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Jeffrey D. Allred, Deseret News
Rep. Chris Stewart talks with students during campaigning at the University of Utah in Salt Lake City on Oct 16, 2018.

SALT LAKE CITY — A bill in Congress that would shield banks from federal penalties for serving marijuana-related businesses is gathering support, but a Utah congressman wants to limit the legislation's scope to apply only to medical cannabis.

The Secure and Fair Enforcement — or SAFE — Banking Act is heading for a House vote in coming weeks with 206 co-sponsors. It has the backing of state and banking officials across the country, including Utah Gov. Gary Herbert, Utah State Treasurer David Damschen, Utah Attorney General Sean Reyes and the Utah Bankers Association. But Rep. Chris Stewart, R-Utah, said he supports Utah's recent legalization of medical marijuana, and he's pushing against federal law going beyond that threshold.

He began his efforts Tuesday in a failed attempt to amend a different proposal — a spending bill that would prohibit using federal funds to enforce penalties on financial institutions that serve the cannabis industry in states where the drug is legal. Stewart's failed amendment would have limited protection to banks serving only medical, and not recreational, marijuana businesses.

Jae C. Hong, Associated Press
FILE - In this June 27, 2017, photo, bundles of $20 bills are placed on a table as Jerred Kiloh, owner of the Higher Path medical marijuana dispensary, prepares a trip to Los Angeles City Hall to pay his monthly tax payment in cash in Los Angeles.

Supporters of banking protections say growers and distributors are "soft targets" for armed robberies, kidnappings and other crimes as they are forced to run cash-only operations because financial institutions are reluctant to bank their earnings and run afoul of federal law, which classifies cannabis as an illegal Schedule I drug.

But during debate of his amendment in the House Appropriations Committee, Stewart acknowledged he has little sympathy for recreational marijuana businesses exposed to violent crime.

“I guess I’m just willing to say a company that’s selling recreational marijuana to our youth and to others, I don’t really care if they have a threat of cash sitting in their basement, if they’re paying their employees in cash,” Stewart said. “I don’t want to make life easier for them. I want to make it more difficult … for them to continue with an enterprise that I think is very harmful to people.”

He said the spending bill's language tells illegal drug cartels they now have access to the national financial system and sends the wrong message that encourages a "destructful" habit, especially for youth.

"Why would we want to do that?" he said. "I would encourage the members of the committee to consider the enormous cost and the very negative message we'd be sending by saying, 'If you sell tires, if you sell donuts or if you sell dope, it's all the same to us. Come on down to our bank and open up an account and we'll take care of you.'"

After a bipartisan majority spoke against his amendment, Stewart withdrew it.

"But I think it's a mistake for us to have had this conversation here and not be willing take to take a stand on it," Stewart said, noting the best fix to the banking dilemma is to remove cannabis from the list of illegal Schedule I drugs — although he didn't say he would support that change.

Stewart told the Deseret News he plans to continue to push to limit banking services to entities involved in the production and dispensing of medical marijuana.

The spending bill's provision is intended to be temporary, while the so-called SAFE Banking Act would be a permanent solution. Although the banking act has more than 200 co-sponsors in the House and support from state government and banking associations, its prospects are less certain in the Republican-controlled Senate, where a companion bill awaits a hearing.

Other Republicans in Utah's congressional delegation said they are still studying the issue and haven't taken a position on the SAFE Banking Act. Rep. Ben McAdams, D-Utah, who sits on the Financial Services Committee that advanced the proposal in March to the full House, supports the bill.

" I think it's a mistake for us to have had this conversation here and not be willing take to take a stand on it "
Utah Rep. Chris Stewart

Marijuana banking has been a problem since the drug first became legal in California in 1996. Last year, it became an issue in Utah after voters legalized medical cannabis and state lawmakers created a regulatory framework where growing, processing and dispensing involves state and local agencies that have long-established bank accounts. The state system takes effect next year.

Obama-era federal guidelines have shielded financial institutions from prosecution and penalties for serving marijuana-related businesses, but those directives are temporary and compliance is time-consuming and costly for the small number of financial institutions that have tried to service the growing marijuana industry.

Kristin Murphy, Deseret News
FILE - Rep. Chris Stewart speaks during the Utah Republican Party state convention at the Maverik Center in West Valley City on Saturday, April 21, 2018.

Operating cash-only is not only a public safety hazard, but also a burden on local and state treasurers who have to process cash tax payments amounting to tens of thousands of dollars, government officials said at a congressional hearing in February.

Damschen, who is also president of the National Association of State Treasurers, which recently urged Congress to resolve the marijuana banking dilemma, declined to comment on Stewart's opposition to the SAFE Banking Act.

Reyes joined 38 attorneys general in urging Congress to pass the act. "Legislation is crucial to providing structure to an array of businesses that are growing exponentially," his spokesman Richard Piatt said Friday, declining to address Stewart's position directly. "This is a matter of public safety and state sovereignty.”

In June, Utah Gov. Gary Herbert joined 20 other governors in signing a letter urging Congress to pass a bipartisan marijuana banking bill, according to the website Marijuana Moment.

The American Bankers Association supports the SAFE Banking Act to "clarify many issues for the banking industry, regulators, businesses and consumers."

Howard Headlee, executive director of the Utah Bankers Association, said Stewart has been clear in his position, although it conflicts with that of other states that want to bank all types of cannabis businesses and doesn't have much support in Congress.

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For his part, Stewart acknowledged in Tuesday's hearing that he's the "lone man in the wilderness" opposing the current marijuana banking proposals, and pushing for limiting changes to accommodate the situation in his home state. The Utah Legislature passed a resolution this year urging Congress to allow banking for just "legal medical cannabis."

“My amendment is supportive of Utah’s responsible actions to facilitate medical marijuana for patients, including banking access within the industry,” Stewart said in a statement to the Deseret News.