U.S. House Passes Bill Giving Cannabis Businesses Access To Banking
Thirty-three states have legalized cannabis for medical or recreational use but federal prohibition made it difficult for businesses in the multibillion-dollar industry to get bank accounts, loans and other financial services.
The U.S. House of Representatives passed a bill on Wednesday that would give legal marijuana businesses access to banking. The SAFE Banking Act passed 321-103 with near-unanimous Democratic support and nearly half of Republicans. Its prospects in the Senate are uncertain, but supporters say the Republican support in the House is a good sign, Associated Press reported.
The bill’s passage in the House is a “big day in history going forward with cannabis,” said Kevin Murphy, CEO of Acreage Holdings, a New York-based company listed on the Canadian Securities Exchange (ACRG).
“It’s a big deal because it’s the first meaningful step in recognizing the fastest growing industry in the United States,” Murphy said in a Yahoo Finance interview. “It’s a legitimate business, it employs tens of thousands, and think about the hypocrisy we’ve lived with in this space — the IRS is willing to collect your taxes… but they’re not really willing to have banks bank the industry.”
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There’s a growing gap between federal and state cannabis laws. The federal prohibition means that marijuana growers and retailers often cannot access even the most basic banking services. Even businesses that provide them with products and services can be subject to sanctions.
In legal marijuana markets, “cash is not simply king; it is all-consuming. It is counted and recounted and stuffed into bulging envelopes, slid into back pockets and ferried around town in beaters and fully loaded SUVs,” Robb Mandelbaum wrote for New York Times.
If passed, the SAFE bill will increase the safety of cannabis operations for patients, customers and employees by reducing the reliance on cash and promoting transparency, said Joe Lusardi, the CEO of multi-state cannabis company Curaleaf (CRLF), in a statement.
The cannabis industry does $50 billion in sales per year and is expected to grow to $80 billion by 2030, according to investment bank Cowen.
The Obama administration instituted policies that allowed more banks to serve the cannabis industry as legalization spread. However, the Trump administration rescinded those guidelines under former Attorney General Jeff Sessions, AP reported.
Making cannabis banking accessible
Some progressives Democratic presidential candidates have made marijuana reform a large part of their platform and feel the SAFE banking bill is too limited. Senators Cory Booker and Kamala Harris want legislation to go further and include elements of criminal justice reform related to marijuana.
A bill proposed by Harris and House Judiciary Committee Chairman Jerry Nadler known as the MORE Act would not only legalize marijuana at a federal level but also set aside tax revenue in a fund to help socially disadvantaged business owners and minimize barriers to entry for minority cannabis entrepreneurs.
After the SAFE vote in House, Marijuana Business Daily put together some things you need to know about the current state of banking in the marijuana industry:
- Put yourself in the shoes of your banker to know what’s important to them. Read more here.
- Every state has at least one bank that serves cannabis industry. It’s slim pickings but 715 banks and credit unions were serving U.S. marijuana-related companies at the end of June, according to federal data. What does it take to land an account at one of them? Learn more here.
- Getting an account is half the battle. Maintaining it requires a lot of precise reporting on the part of dispensary owners. Learn more here.
- A subsector of companies has emerged that connects marijuana-related businesses with bank accounts and services such as electronic payments. Here’s a look at some banking-related services that cannabis companies have had access to.