Eoin Keenan – Content & Communications Director
The Secure And Fair Enforcement Banking Act, SAFE, has recently been passed in the U.S. House of Representatives by a vote of 321 to 103. The SAFE Banking Act would grant the burgeoning cannabis industry access to basic banking and financial services, allowing institutions, insurance providers and investors the chance to safely and confidently trade with cannabis-based businesses.
Whilst this is great news for those hoping to see legislative reform, how promising does it look for it to pass Senate?
At present, banks can work with cannabis businesses operating within the legal framework of their state; however, banks cannot offer the same range of services that would normally be available to businesses.
This means businesses operating within the cannabis industry must apply for temporary riders or resort to operating with cash, which is unsustainable and often results in business failure.
According to Neal Levine, CEO of the Cannabis Trade Federation, ‘the SAFE Banking Act will ensure state-legal cannabis businesses and their employees have access to the same basic banking and financial services (…) Allowing the cannabis industry to access banking services will reduce its reliance on cash and greatly improve safety for cannabis businesses, employees and consumers. It will also increase transparency and help law enforcement deter and detect illegal operations.’
Besides allowing businesses to operate in a safer and more transparent way, the SAFE Banking Act would also grant financial institutions the opportunity to invest without the danger of putting their institutions at risk of federal prosecution, something that would most certainly create an incentive for companies to invest in the industry.
Yet, whilst the executive director at the Marijuana Policy Project, Steve Hawkins, reminds us that this vote is an ‘indication that Congress is more willing than ever to support and take action on sensible cannabis policies’, the reality is that this bi-partisan legislation still doesn’t have enough support from the Republican-led Senate.
In fact, despite its bi-partisan design, the SAFE Banking Act is still far from being a Republican idea, with only 26 Republicans versus 180 Democrats signed on as co-sponsors, meaning that it could be an arduous process for this legislation to pass Mitch McConnell’s GOP-led Senate.
McConnell has been a staunch critic of the cannabis industry in the past, blocking cannabis banking reforms in 2018 and naming cannabis derivatives as ‘hemp’s illicit cousin which I choose not to embrace’. So, despite two-thirds of Americans saying they support the legalisation of cannabis, it seems unlikely that this Banking Act will pass through Senate.
If this wasn’t enough of a road-block, divisions are also present within the Democrats themselves, some, including the ACLU and the Center for American Progress arguing that this Banking Act isn’t comprehensive enough and doesn’t tackle the problem at its core.
Representative Maxine Waters, of the Democratic Party, instead urges for the House Judiciary Committee to pass the MORE Act, a bill to decriminalise and deschedule cannabis on the federal level saying that ‘it’s long overdue that Congress address the unjust criminalisation of marijuana use’.
Despite the historical passage of the SAFE Banking Act through the U.S House of Representatives, it seems unlikely that the bill will pass the Senate in the current political climate.
However, it is instrumental to not see this as a defeat – the traction and momentum generated by this Banking Act have positively impacted the industry as businesses operating in the cannabis industry have been given hope that the market will soon receive serious financial backing.
If you would like to understand more about the cannabis industry in North America, email our lead consultant, Barbara Pastori: Barbara@prohibitionpartners.com