The House of Representatives last week passed the SAFE Banking Act as part of a separate bill, marking the sixth time the lower house of Congress has passed the legislation to grant cannabis businesses access to banking and other financial services.
Members of the House adopted provisions of the banking bill on Friday as an amendment to legislation drafted to support U.S. manufacturing and improve competitiveness with China known as the America Creating Opportunities for Manufacturing, Pre-Eminence in Technology, and Economic Strength Act of 2022 (America COMPETES Act).
Federal law makes it cumbersome for banks and other financial institutions to provide services to cannabis businesses, even those operating legally under state law. As a result, many cannabis companies are forced to conduct most transactions in cash, leaving them at greater risk of robbery and theft. Under the SAFE Banking Act, originally introduced in 2013 by Democratic Representative Ed Perlmutter of Colorado, banks would be permitted to provide financial services to state-legal cannabis companies.
“Cannabis-related businesses—big and small—and their employees are in desperate need of access to the banking system and access to capital in order to operate in an efficient, safe manner and compete in the growing global cannabis marketplace,” Perlmutter said in a statement quoted by Roll Call.
“We need to bring some sense to what is really dangerous right now in this space that so many states allow for dispensaries, for grow operations,” he added. “There’s just a lot of cash and that cash can really pose problems.”
Friday’s vote in favor of the SAFE Banking Act as an amendment to the China bill marks the sixth time that the House has approved the legislation. Most recently, provisions of the measure were included in a defense appropriations bill. The cannabis banking amendment was later dropped from the spending bill in a congressional conference committee.
Matt Hawkins, founder and managing partner of cannabis investment firm Entourage Effect Capital, called on senators to follow the lead of the House of Representatives and pass the cannabis banking legislation.
“While this is a step in the right direction, albeit, for the sixth time, it is imperative for the Senate to finally take SAFE Banking across the finish line,” Hawkins wrote in an email to High Times. “Cannabis is the next great American sector, and the industry can only sustain its dominant global standing if it can legally engage with mainstream financial institutions.”
Final Approval Uncertain
Time will tell if the SAFE Banking Act is included in the final version of the America COMPETES Act. Some Democrats in the Senate, including Sen. Cory Booker of New Jersey, want to see cannabis banking included in a more comprehensive marijuana legalization bill with provisions to address the harms caused by decades of cannabis prohibition. Perlmutter, however, is advocating an incremental approach to cannabis legalization.
“The SAFE Banking Act is the best opportunity to enact some type of federal cannabis reform this year and will serve as the first of many steps to help ensure cannabis businesses are treated the same as any other legal, legitimate business,” Perlmutter said.
Kassia Graham is the director of community and strategy for Cannaclusive, a media services company built to facilitate fair representation of minority cannabis consumers through imagery and education. She says that the cannabis banking bill should be amended to ensure it benefits small companies as well as multistate operators (MSOs).
“On the surface, the SAFE Banking Act seems like legislation that benefits all businesses in the cannabis industry. However, banks have very specific processes to determine loans and other offerings, and compliance regulations they must adhere to when determining if they’ll work with a client,” Graham told High Times.
“Historically, Black, Indigenous, and non-white Latine people have been denied loans for less risky businesses. Though deemed an essential industry during the pandemic, cannabis is still a Schedule I drug on the federal level. In order for SAFE to be viable for more than MSOs, there’d need to be provisions that ensure interest rates are fair, the process is accessible and void of class and racial bias.”
The SAFE Banking Act faces an uphill battle in the Senate. On Monday, Republican minority leader Mitch McConnell referred to the provisions of the bill in the America COMPETES Act as a “poison pill” in the legislation.