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U.S. House Approves Bill to Ease Cannabis Banking

U.S. House Approves Bill to Ease Cannabis Banking

The U.S. House of Representatives late Tuesday night approved a bill that would let banks to do business with cannabis companies without fear of penalty, giving traction to the least-disputed reform sought by the growing industry. 

The so-called SAFE Banking Act would be a boon for marijuana companies, which have so-far been stymied by the necessity to deal in cash because of federal restrictions. That has meant they have extra security costs and logistical problems, even as marijuana increasingly becomes legal. Some three dozen states now allow medical or recreational use, according to New Frontier Data, a cannabis research firm.

The measure, which has been passed by the House before with bipartisan support, was this time approved by voice vote as part of the National Defense Authorization Act.

Representative Ed Perlmutter, a Colorado Democrat, who had re-introduced the bill, has said that allowing cannabis businesses to access the banking system would bring more money into the economy and offer the opportunity to create good-paying jobs. The American cannabis industry had $20.3 billion in legal sales in 2020, according New Frontier Data.

The bill’s prospects are unclear in the Senate.

Yet it’s still a far cry from the wish-list of legal reforms that the industry seeks, including all-out legalization, and relief from tax burdens.

The U.S. Cannabis Council, a trade group that represents companies in the industry, called the current rules that require marijuana firms to be all-cash a security hazard.

“Over $17 billion in legal cannabis was sold in the United States last year, overwhelmingly through cash transactions. Forcing legitimate, well-regulated cannabis businesses to conduct most of their business in cash is anachronistic and a clear threat to public safety,” the council’s chief executive Steven Hawkins said in a statement before the bill passed.

BTIG analyst Camilo Lyon said in a research note this week that the SAFE Act’s inclusion with the defense authorization might enhance its prospects.

“Discussions with our D.C. contacts suggest it has an easier pathway of getting through the Senate, largely because no senator wants to be viewed as holding up the massive 1,700 page must-pass NDAA simply because of SAFE banking,” Lyon wrote.

House Committee Approves Marijuana Protections For Banking

House Committee Approves Marijuana Protections For Banking

A house appropriations committee has approved a cannabis banking amendment

A House subcommittee on Thursday approved a large-scale funding bill that includes provisions protecting banks from being punished for working with marijuana businesses and allowing Washington, D.C. to legalize cannabis sales.

The move by congressional Democrats to let the District of Columbia set its own marijuana policies is in contrast with a budget released last month by President Joe Biden, which proposed continuing the longstanding Republican-led rider that has prevented the city from spending its own money to regulate adult-use cannabis commerce.

The banking-related provision is less far-reaching than more robust standalone bills the House has passed on four occasions, but would still provide some protections to banks that work with state-legal marijuana operators.

Both measures are attached to a bill to fund various federal agencies for Fiscal Year 2022 that was approved by the House Appropriations Financial Services and General Government (FSGG) Subcommittee in a voice vote. The full House Appropriations Committee is scheduled to take up the legislation on Tuesday.

In a press release, the panel called the rider blocking local D.C. marijuana policymaking an “objectionable” measure that “undermine[s] home rule.”

Rep. Eleanor Holmes Norton (D-DC) said in a press release that she’s “very pleased the bill respects D.C.’s right to self-government by allowing D.C. to spend its local funds as it sees fit, including on…recreational marijuana commercialization.”

“With Democrats controlling the White House, House and Senate,” she said, “we have the best opportunity in over a decade to enact a spending bill with no anti-home-rule riders, as this D.C. appropriations bill does and as I requested.”

After the Biden budget was released, Norton told Marijuana Moment that she was “very disappointed” over the decision, especially considering that fact that he’s voiced support for D.C. statehood.

The exclusion of the D.C. provision from the Fiscal Year 2022 FSGG appropriations bill could set the stage for conflict between lawmakers and the president. The Biden administration has already disappointed advocates by declining to take meaningful action on cannabis reform as promised on the campaign trail, and his inclusion of the D.C. rider was seen as an outright hostile act.

The District’s mayor said in April that local officials are prepared to move forward with implementing a legal system of recreational cannabis sales in the nation’s capital just as soon as they can get over the final “hurdle” of congressional interference.

The ongoing blockade is the result of an amendment that was first added by Rep. Andy Harris (R-MD) when Republicans controlled the House and has since been continued in annual appropriations legislation. The House on several occasions has since passed spending bills that do not include the cannabis ban, but it has been included in final enacted legislation because the Senate under GOP control insisted on reinserting it.

SAFE Banking Act Reintroduced In Senate

SAFE Banking Act Reintroduced In Senate

SAFE Banking Act is soon to voted on in the Senate

A bill to protect banks that service state-legal marijuana businesses from being penalized by federal regulators has been reintroduced in the Senate—with nearly a third of the chamber as cosponsors. It’s a development that takes on a new light now that Democrats are back in control the chamber.

This comes days after the Secure and Fair Enforcement (SAFE) Banking Act was refiled in the House, where it passed with bipartisan support as a standalone bill in 2019 and also as part of two COVID-19 relief bills.

The Senate version is being sponsored by Sens. Jeff Merkley (D-OR) and Steve Daines (R-MT), and it currently has 27 other cosponsors. In the House, the legislation has more than 100 members who’ve signed on as cosponsors.

The SAFE Banking Act would ensure that financial institutions could take on cannabis business clients without facing federal penalties. Fear of sanctions has kept many banks and credit unions from working with the industry, forcing marijuana firms to operate on a cash basis that makes them targets of crime and creates complications for financial regulators.

“No one working in a store or behind a register should have to worry about experiencing a traumatic robbery at any moment,” Merkley said in a press release. “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.”

Daines added that “Montana businesses shouldn’t have to operate in all cash—they should have a safe way to conduct business.”

Hemp Industry Win: Farmers Might Finally Get Bank Access

Hemp Industry Win: Farmers Might Finally Get Bank Access

Banking has been an issue for cannabis and hemp businesses alike due to federal banking restrictions for years. But for hemp, that all could be changing very soon.

It’s safe to say that the hemp industry and cannabis industry don’t have the best relationships with banks. Because most banks are federal institutions, they have to follow federal law. This is why despite cannabis being legal in multiple state, businesses have a lot of difficulty finding a bank that will work with them.

While this will remain the case for the cannabis industry unless the SAFE Banking Act passes, the legal hemp industry has achieved another milestone in regards to banking for legal hemp businesses.

Hemp Industry Banking

Currently, the banks that actually work with legal hemp businesses could be counted on one hand. Due to strict requirements that come with loads of paperwork, most banks just avoid hemp businesses all together. But that is all about to change.

Federal and state bank regulators announced Tuesday that they were scrapping a burdensome requirement that banks said kept them away from the hemp business. With the requirement scrapped, banks no longer have to treat their hemp customers as suspicious and file reams of paperwork to anti-money-laundering authorities for each interaction.

In other words, with less paper work and red tape surrounding the legal hemp industry, banks are about to feel a lot safer about working with hemp businesses. And it’s not like the demand isn’t there either.

In November of 2019, the American Banking Association surveyed 1,800 agriculture-focused banks in the country and found that almost half had gotten questions from their farmer-customers about whether they would still do business with them if they started growing hemp.

Hopping on a moving train

Banks have been sitting on the sidelines of the legal hemp industry and legal cannabis industry for a while now, and the industry has progressed just fine without the financial institutions up to this point. Even though banks have been slow to embrace the cannabis industry, investors have been geared up to profit from it.

Analysts tracking publicly traded companies have added pot producers to their portfolios, in order to help investors decide where best to maximize their exposure to the industry. Ultra-rich venture capitalists have begun to treat pot businesses like tech start-ups. While some stocks have had their hiccups, the industry is looking strong and projected to continue growing through 2020 and beyond.

While banks have been slow to get onboard the legal hemp industry train, hemp businesses will likely be happy to work with them now that the requirements have been lessened. Even though hemp flower producers may still find it difficult having a product so similar to federally illegal cannabis, other businesses in hemp clothing and manufacturing should start finding it much easier to find a bank that will work with them.

Is cannabis banking next?

The hemp industry is making strides on strides in terms of legalization and banking access, whereas legal cannabis industries have been inching along slowly year over year. Progress has been exponential since Colorado first legalized in 2012, with multiple states following suit in the years after. But with federal law remaining the same regarding cannabis, progress has been slow with legal cannabis businesses still lacking banking access, despite state law.

The SAFE Banking Act is currently the best hope legal cannabis businesses have to achieve banking access in the near future. While the bill has already passed through the House of Representatives with large support from the banking industry. However not many are hopeful of the bill surviving the republican controlled senate headed by Mitch McConnell.

The irony of the whole situation is that McConnell is largely responsible for the passing of the 2018 Farm Bill the federally legalized hemp across the country, yet he will also be the reason that legal cannabis businesses may not get the access to banks they desperately need. Only time will tell, and for, all the wires are silent.