It’s back to the drawing board for the SAFE Banking Act as the U.S. Senate aims to take up the legislation again, which a group of bipartisan lawmakers is trying to resurrect. The legislation would offer banking services to cannabis businesses in states that have legalized the drug nationwide, giving them access to financial services most businesses take for granted.
For the first time in the U.S. Senate, there could be a pathway to get the SAFE Banking Act time on the floor and up for a meaningful vote. Cannabis stocks at specific marijuana businesses rose as news spread that the Senate was taking up the measure. However, advocates remain cautiously optimistic, considering similar legislation has failed numerous times.
What Is the SAFE Banking Act and Why Is It Important to the Cannabis Industry?
The Secure and Fair Enforcement or SAFE Banking Act aims to allow businesses in the cannabis industry access to secure banking systems and financial services. The problem with today’s marijuana business model is that it is cash-based, meaning customer transactions, payroll, and other services must all be conducted in cash. For obvious reasons, a cash-only system is inherently dangerous, opening the door to robbery, burglary, and money laundering risks throughout the cannabis industry. Numerous studies and publications point to the financial and safety hazards of running a business with a cash-only model.
Unfortunately for the cannabis industry, marijuana remains classified as a Schedule I controlled substance by the federal government. Since weed is a still-illegal substance at the federal level, banks and financial institutions generally refuse to conduct business with cannabis companies since they could potentially face federal prosecution and penalties for providing financial services to them, even in areas where cannabis is legal at the state level. Without access to these basic banking and financial services, cannabis businesses have always been limited to cash-only business models.
The newest iteration of the SAFE Banking Act seeks to remove safety concerns for cannabis businesses that operate legally in U.S. states by keeping federal banking regulators from prohibiting or penalizing banks that provide financial services to legitimate, state-sanctioned cannabis businesses. It will also prevent banking regulators from terminating or limiting a bank’s federal deposit insurance if it offers services to cannabis-associated enterprises.
Additionally, the legislation would protect banks and financial institutions that choose to conduct business with regulated cannabis businesses from criminal prosecution and liability. For the first time, this version of the SAFE Banking Act also goes so far as to extend this protection to Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs).
In a nutshell, this legislation makes it easier for banks and cannabis companies to interact and conduct business with each other. If the Senate passes the law, cannabis businesses would get lawful access to banking services for the first time, making it easier to manage customer payments, payroll, and more. At the same time, the measure would shield banks from legal repercussions for providing these vital financial services to the cannabis industry.
The History of the SAFE Banking Act
The SAFE Banking Act is no stranger to disputes at the national level. For years, SAFE Banking Act legislation has been up for debate in Washington. Some form of the SAFE Banking Act has passed in the U.S. House of Representatives seven times previously. However, prior banking legislation has stalled in the Senate because of confusing messaging from the Department of Justice and opposition from then-Senate Majority Leader Mitch McConnell, R-Ky. The measure has failed as a standalone bill and as part of other comprehensive spending bills.
The latest version of the SAFE Banking Act, introduced by a group of bipartisan lawmakers, will move through the Senate Banking Committee before it reaches the floor for a full vote. Current Senate Majority Leader Chuck Schumer, D-N.Y., says he supports the measure and wants to make sure the legislation includes criminal justice provisions by the time it hits the floor. Sen. Jeff Merkley, D-Oreg., says he wants to make 2023 the year the measure finally gets signed into law and starts protecting businesses and communities.
Although Congress remains bitterly divided on several topics, some see the SAFE Banking Act as one of the few pieces of legislation that stands a strong chance of passing with bipartisan support. However, it was only recently that Republicans in the Senate blocked a procedural motion to advance a bipartisan bill that would have allowed studies into the medical potential of cannabis for military veterans with chronic pain and post-traumatic stress disorder.
Hope on the Horizon for the Cannabis Industry?
Recent news of the Senate’s plans to consider this legislation bolstered cannabis stocks nationwide, with some companies seeing nearly double-digit increases in stock prices. Top cannabis company executives continue pushing Congress to take action and hope the attention on this version of the SAFE Banking Act will spur legislators to vote in favor of the measure. Many advocates and business leaders hope access to financial services and banking reform will fortify and protect their business models during the current market downturn.
The CEO of Sunburn Cannabis says the measure could serve as a springboard that gives the U.S. banking and financial sectors the ability to participate in the budding cannabis industry in a meaningful way. He says the legislation could also significantly reduce the risks faced by so many cannabis employers and employees under the all-cash business model.
Many cannabis executives echo these thoughts and feelings, expressing excitement over this potentially monumental step for the U.S. Senate. Whether the sentiments of the cannabis industry fall on deaf ears or a receptive audience, however, remains to be seen.
What will happen to the SAFE Banking Act in the U.S. Senate? Could legislation finally pass and give cannabis businesses across the nation the relief and resources they need? You can follow this story and more cannabis-related news by bookmarking Cannabutter Digest. Make Cannabutter Digest your only online source for cannabis news, recipes, and product reviews.