Critical Cannabis Banking Bill Is Re-Introduced In Congress After Stalling In Senate

It’s back, or at least, no longer languishing on a desk. The SAFE Banking Act, a proposed legislation that prevents federal banking regulators from penalizing banks for working with legal cannabis businesses, has been re-introduced in both the U.S. Senate and House of Representatives. Previously, the bill stalled in the Senate after being approved by the House of Representatives with wide margins and significant bipartisan support during the past two congressional sessions.

If the bill passes both chambers of Congress, it would be a momentous victory and historical turning point for the industry. The banking ban is one of the industry’s most formidable challenges. Even if cannabis businesses operate in legal states, financial institutions won’t work with them due to the federal illegality. As a result, many businesses are forced to become cash-only operations, rendering them vulnerable to theft and other criminal acts. Although some businesses find refuge with credit unions while others deposit cash in a safe or contract a cash holding company, traditional banks are still the optimal solution to an issue that continues to plague the industry.

With a majority of Americans supporting federal legalization, according to a recent poll, coupled with two-thirds of the country having legal medical markets and over a third permitting adult-use, government and industry representatives are clamoring to remedy this situation. And their voices are becoming increasingly louder and more strident.

Currently, there are 322 House members and 76 senators representing states with medical or adult-use cannabis laws whose constituents would directly benefit from passage of the SAFE Banking Act.

Aaron Smith, co-founder and CEO of the industry trade organization National Cannabis Industry Association, said this need has never been more pressing than right now.

“With a supermajority of Congress now representing a state with licensed cannabis sales, enacting this sensible and necessary legislation should be among the least controversial issues before the Senate today,” said Smith in a statement. “This bill is a common sense step toward improving public safety and transparency while also opening much-needed access to capital to struggling small businesses throughout the nation.”

According to the NCIA, nearly three in four Americans live in a state where cannabis is legal in some form.

Industry professionals are hailing the re-introduction and expressing optimism about the bill’s passage.

“This legislation would provide the industry with much-needed safety and security, while increasing access to capital for small businesses and entrepreneurs,” said Anthony Coniglio, CEO of NewLake Capital Partners, a provider of cannabis real estate capital. “The reality is that Americans consume approximately $100 billion of cannabis each year, with 75% of it being from unregulated sources. The SAFE Banking bill is an important step in converting sales to a regulated channel.”

Passage of the bill might also be key in reversing the industry’s recent downturn.

“The marijuana industry has unjustly taken an equity beating over the last 16 months,” maintained John Mueller, CEO and co-founder of multi-state operator Greenlight Dispensary. “In a $30 billion industry, with 25% EBITDA margins, all of the market caps combined are worth less than $12 billion today. If SAFE passes, those equities will skyrocket.”

The bicameral legislation was introduced by Sen. Jeff Merkley (D-OR), Sen. Steve Daines (R-MT), Rep. Dave Joyce (R-OH), and Rep. Earl Blumenauer (D-OR). The bill has been slightly revised since the last session.