The U.S. House of Representatives made history yesterday, voting 321 to 103 to pass the SAFE Banking Act. The legislation would provide cannabis businesses, which are legal in over 34 states and the District of Columbia, full access to banks and other financial services. And it would allow their customers to pay for purchases with credit or debit cards, rather than using cash only.
The legislation was pushed along by the growing nationwide momentum for the legalization and normalization of the cannabis industry. “The states aren’t waiting for us,” said Rep. Earl Blumenaur (D-OR), as reported in a Rolling Stone article. “This is an $11 billion industry and growing. And it’s growing because the people and the states are demanding it. We need to step up.”
The bipartisan vote passing the SAFE Banking Act marks the first-ever standalone cannabis reform bill to ever pass a chamber of Congress. While the legislation stops the government from cracking down on banks providing services to legal cannabis businesses, it doesn’t change the status of cannabis as a Schedule 1 drug under the Controlled Substances Act. Under the current federal law, banks that service state-legal marijuana businesses can be subject to criminal prosecutions and suffer other consequences, such as losing their FDIC deposit insurance.
Dangers of a Cash-Only Business
While some local banks and credit unions currently may try to support cannabis businesses, national banks have been leery of doing the same because of the risk of prosecution. This has meant that most U.S. cannabis companies are cash-only businesses. With so much money on hand, these companies are at a greater risk of being targeted for robbery, threatening the safety of employees and customers.
“We applaud the House for approving this bipartisan solution to the cannabis banking problem," said Neal Levine, chief executive officer of the Cannabis Trade Federation, in a U.S. News & World Report article.
“This vital legislation will have an immediate and positive impact, not only on the state-legal cannabis industry, but also on the many communities across the nation that have opted to embrace the regulation of cannabis. Allowing lawful cannabis companies to access commercial banking services and end their reliance on cash will greatly improve public safety, increase transparency, and promote regulatory compliance."
Also, dealing in cash only means that the government may be missing out on tax revenues from undeclared income.
SAFE Banking Act Still Must Pass Senate
Having been passed by Congress, the SAFE Banking Act is now in the hands of the Senate, where its fate remains unclear. However, some facets of the bill have been designed to appeal to conservative lawmakers in the Senate, including language to protect the hemp businesses that are supported by the likes of Mitch McConnell, the Senate Majority leader.
In the meantime, Congress isn’t through riding the legalization wave. The House Judiciary Committee should start debating more sweeping reform legislation, including the Marijuana Opportunity, Reinvestment, and Expungement (MORE) Act.
The bipartisan legislation would remove the cannabis plant from the Controlled Substances Act, enabling states to set their own regulatory policies without federal interference. Among other important changes, the measure would also provide tax relief to licensed cannabis operators, and reserve a portion of the federal taxes collected from the legal cannabis industry to pay for the expungement of past records for some cannabis offences. It would also partially fund reentry services, job training, and community improvements in jurisdictions most disproportionately affected by the cannabis prohibition.