The bipartisan Secure and Fair Enforcement (SAFE) Banking Act, which remains stalled in the US Senate, could help make a difference in ending the federal ban on cannabis, a nearly $18 billion industry that continues to grow as more states decriminalize it.
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“The SAFE Banking Act won’t end cannabis prohibition on its own, but it is an essential step on the road to legalization,” Steven Hawkins, CEO of the US Cannabis Council, told Financial Regulation News.
U.S. Representative Ed Perlmutter (D-CO) in March 2021 sponsored his House’s version of the bill, HR 1996, which currently has 180 co-sponsors. On April 19, 2021, the United States House of Representatives voted 321 to 101 to approve the bill, which generally prohibits a federal banking regulator from penalizing a depository institution for providing banking services to a legitimate business. cannabis-related.
The U.S. Senate received the bill on April 20, 2021 for review and referred it to the Senate Banking, Housing, and Urban Affairs Committee, which is also considering the Senate version of the bill, S. 910.
Since then, there has been no action on the bill, and Rep. Perlmutter announced earlier this month that he would not seek re-election. The congressman, who has represented Colorado’s 7th congressional district since 2007, said he still plans to help get the SAFE Banking Act across the finish line.
“I am optimistic about the path forward for the SAFE Banking Act and, more broadly, reforms to our federal cannabis laws,” Perlmutter said of the House-approved bill. “Congress must act to catch up with the will of the majority of voters in this county and to ensure that we reduce the public safety risk to our voters and our communities.”
Forty-seven states, four US territories and the District of Columbia – representing nearly 98% of the US population – have legalized some form of recreational or medical marijuana, including CBD.
However, current law prevents legitimate licensed marijuana businesses from accessing banking services and products, including checking and deposit accounts, which has forced them to operate in cash, according to Perlmutter staff.
And whenever businesses are known to operate strictly in cash, a serious public safety risk develops for communities by inviting theft, robbery and burglary, its staff said.
“Cannabis businesses of all sizes are struggling to conduct their business almost entirely in cash,” Hawkins agreed. “It’s inefficient and a constant security risk. The past two years have seen an upsurge in crimes targeting dispensaries.
The purpose of the SAFE Banking Act is actually to increase public safety by ensuring access to financial services for legitimate cannabis-related businesses and service providers and reducing the amount of money in those businesses, according to the text of the bill.
The bill would also state that the proceeds of a transaction involving the activities of a legitimate cannabis-related business are not considered proceeds of illegal activity, according to the congressional summary of the bill, and that A deposit-taking institution would not, under federal law, be held liable or subject to asset forfeiture for providing a loan or other financial services to a legitimate cannabis-related business.
In addition, the bill would provide that a federal banking agency cannot request or direct a deposit-taking institution to terminate a customer account unless the agency has a valid reason to do so, and a reason does not cannot be based solely on reputational risk, the summary states. . Valid reasons for terminating an account include threats to national security and involvement in the financing of terrorism, including state sponsorship of terrorism.
“The legislation is common sense reform that extends standard banking services to regulated cannabis businesses,” Hawkins explained. “Many small, minority-owned cannabis businesses struggle to access capital and basic services like verification and payment processing. Many large cannabis companies have found workarounds that work, but they’re expensive and inconvenient. »
Speaking of minorities, many industry players and lawmakers, such as Senate Majority Leader Chuck Schumer (D-NY), believe cannabis reform must also be balanced with social equity measures. Hawkins agrees.
“A fair cannabis industry is a more prosperous and sustainable industry for everyone involved. We believe advancing social equity is not only the right thing to do, it’s also smart business and drives the long-term viability of cannabis,” he said.
By including social equity provisions, Hawkins said there would be guarantees that pathways to entrepreneurship exist for populations who have been “hardest hit” by past punitive entrepreneurship policies. of cannabis. “Policies that support a diverse cannabis industry are critical to success,” he said.
Although the House-approved SAFE Banking Act does not include such provisions, the bill would require the U.S. Comptroller General to conduct a study of barriers to market entry, including in the process of licensing, and access to financial services for potential and existing legitimate minority and women-owned cannabis-related businesses, and to provide Congress with any regulatory or legislative recommendations to remove these barriers and expand the access to financial services.
Senator Schumer would have liked to see greater social equity protections in the bill before agreeing to advance cannabis banking legislation, and Senate leaders have also said comprehensive reform must come first. the banks. Both positions effectively prevented the SAFE Banking Act from being included in a larger defense bill that was before the Senate.
“The narrative has begun to shift around the SAFE Banking Act as more people understand that lack of access to banking services is a risk to public safety and undermines social equity,” Hawkins said. “We were inspired by the wave of support last year for banking reform from all corners of our society and economy – from the association of estate agents to the union of food workers.”
Hawkins added that the US Cannabis Council (USCC) is “aggressively pushing” to advance criminal justice reforms in Congress and by President Joe Biden.
“Specifically, we strongly support the HOPE Act, a bipartisan bill that would make it easier to expunge state and local cannabis-related crimes,” he said. “We also urge the President to follow through on his campaign promise to issue a blanket pardon for federal cannabis offenses.”
HR 4236 Health Equity Opportunities (HOPE) Act would require the US Department of Health and Human Services, when awarding grants to train low-income people to work in certain health professions, to make some effort to ensure the geographic diversity of grant recipients, according to the summary of the Congressional record bill. The bill was introduced last June by U.S. Representative Bill Pascrell, Jr., (D-NJ) and remains under consideration by the House Ways and Means Committee.
Additionally, the USCC plans to actively engage in the Booker-Wyden-Schumer reform proposal in the Senate, Hawkins said, referring to comprehensive cannabis reform legislation to be formally introduced by Senator Schumer and the American senses Cory Booker (D-NJ) and Ron Wyden (D-OR).
Currently being circulated as a discussion draft, the Cannabis Administration and Opportunity Act proposes to end federal prohibition of cannabis by removing it from the Controlled Substances Act, and would designate the United States Food and Drug Administration as primary federal manufacturing and marketing regulator. cannabis products, with regulatory oversight from the Bureau of Alcohol and Tobacco Tax and Trade and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
Among many other provisions, the proposal also addresses the impact of the War on Drugs through expungements, re-convictions, opportunity trust fund programs and small business administration programs, the draft says. of the Senate.
“We look forward to a substantive conversation in the Senate on how best to legalize and regulate cannabis federally,” Hawkins said.
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