On Tuesday, March 26th, the House Financial Service Committee will take up, debate and vote on the Secure and Fair Enforcement (SAFE) Banking Act, a bi-partisan bill addressing the cannabis industry’s banking crisis. A yes vote on the SAFE Act would represent a crucial milestone in federal marijuana policy and pave the way for major financial institutions to work with legal cannabis businesses. But just days ahead of the committee markup, a key sponsor of the bill moved to add provisions that would help to further diversity and inclusion across the industry.
Passage of the SAFE Banking Act Would Clear a Major Roadblock to Cannabis Industry Growth
For years, federal legislators on both sides of the aisle have tried to pass laws to protect banks who do businesses with state-legal cannabis companies. Without those protections, federally regulated financial institutions have largely refused to provide services to cannabis industry participants. Since federal law classifies marijuana as a Schedule I drug, banks who work with cannabis businesses are vulnerable to federal prosecution.
But under the SAFE Banking Act, the federal government would no longer consider proceeds from cannabis and cannabis-related business transactions as proceeds from unlawful activity. And that means that banks could conduct transactions with those proceeds without having to worry about facing money laundering or other financial crimes charges.
Without access to financial services, cannabis companies have largely had to operate on a cash-only basis, which presents a number of operational, security, and safety risks for cannabis businesses, including robbery and fraud. Hence, establishing federal banking protections and clear guidelines for financial service providers has been a major goal for industry participants.
So far, the bi-partisan SAFE Banking Act has garnered 144 co-sponsors, or nearly one third of the House. Yet high-ranking Republicans have sought to delay a vote on the bill, which many see as the first step toward a larger federal marijuana law reform agenda.
New Banking Bill Provisions Focus on Minority-Owned and Women-Owned Cannabis Businesses
The SAFE Act’s banking protections for the cannabis industry are crucial in their own right. But last-minute changes and additions to the bill address another key area of concern in the cannabis industry: equity, diversity and inclusion.
As the legal cannabis industry expands across the United States, those with access to capital have been best-positioned to capitalize on its rapid growth. At the same time, historically disenfranchised groups, including those disproportionately impacted by the regime of prohibition and criminalization, have struggled to enter the cannabis industry on equal footing.
In order to meet this issue head on, Rep. Ed Perlmutter (D-Colorado), the SAFE Act’s primary sponsor, moved to replace some of the bill’s language with new provisions. These new provisions would require the federal government to both monitor and recommend ways to expand minorities’ and women’s participation in the legal cannabis industry.
For example, one new provision, “Sec. 8. Annual Diversity and Inclusion Report,” would require federal banking regulators to issue an annual report to congress containing “information and data on the availability of access to financial services for minority-owned and women-owned cannabis-related legitimate businesses.” The report would also require the report to include any regulatory or legislative recommendations for expanding access to financial services for minority-owned and women-owned cannabis companies.
A second change would require the Comptroller General of the United States to study and issue reports about the barriers hindering minorities and women from entering the legal cannabis market. The provision specifically identifies barriers like the high costs of licensing applications and limited access to financial services.
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