A Banking Breakthrough?
Late last month, the U.S. Senate Banking Committee approved the Safe and Secure Enforcement and Regulation (SAFER) Banking Act, clearing the way for a floor vote. The bipartisan legislation, introduced by U.S. Sens. Jeff Merkley and Steve Daines, would allow financial institutions to do business with the legal cannabis industry without fear of running afoul of federal banking regulations. The legislation cleared the committee on a 14-9 vote.
The SAFER Banking Act would afford the cannabis industry better access to financial services that are currently unavailable or not reliably accessible, including depository services, electronic payments, and lending. Similar bipartisan legislation has passed in the U.S. House of Representatives seven times in previous congressional sessions, but has yet to receive a vote in the Senate. Last month’s committee vote clears a path for the bill to finally make its way to the Senate floor for a vote.
“The committee’s approval of the SAFER Banking Act gives hope to thousands of compliant, taxpaying businesses desperately trying to access the basic financial services other businesses take for granted.”
During the markup session, multiple amendments were offered. One would create a five-year sunset for the legislation unless a report from the Treasury Department certified that it had decreased the racial wealth gap and ameliorated other negative economic impacts of the war on drugs. This amendment ultimately failed.
Advocates are hopeful the Senate will approve the SAFER Banking Act given the strong bipartisan support. Seventy-six senators currently represent states that regulate the sale of cannabis for medical or adult use, including 28 Republicans.
“The committee’s approval of the SAFER Banking Act gives hope to thousands of compliant, taxpaying businesses desperately trying to access the basic financial services other businesses take for granted,” said Aaron Smith, CEO of the National Cannabis Industry Assoc. “This uniquely bipartisan legislation has the potential to save lives and help small businesses; it’s time for Congress to get it to the president’s desk without further delay.”
The Department of Health and Human Services and the Food and Drug Administration also recently made an official recommendation to move cannabis from Schedule I to Schedule III status in the federal Controlled Substances Act (see story on page 37), but that change would not affect the current banking situation for the industry.
The SAFER Banking Act is endorsed by the National Assoc. of Attorneys General, the National Assoc. of State Treasurers, the American Bankers Assoc., the Credit Union National Assoc., Independent Community Bankers of America, the NAACP, Americans for Prosperity, the United Food and Commercial Workers Union, and a bipartisan group of 20 state governors.
Smith noted that current banking regulations force cannabis businesses to operate in a very cash-heavy environment as they are unable to process credit cards and sometimes even unable to access depository services. The situation has led to numerous robberies and violent crimes targeting cannabis retail facilities and industry employees.
The bill would also open the door to greater business lending in the industry, providing access to capital that advocates say is sorely needed by small and independently owned cannabis businesses.
Laws to make cannabis legal for adults have passed in 23 states as well as the District of Columbia, while 38 states have comprehensive medical cannabis laws. Three in four Americans live in a state where cannabis is legal in some form.
“The vast majority of Americans now live in a state that is effectively regulating legal medical or adult-use cannabis sales,” Smith added, “but federal banking regulations are exposing millions to an unnecessary and completely avoidable risk of violent crime.”