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Sen. Mike Crapo lays out ‘significant concerns’ with federal marijuana banking bill

UPDATED: Fri., Dec. 20, 2019

Sen. Mike Crapo, R-Idaho, speaks at a Senate Judiciary Committee hearing in this September 2018 photo. Crapo, who chairs the Senate Banking Committee, is seeking new provisions addressing potency and marketing to children in a federal marijuana banking bill that passed the House of Representatives in September. (Jacquelyn Martin / AP)
Sen. Mike Crapo, R-Idaho, speaks at a Senate Judiciary Committee hearing in this September 2018 photo. Crapo, who chairs the Senate Banking Committee, is seeking new provisions addressing potency and marketing to children in a federal marijuana banking bill that passed the House of Representatives in September. (Jacquelyn Martin / AP)

Trade groups representing the cannabis and banking industries are lobbying for a federal bill that would allow them to work together, after U.S. Sen. Mike Crapo said he had “significant concerns” about the measure.

That criticism is key to the measure’s future in the upper chamber, as Crapo is the chairman of the Senate’s powerful Banking Committee in charge of reviewing the legislation before a potential vote. The bill, the first federal legislation addressing marijuana commerce, passed the U.S. House of Representatives this fall with many Republicans voting in favor, including Rep. Cathy McMorris Rodgers.

But Crapo, in a lengthy statement released this past week, said the bill didn’t do enough to keep marijuana from being marketed to children or protect public health and suggested several changes. The senator represents one of only four states that have not passed laws permitting marijuana possession or use, and was unavailable for comment Thursday or Friday due to travel, according to staff of the Senate Banking Committee.

The senator’s statement included a request to keep banks from doing business with any company producing the drug with concentrations of tetrahydrocannabinol, or THC, above 2%.

There has not been enough study linking the potency of THC, which gives the user the psychoactive “high” effect in the brain, to health effects, Crapo argued in his memo. But industry groups say the threshold the senator suggests is unreasonable, as many strains available in Washington’s pot stores measure well above 20%, and potency is used as a selling point by different producers jockeying for consumer attention.

“This industry is an economic driver for the country and Sen. Crapo’s approach would inflict irreversible damage to the industry,” said Aaron Smith, executive director of the National Cannabis Industry Association, in a statement.

The 2% threshold was requested based on potency levels of the drug seized by law enforcement officials in the 1990s, “before more synthetic THC was being produced,” wrote Mandi Critchfield, communications director for the Senate Banking Committee, in an email Friday evening. The 2% threshold could be overridden if states passed a new standard “that appropriately addresses the health and safety risks to its citizens,” according to Crapo’s statement.

Kevin Oliver, executive director of the Washington chapter of the National Organization for the Reform of Marijuana Laws, said the inability to access lines of credit from lending institutions concerned with violating federal law limits who can enter the new, legal market.

“By not having the ability to do loans, it is 100% a barrier to entry,” Oliver said.

Banking institutions, which would be given assurances under the act they would not be prosecuted for doing business with state-licensed cannabis businesses, have also come out in support of the bill approved by the House of Representatives, while pledging to provide the Senate with information to ease Crapo’s concerns.

The House bill does not mention THC potency and does not include requirements for additional study of the drug’s marketing to vulnerable groups and potency, another request of Crapo that researchers say is difficult because of the limited access to laboratory-grade cannabis.

Glen Simecek, president and chief executive officer of the Washington Bankers Association, said he believed the state’s Department of Financial Institutions did a good job ensuring the few lenders who work with cannabis companies were following the law.

“I can understand where the senator is coming from. Idaho will probably be among one of the last states to legalize cannabis,” Simecek said. “I would hate to see the industry have to establish another regulatory regime at the federal level to ensure this business gets banked.”

In Idaho, where marijuana remains illegal under state law, banks also want passage of the bill to provide certainty for financial dealings with other businesses that may be tangentially tied to the drug, said Trent Wright, president and chief executive officer of the Idaho Bankers Association. That includes banks paying utility providers or cashing paychecks from workers crossing state lines.

But the group supports Crapo’s position on keeping the drug illegal under federal law and crafting restrictions in the bill on THC potency and marketing to vulnerable groups, he said.

“I think the bigger issue is whether Senate leadership is going to give it the consideration it deserves,” Wright said, referencing the tough sledding for a federal marijuana bill in an election year when the GOP-led Senate has other priorities.

Crapo said in the statement his office will accept comment on the issues, but has not offered a timeline on when – or if – the bill would get a hearing in the Senate’s banking committee.

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