A bipartisan group of federal lawmakers reintroduced the Secure and Fair Enforcement (SAFE) Banking Act in Congress, which would clear the way for legal cannabis operations to use the banking system. If SAFE makes it through committees, which looks likely, it could go up for a vote in the Senate for the first time.
Leafly Senior Editor David Downs talks about where the bill stands this time around.
What is the SAFE Banking Act?
What the SAFE Banking Act does is it prohibits banking regulators from targeting banks who provide banking services to the legal cannabis industry. Right now all banks are subject to money laundering charges, and are losing their federal depository insurance, which translates into a lot of fees for those banks to collect from cannabis businesses.
The current regime really punishes small operators who report losing their checking accounts and payroll, and the inability to get loans or credit. A lot of these operators will encounter trouble trying to get a home loan, lawyers, landlords, and their insurers. In California last year, we had to make it clear that insurers weren't committing a crime if they were insuring cannabis businesses.
In terms of the experience for the consumer [what it results in is] you have to use cash when you're in a store instead of a debit card. All that cash floating around in a $20 billion industry equals injuries, robberies, and deaths of cannabis licensees
Is it more likely to pass this time around?
We have new members on the Senate Banking Committee where the rubber hits the road, but cannabis remains a political football on Capitol Hill.
We also know that Senate Majority Leader Chuck Schumer has already said that he wants to see more social equity provisions be put into the SAFE Banking [Act]. Lawmakers tried to do that in the past and they’ve run into Republicans who find that idea kind of a poison pill. A lot of Republicans on the far right see the idea of social equity as just like a nonstarter that we don't really need.
There's a lot of places now where legislators are going to be hearing from local constituents about the need for cannabis law reform. Another factor is cannabidiol and hemp legalization that really put hemp producers in Kentucky in the ear of people like Senator Mitch McConnell.
We know the SAFE Banking Act has passed the House seven times. It's never passed in the Senate, and now that there's been a change in Congress, it remains to be seen how it'll progress this time.
How could the passage impact California?
California will see small business owner-operators be able to avail themselves of banking services, and be better able to tread water in this really tumultuous environment.
It could result in lower cost to consumers because the cost of banking would go down for those producers. It would be another tailwind in terms of federal reform, as well as even at the local level.