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The Possibility Of Banking Security For The Cannabis Industry in 2019

April 6th, 2019 photo/istock/OlegMalyshev

By Roger Malespin

As the legal cannabis market expands across the country, more people are learning about the restrictions its status as a schedule 1 drug are. Specifically, the fact that just about any bank will not touch money from the industry because the risk of reprisal from the federal government is too great. There is, however, an effort in congress to change that. The Secure And Fair Enforcement (SAFE) act was brought before congress by Rep. Ed Perlmutter (D-Co.) originally as H.R. 2215 in 2017.

 “Thousands of employees, businesses and communities across this country... have been put at risk because they have been forced to deal in piles of cash while Congress sticks its head in the sand,” Perlmutter said in a written statement following the hearing, which was titled "Challenges and Solutions: Access to Banking Services for Cannabis-Related Businesses."

 "The SAFE Banking Act is focused solely on taking cash off the streets and making our communities safer," Perlmutter continued, "and only Congress can take these steps to provide this certainty for businesses and financial institutions across the country.”

 As specified by the bill, a depository institution shall not, under federal law, be liable or subject to forfeiture for providing a loan or other financial services to a legitimate marijuana-related business.

 The first time the bill was introduced, it got little to no traction from either the House or Senate, but Perlmutter is hoping this time around the help of Denny Heck (D-Wash.), along with Sen. Jeff Merkley (D-Ore.) and a Democrat-controlled House things will be different. Cannabis legalization is quickly becoming a major issue in American national politics as lawmakers from both sides of the isle struggle with answers for the opioid crisis and potential tens of millions in tax revenue for ailing infrastructure.

There are some revisions for this year’s version of the bill. According to the National Cannabis Industry Association, "It adds protections for ancillary businesses providing products or services to a cannabis-related legitimate business; specifies how businesses on tribal land could qualify; and requires the Federal Financial Institution Examination Council to develop guidance to help financial institutions lawfully serve cannabis-related legitimate businesses."
The chances of the bill gaining momentum are difficult to assess for several reasons. Although a Democrat controlled House seems a major ally, House Speaker Nancy Pelosi (D-CA) has only shown marginal support for legalization at best. Her comments on the matter from saying everything is up to President Trump to saying the decision is in the hands of the public have been received as non-committal and fleeting.

Then there is the issue of the Attorney General William Barr. Former AG Jeff Sessions was a staunch opponent of any form of cannabis legalization, but was always at odds with Trump, who has publicly stated he would support decriminalization. Barr himself has diverged from Sessions and reiterated the Obama administration’s stance of not going after states who legalize, which is understandable since he has much bigger problems on his table for the foreseeable future. However, this still leaves the financial options of cannabis business in limbo because the banks will not touch their money without concrete protection from the government in writing.

 There is more reason to be optimistic than not though. Polls across the country show a sizeable difference is cannabis legalization support among Americans than just 10 years ago. The support crosses political, racial, and gender lines like few other issues with a clear majority in favor. Additionally, as other issues surrounding legalization such as unjust incarcerations and resistance to the pharmaceutical lobby are front and center in progressive politics, the ground is more fertile than ever for the SAFE bill to take root.