis legalization at the federal level.

The bill is a high priority for the banking industry, and enactment during this session of Congress would be a major victory. Banks and credit unions are lobbying for the legislation because of concerns that federal regulators will penalize them for serving cannabis businesses now legal at the state level. They're supporting the stopgap measure because it's unclear when the federal ban at the heart of the conflict will be lifted.

The potential amendments that House lawmakers are considering may not only increase the GOP vote tally but may also address priorities like hemp for McConnell, the Senate majority leader, and a controversial program under President Barack Obama's Justice Department that was known as "Operation Choke Point" for Senate Banking Chairman Mike Crapo (R-Idaho).

One proposal would extend the bill's financial services safe harbor to products derived from hemp, a non-intoxicating plant whose fibers can be used for clothing, plastics and rope that was removed last year from the Controlled Substances list.

Rep. Andy Barr, who opposes marijuana legalization and voted against the cannabis banking bill in committee, said he has had extensive discussions with Perlmutter about adding protections for hemp products.

Barr, a Kentucky Republican, said he’s responding to concerns that credit card processors can’t differentiate between cannabidiol derived from industrial hemp and marijuana. Otherwise known as CBD, the cannabis product has grown increasingly popular as a treatment for a range of health issues.
If the legislation addressed hurdles that hemp businesses face when accessing credit card processing services and banking, "then that helps me get to a yes," Barr said.

"They need Republicans on this bill," he said.

The other potential addition being discussed would prohibit regulatory agencies from pressuring banks into cutting off customers because they're out of favor politically.

The proposal, which the House passed 395-2 as a standalone bill in 2017, is intended to prevent the potential comeback of Operation Choke Point.

Choke Point sought to cut off fraudulent merchants from the financial system, but Republican critics argued for years that it discouraged banks from serving a range of lawful businesses, including small-dollar lenders and gun sellers.

Rep. Blaine Luetkemeyer (R-Mo.), who has been driving the legislation, is talking with Perlmutter about adding it to the cannabis banking bill.

Luetkemeyer voted against the marijuana banking bill in committee and said he still isn't convinced that it would solve banks' legal problems with cannabis.

But he may come around to supporting it as a vehicle to cement the end of Choke Point.

Barr predicted that Perlmutter would be able to win over "a lot more Republicans, especially in the Senate" if a Choke Point amendment were added.

"If it's a chance to get my bill across the finish line, it's something that we need to consider," Luetkemeyer said.

The bill in the House has 184 co-sponsors, including 20 Republicans. Perlmutter said he hoped to add about a dozen more members to the list.

"You want it to be as broad-based and solid a vote as possible to have momentum and open the eyes of folks over in the Senate side," Perlmutter said.

Five GOP senators are co-sponsoring the Senate version. The Republican lead in the Senate is Sen. Cory Gardner (R-Colo.), who is up for reelection next year in a state with a major cannabis industry.
"We've had a lot of good discussions about it over here with a number of members," Gardner said.
Though the White House has not yet announced its position on Perlmutter's legislation, President Donald Trump said last year that he “probably will end up supporting” a separate Gardner bill that would shield cannabis businesses from federal restrictions if they're complying with state or tribal laws allowing the sale of marijuana.

One prominent hurdle in the Senate is Crapo, who leads the Senate Banking Committee. The Idaho Republican has so far been unwilling to commit to taking up the legislation.

"As long as cannabis is illegal under federal law, it seems to me to be difficult for us to resolve the issue," he said in April.

But Crapo has also been one of the most prominent critics of the Choke Point program. In an interview, he said he would be interested in any vehicle that would stop it from coming back to life, though he's unsure the amendment would change his approach to cannabis legislation.

Bank trade groups from all 50 states and Puerto Rico wrote to Crapo recently and urged him to move forward with hearings on their cannabis concerns.

"I don't feel pressure," he said. "I'm looking at it but I haven't made any decisions."