The legal cannabis industry has endured a marginalized existence despite broad public support of legalization. Incredibly high, non-refundable license application fees, unsafe banking options, outrageous taxes, and the inability to write off legitimate business expenses create a massive barrier to entry and make it challenging for cannabis businesses to prosper under the weight of compliance without support. So when legislatures Sen. Merkley and Rep Perlmutter announced the 2017 bi-partisan SAFE Banking Act, many in the industry were elated. Sadly it's made little progress in the last five years. So let's unwrap this politically charged issue and get a look at the current bill.
What is the SAFE Banking Act?
The SAFE Banking Act (H.R. 1595) is a banking-specific bipartisan solution that addresses the current marketplace's unsafe reality and allows banks to serve legal cannabis-related businesses. The U.S. House of Representatives has, for the second time this year (2021), approved the SAFE Banking Act allowing cannabis businesses access to federally regulated banking. The bill would allow banks to service legal cannabis businesses without fear of penalties. The problem is that the Senate has yet to consider any of the previous eight versions of the House of Representatives bill.
The history of the SAFE Banking Act
H.R. 1595, the SAFE Banking Act, first introduced hope to legal cannabis operators in March of 2017 by Sen. Merkley and Rep Perlmutter. Since its initial introduction, it has been modified eight times in the House.
The bi-partisan bill in 2019 was endorsed by more than one hundred other original cosponsors. The House had since approved the bill three times, with another approval in September 2019. That bill advanced to the Senate, where it stalled in early 2020 due to the pandemic.
On Tuesday, September 21, 2021, Bloomberg reports that the U.S. House of Representatives again approved H.R. 1595, the SAFE Banking Act, allowing banks to work with legal cannabis firms without fear of penalty. It was the second time this year and the fifth time since the bill was re-introduced in 2019 that, despite chamber approval, it has yet to be considered by the Senate.
Speaking out for the SAFE Banking Act
Broad support for this bill comes from across the cannabis industry, including ancillary businesses that support legal cannabis businesses. But it's also generating massive support amongst banking associations. The American Banking Association sent a letter in support of H.R. 1595 to House Speaker Pelosi and others in March of 2021 in which they said, "Although we do not take a position on the legalization of marijuana, our members are committed to serving the financial needs of their communities – including those that have voted to legalize cannabis. Currently, 36 states covering 70 percent of the nation's population have legalized cannabis for medical or adult-use. Despite this ever-growing voter preference, current federal law continues to prevent banks from safely working with these businesses without fear of federal sanctions. As a result, this segment of our local economies is forced to operate on an all-cash basis, which creates serious public safety, revenue administration, and legal compliance concerns in the communities we serve."
National Cannabis Industry Association CEO Aaron Smith said, "Lack of access to banking services continues to create serious unnecessary issues for public safety, transparency, and access to traditional lending that smaller operators desperately need. These businesses are contributing billions of dollars to the national economy every year and need to be treated like any other legal regulated industry."
Looking towards the future
Now in the Senate, the bill heads to the Committee on Banking, Housing, and Urban Affairs. Let's hope voters pressure lawmakers to finally hear and approve this much-needed legislation.
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