It may come as a surprise to many: cannabis business is still crippled by the federal government’s laws restricting banking rights. Since all banks must be federally insured, and all federal laws still view cannabis as illegal, any bank who will accept deposits, checks or process credit cards from cannabis businesses are breaking the law.
This may seem like a catch-22; most banks in America are unwilling to risk their business when they know the federal government might come down on them, yet most state governments are demanding and encouraging cannabis business. Only 6 states in the US still have marijuana completely illegal in all forms, including medicinal. The amount of lawmakers dedicating their efforts to passing legislation that would remove restrictions on banks is high, and bipartisan support makes it more likely than ever to pass at a federal level.
Senators Jeff Merkley (D-OR) and Steve Daines (R-MT) reintroduced the Secure and Fair Enforcement (SAFE) Banking Act before the US Senate, with the support of 27 original cosponsors. The support of both parties is crucial to the goal of waiving restrictions on financial institutions to support legal cannabis trade.
Problems with Money and Marijuana
Currently, any bank proved to be doing business with a cannabis business entity can face possible charges for processing cash taken in by dispensaries. Also, the dispensaries themselves are not able to process check or credit card transactions. This puts an undue burden on pot shops, even when selling weed is legalized in their particular state. Cash transactions lend themselves to fraud, theft, and overall discrepancies with business transparency.
“No one working in a store or behind a register should have to worry about experiencing a traumatic robbery at any moment,” said Sen. Merkley. “That means we can’t keep forcing legal cannabis businesses to operate entirely in cash – a nonsensical rule that is an open invitation to robbery and money laundering. Let’s make 2021 the year that we get this bill signed into law so we can ensure that all legal cannabis businesses have access to the financial services they need to help keep their employees safe.”
State and Federal Conflict with Cannabis Commerce
In a business where controversy runs high, this glaringly obvious discrepancy between state and federal law causes undue burdens on businesses who are operating legally within their state’s regulations. This financial double standard perpetuates the concept of small, minority-owned business members being at a disadvantage against large, multi-state operating agencies. Since banks will not lend money to these entities, as it places them under great liability with the federal government, it makes it virtually impossible for business owners to secure startup funds.
While this is not the first time legislation has been pushed to help bridge the gap between the feds and the states over cannabis trade, previous attempts were stalled under former Senate Majority Leader Mitch McConnell (R-KY). New legislation introduced on Tuesday had bi-partisan support. In the senate, there are 72 delegates whose constituents would be directly impacted by this decision, and the leadership in the Senate seems much more responsive now than with previous efforts.
Advocates, legislators, and business owners agree that making strides in the difficult financial climate will help to support positive business growth in the cannabis industry. Opening lending opportunities to marginalized communities, creating safer environments for employees and customers, and keeping cannabis commerce local as much as possible are all no-brainer concepts. It is heartening to see party lines being set aside their differences to work for a common goal that will benefit Americans on this interesting journey of marijuana business growth. Stay tuned for updates as we follow the progress of this piece of legislation.
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