SAFE Banking Act Is Paving the Way to a Greener Future

Gradually, the legalization and decriminalization of cannabis consumption are spreading throughout the country. As the industry gains more legitimacy in the eyes of U.S. lawmakers, cannabis enthusiasts can put more stock into a greener (and more relaxed) future. We still have a long way to go as a nation, but we are getting there, one step at a time.

One of the greatest challenges the cannabis industry has faced is the failure of financial institutions to recognize the sales of cannabis products as a legitimate practice. Despite widespread legalization, banks across the nation are unable to support cannabis dispensaries. Because of this, these very legitimate businesses often have no choice but to operate exclusively on cash transactions. This creates a very dangerous situation for dispensaries, making them easy targets for criminal activity. It also forces these businesses to depend heavily on special security measures, which impact cannabis dispensaries on multiple levels; however, there is hope for the future.

A new bill, known as the Secure and Fair Enforcement Banking Act of 2021, was introduced in the House by Ed Perlmutter, a Representative of Colorado, and co-sponsored by Senator Bob Menendez. Under the SAFE Banking Act, it would be illegal for regulators to prevent banks from working with businesses within the cannabis industry. This bill has incredibly promising implications that surpass simple banking. The SAFE Banking Act would open up bank loans to cannabis dispensaries and extend access to affordable insurance policies as well. Not only would this provide extra safeguards like bankruptcy protection to entrepreneurs looking to open a dispensary, but it would give more women and minorities the chance to start their own cannabis businesses. And inclusion and representation are critical for this community.  

Cannabis businesses have struggled with issues that most industries don't face, simply on the basis of federal regulation. Every day, security guards who work at dispensaries put their lives on the line, and they don't always make it home alive. Two tragic examples are Michael Arthur and Travis Mason, both of whom were recognized when the bill was introduced. Dispensaries have been robbed, legitimate businesses have had their accounts suspended, and very few banks are willing to take on cannabis providers as clients. The stigma associated with the industry is such that even sales of educational materials can put a business at risk of facing suspension from financial institutions. If one vendor experiences such an interruption, that can have an effect on all businesses that work with said provider.  

At Justice Cannabis Co., we’ve been fortunate enough to have a good working relationship with our bank, but this is a rare exception. We regularly see our industry partners face challenges, which is why we continue to advocate for legislation like the SAFE Banking Act. Gary Seelhorst, our National Compliance and Government Affairs Officer, is optimistic about the new bill. As he explained, “The more banks that start to come on, the more confidence there is in the industry. It’s that success begets success model.”   

Considering that the sales and distribution of cannabis products make up an $18.3 billion industry as of 2020 — one that is still without widespread access to regulated banking — it's easy to see why these businesses are prime targets for criminal activity. It's high time that congress ushers in some significant changes, and the SAFE Banking Act of 2021 is a promising step in the right direction. But it's also important to keep in mind that this is only the beginning. Should the legislation pass, cannabis dispensaries will face far fewer obstacles in obtaining some of the most basic resources every business needs. 

 NJBiz article about SAFE Banking