On Thursday, The United States House of Representatives reintroduced a critical cannabis banking bill. Ed Perlmutter (D-CO), Steve Stivers (R-OH), Nydia Velazquez (D-NY), and Warren Davidson (R-OH) brought the SAFE banking act back to the House along with the support of over 100 additional cosponsors. The bill, which is expected to effortlessly advance, previously passed the house in 2019 and 2020 but was squashed by the Republican-controlled senate. However, now that Democrats control both the White House and Senate, the bill has a real chance of passing.
What Is The SAFE Banking Act?
The Secure and Fair Enforcement (SAFE) Banking Act would allow legitimate cannabis businesses acting within the confines of the law access to the same banking services as other companies.
Currently, despite the industry generating millions of dollars in tax revenue, cannabis entrepreneurs are seen more like criminals in the in the eyes of major financial institutions. Not only are cannabis operations effectively barred from traditional lending, but it’s also nearly impossible for these businesses to legally open a bank account. As a result, dispensaries and other cannabis businesses are obligated to deal primarily in cash-only transactions, making them prime targets for criminals. According to Representative Perlmutter,
“Thousands of employees and businesses across this country have been forced to deal in piles of cash for far too long. It is the responsibility of Congress to step up and take action to align federal and state laws for the safety of our constituents and communities.”
The bill remains largely the same as it was in 2019 and 2020, but with added language that explicitly includes hemp and CBD businesses as well as additional clarification on safe harbor laws and cannabis insurance.
The SAFE Banking Act’s Path Forward
In 2019, The SAFE Banking Act was introduced as a stand-alone bill. Despite overwhelmingly passing the House, it would never see the Senate floor. A year later, House Democrats attempted to embed the bill in part of their larger Coronavirus relief package, pointing out the inherent dangers of operating an “essential business” in a cash-only capacity during the height of a catastrophic pandemic. After considerable criticism from Republicans, the House eventually dropped the SAFE Banking Act from the relief bill’s final draft. Perlmutter harkened back to this subject in his Thursday address, saying,
“In many states, the industry was deemed essential yet forced to continue to operate in all cash, adding a significant public health risk for businesses and their workers. As we begin our economic recovery, allowing cannabis businesses to access the banking system would also mean an influx of cash into the economy and the opportunity to create good-paying jobs.”
The Senate is expected to introduce its own version of the bill this week. For the last two years, this is where the SAFE Banking Act has predominantly run into challenges. However, this time around, the Senate has a more favorable makeup—split 50-50 between Republicans and Democrats, with Vice President Kamala Harris acting as the tiebreaker. Perlmutter remains optimistic the bill will make it all the way to President Biden’s desk. He said,
“I think this is going to get a full legislative review, and we’re going to get a good product, a good piece of legislation, and send it to the White House.”
The California Cannabis Industry Association (CCIA) is calling for cannabis businesses to join them in imploring Speaker Pelosi to prioritize the Secure and Fair Enforcement Banking Act (SAFE Banking Act).
Click this link to add your company name and logo to the letter that will be sent to Speaker Pelosi later today. The cutoff time of today, August 4 at 5 pm is quickly approaching. Act now.
What is the SAFE Banking Act?
The SAFE Banking Act is a measure that will allow financial institutions, like banks and credit unions, and insurance providers to work with state-legal, legitimate cannabis businesses without fear of federal prosecution.
Currently, these service providers are not able to work with cannabis businesses because cannabis remains federally illegal under the Controlled Substances Act. More than 30 states, Washington D.C., Guam, and U.S. Virgin Islands have enacted either medicinal or recreational legalization amendments. Cannabis businesses deserve the same access to banking and insurance services as any other legitimate business. The federal government cannot ignore the will of the people, and lawmakers need to hear from you to know that you want them to support the SAFE Banking Act.
This is the email statement from the CCIA about the plan to send a letter:
Now is the time to raise our voices and fight for SAFE Banking on behalf of the entire cannabis community. We have a narrow window to implore Speaker Pelosi to prioritize this legislation. Please lend your name to this crucial effort by 5 pm on 8/4!
CCIA and The Liaison Group have been working tirelessly behind the scenes on SAFE Banking. Our efforts in the spring with California Delegation leaders Correa, Porter and Lieu, were crucial to SAFE making it into the Heroes Act.
SAFE Banking has passed out of the House on two occasions, the latest being part of the Heroes Act (H.R. 6800), however, this bill is yet to be passed by the Senate and signed into law. We need our leadership in California to negotiate that SAFE language remains in the COVID relief act!
We need SAFE Banking to ensure that BIPOC (Black, Indigenous, People of Color) owned businesses, especially women, have equitable access to funding and for the safety of our employees and our communities. We know that the fight for social justice and cannabis reform are deeply intertwined and that cannabis justice is racial justice. We cannot hope to repair our communities through reinvestment without the appropriate tools, including SAFE Banking.
CCIA will be submitting a letter on behalf of our members to urge Speaker Pelosi to help fight for SAFE Banking. Please use the link below to add your company name and logo by 5 pm 8/4.
We’re in this fight together!
Below is a copy of the letter that the CCIA will send to Speaker Pelosi today:
August 5, 2020
The Honorable Nancy Pelosi
U.S. House of Representatives
Washington, DC 20515
Dear Speaker Pelosi:
For the safety of our employees and our communities, we the undersigned implore you to ensure the SAFE Banking Act remains part of COVID relief. As you know, the SAFE Banking passed out of the House on two occasions. The first was standalone bill H.R. 1595 and the second as part of the Heroes Act (H.R. 6800), however, this bill is yet to be passed by the Senate and signed into law. Upon reviewing the Senate response to Heroes, we were disappointed to see SAFE Banking not included, but want to make sure that this important piece of legislation is part of a final negotiated package. We need SAFE Banking to ensure that BIPOC (Black, Indigenous, People of Color) owned businesses, especially those owned by women, have equitable access to funding. Most notably, BIPOC owners who have been most adversely impacted by the pandemic compared to their white counterparts. Below are just some reasons among many that stress the importance of this relief.
- Los Angeles’s social equity program, one of the few in the state, was designed to promote equitable ownership in the cannabis industry, but this program has had considerable challenges due to an imbalance of wealth. Although it was intended that Social Equity applicants have the opportunity to be first to market, a group of said applicants were forced to file a lawsuit to achieve fairness in a flawed process, which has now been settled. This is just the first step in an attempt to achieve equity. The majority of Social Equity applicants have not been able to afford the delayed process, nor the start-up costs associated with launching a cannabis business.
- BIPOC operators lack access to the capital that is essential to start cannabis businesses, so establishing loan programs would help with this burden. However, even if the SBA were to set up a loan program, this could not be effectuated without access to banks.
- Unfortunately, in the states that have equity programs written into their cannabis statutes, BIPOC owners fall prey to predatory business arrangements in which larger cannabis companies will be effectively running the businesses through a management services agreement while the BIPOC owner becomes a figurehead.
- Women and BIPOC face significant barriers to accessing investment dollars. Every year women of color get less than 1% of total venture capital funding. Further, data from 2019 indicates that only 200 Latinx and Black individuals nationwide were able to raise over $1 million in venture capital. This number is for all industries, not just cannabis.
- The bill is unquestionably part of a holistic approach to ending the War on Drugs, and its devastating effects on communities of color. The longer that BIPOC entrepreneurs have to wait to enter this industry, the greater disadvantage they are at because of larger companies’ ability to build their brands and customer loyalty.
- SAFE Banking reduces cash motivated crimes. Cannabis businesses and employees are routinely targeted, robbed, and sometimes attacked because of the large amounts of cash that they are forced to deal with.
- Lastly, SAFE Banking as included in the Heroes Act (H.R 6800) calls for two diversity studies for the cannabis industry. While these studies will largely tell us what we currently know (that non-white representation in the industry is disproportionately low), this will create an important baseline for future conversations around legalization and ensuring the industry is equitable.
We know that the fight for social justice and cannabis reform are deeply intertwined and that cannabis justice is racial justice. We cannot hope to repair our communities through reinvestment without the appropriate tools, including SAFE Banking. The events of recent months have shown us that this bill is more important than ever. We urge its swift passage to help our economy and our communities.
California Cannabis Industry Association (CCIA)
CCIA Board President
Senior Vice President Harborside
CCIA Board Vice President
On Monday, the Republican-controlled Senate rolled out new Coronavirus relief legislation—a counteroffer to the $3.4 trillion package unveiled by House democrats back in May. The Senate’s relief bill comes with a much smaller price tag of only $1 trillion dollars, which it achieves by slashing much of the benefits proposed by the House.
In addition to the dramatic cuts to the weekly enhancements of state unemployment benefits and safety net programs proposed in the House’s version (The HEROES Act), the Senate’s package does not include language that would protect banks who service the legal cannabis industry.
SAFE Banking Act
The Secure and Fair Enforcement (SAFE) Banking Act, which was originally proposed as a standalone bill sponsored by Rep. Ed Perlmutter (D-CO), would allow legitimate legal cannabis businesses access to financial services regardless of federal prohibition. Despite being initially approved by the house months ago, the Senate Banking Committee has continued to take no action on the bill. In order to circumvent the Senate Banking Committee, House Democrats included a version of the SAFE Banking Act in their Coronavirus relief bill.
According to the summary provided in the HEROES Act, the SAFE Banking section would “allow cannabis-related legitimate businesses, that in many states have remained open during the COVID-19 pandemic as essential services, along with their service providers, to access banking services and products, as well as insurance.”
The executive director of the National Cannabis Industry Association, Aaron Smith, tweeted out his approval of SAFEs inclusion in the House’s relief bill, stating: “On behalf of the legal cannabis industry, we commend the congressional leadership for prioritizing public health and safety by including sensible cannabis banking policy in this legislation.”
Criticism From Senate Republicans
Despite the fact that forcing essential businesses to continue operating as cash-only during a global pandemic seems counterintuitive to stopping the spread of the virus, Senate Republicans have leveled criticism at the addition of marijuana banking protections to the Coronavirus relief bill.
Senate Majority Leader Mitch McConnell has been particularly vocal about his opposition to including protections for cannabis businesses in any relief package, stating: “I am opposed to non-germane amendments, whether it’s funding for the FBI building…or other non-germane amendments in the House bill like marijuana studies or aid to illegal immigrants…”
McConnell’s disapproval is not only aimed at the germaneness of the SAFE Act being included in the House’s relief legislation, but also at the diversity report provisions that it contains. Back in May, McConnell gave a speech on the Senate floor where he responded to the passing of the House’s HEROES Act. During it, McConnell sardonically referred to the section on marijuana banking protections as “the cherry on top.”
He continued in a similar tone: “Let me say that again, Democrats’ proposed coronavirus bill includes taxpayer-funded studies to measure diversity and inclusion among the people who profit off of marijuana.”
The Future of the SAFE Banking Act
As of now, it is unclear whether or not House Democrats will push for a section on cannabis banking protections to remain during the upcoming bicameral negotiations that will take place to merge the two chambers bills into one.
As for the Standalone bill, there is no reason to think the Senate Banking Committee will take further action any time soon.
One of the most important pieces of cannabis-related legislation, the Secure and Fair Enforcement Banking Act (SAFE Banking Act), has the chance to be included in the next round of COVID-19 relief legislation in the United States. The House approved the inclusion in May when representatives passed the Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES Act), and it will soon be the Senate’s turn.
The United States Senate has never approved legislation regarding banking services for cannabis businesses before. Many Senators may not have the spirit or understanding to make sure this legislation is enacted, so they need to hear from you, the constituents. Now is the time to contact your Senators. Tell them to support the inclusion of the SAFE Banking Act. Click here to find the contact information for your state’s Senators, and send them an email telling them to support the SAFE BANKING Act. Don’t wait. It only takes a few minutes to voice your opinion. Your letter may be the one to sway the vote.
Are you unsure of what to write? Below is a great sample script from NORML that you can copy and paste into your email. You can also click here to be redirected to NORML’s website where all you have to do is enter your information and it will send your state’s Senators this exact email for you.
I urge you to support the Secure and Fair Enforcement Banking Act (SAFE Banking Act), HR 1595 / S. 1200, to allow state-licensed marijuana-related businesses to engage freely in relationships with banks and other financial institutions.
Presently, more than 30 states authorize the licensed production and dispensing of medical cannabis. ten states permit similar commercial activities and retail sales of marijuana to all adults. Yet, thousands of these licensed and regulated businesses do not have access to the banking industry and are unable to accept credit cards, deposit revenues, or write checks to meet payroll or pay taxes. This situation is untenable. No industry can operate safely, transparently, or effectively without access to banks or other financial institutions.
Congress must move to change federal policy so that these growing number of state-compliant businesses, and their consumers, may operate in a manner that is similar to other legal commercial entities.
Allowing tightly regulated marijuana businesses the ability to access the banking system will help reduce the threat of crime, robbery, and assault in our communities and keep the cash out of cartels. I urge you to support and cosponsor The SAFE Banking Act.
Why is the SAFE Banking Act so important?
While cannabis remains federally illegal as a Schedule I drug under the Controlled Substances Act, 33 states and Washington D.C. have enacted laws legalizing the medical and/or recreational use of the plant. Schedule I drugs are considered to be the most dangerous of all substances, and they are described as “drugs with no currently accepted medical use and a high potential for abuse.” Methamphetamine and cocaine are categorized as Schedule II substances, meaning they are technically defined as being less dangerous and less addictive than marijuana.
The fact that cannabis and tetrahydrocannabinol (THC) are listed among the ranks of ‘most dangerous’ with heroin and methaqualone (Quaaludes) simply does not make sense when there are more than four million registered medical marijuana patients in the United States, and the majority of Americans are in favor of legalization. Nonetheless, financial institutions and insurance providers are federally regulated, so they simply cannot work with cannabis businesses at this time without risking their operating licenses or federal prosecution. The SAFE Banking Act would greatly improve this situation.
Hundreds of thousands of Americans in more than half of the United States are working within a state-regulated, legitimate industry which generates billions of dollars in tax revenue each year, yet these businesses are denied these imperative services. This is not right. It is not fair, and it needs to change.
This also means that cannabis businesses and their employees, which were deemed ‘essential’ like grocery stores and pharmacies in nearly every state in which they operate, were denied access to the federal Payment Protection Program (PPP).
Dangers of Cash Only Operations
When a business is denied access to regular banking services like processing debit and credit cards or writing checks, it leaves them vulnerable. Without a business bank account, state-regulated dispensaries, cultivators, and product producers are forced to operate only in cash. Having large amounts of cash on hand makes these businesses targets for armed robbery which on more than one occasion has resulted in the death of employees.
In the times of the COVID-19 pandemic, just handling cash is also potentially dangerous. While it is thought that the virus is most easily spread from person to person, the Centers for Disease Control and Prevention (CDC) warns that it is possible to catch it from handling infected items like cash.
Contact Your Senators
It is imperative that you communicate with your Senators. Without hearing from you, the people they represent, they may not know how many people support the SAFE Banking Act. If you want to write an email or make a quick call, click here to find the contact information for your state’s Senators. Many Senators are also active on Twitter, so Tweet at them if that is your preferred method of communication.
Ohio’s recreational cannabis initiative has been delayed due to coronavirus social distancing measures, and the petition’s language is also undergoing revisions at the request of Ohio’s Attorney General. Despite these setbacks, the movement is not dead in the Buckeye State.
During the election season, petitioners rely on interaction with the public to inform voters on ballot initiatives and to collect signatures. Without that in-person mechanism, all ballot initiatives and petitions could be delayed indefinitely. Tom Haren, Spokesperson for Regulate Marijuana Like Alcohol, has indicated the group is taking social distancing measures seriously during the pandemic.
“We made the decision early on that the health of our volunteers, supporters, medical marijuana patients, and the general public would be our primary concern,” he said. “As Ohio begins the process of re-opening, we are evaluating our options and hope to have more to share soon.”
Being unable to exercise democracy through legislation and proposed ballot measures has First Amendment implications, and addressing this in court has already been problematic. Earlier this month, a judge in Ohio’s Franklin County said he lacked the ability to make alterations to the state’s constitution that would allow fewer signatures to be collected during the pandemic. Freda Levenson of ACLU Ohio, who is representing Ohioans for Fair and Secure Elections, has concerns about what this could mean for election laws.
“The First Amendment says any infringement on speech, even if it’s temporary or brief is a violation of your rights,” she said. “They can’t say ‘you can talk later.’ You have a right to say it.”
But coronavirus is only part of the petition’s setbacks. In March, the Attorney General of Ohio informed the petitioners by letter that proposed legislation, which would amend the state’s constitution in order to legalize recreational cannabis, was insufficient and required additional information.
“Upon reviewing Section (A) of the proposed amendment and comparing it to the summary language, I am unable to certify the summary as a fair and truthful representation of the proposed amendment,” wrote Attorney General Dave Yost in the rejection letter. “Section (A) of the proposed amendment lists several findings and declarations that the amendment proposes to be made by ‘the people of the state of Ohio.’ The summary makes no mention of these findings and declarations. Thus, it completely fails to inform a potential signer that the amendment elevates these ‘findings and declarations’ to a constitutional standard.”
Haren has said that the group will continue to revise their proposed amendment based on the Attorney General’s notes.
Ohio is one of several states who have a strict medical cannabis program that is largely unsuccessful due to overregulation and lack of available products. Of patients who are qualified and enrolled in the program, thirty percent have not made a single purchase.
“If you’re a patient in Ohio, it’s hard to participate in Ohio’s medical marijuana program,” Haren said. “We were promised a program that worked.” Ohio’s state medical cannabis business association is currently not supporting the bill.
Up to an ounce of cannabis for recreational use would be allowed under the proposed legislation, along with up to six plants for personal use. The state would establish a regulatory body that would oversee production, quality control, licensing, and retail distribution of cannabis along with a proposed sales tax structure, 25% of which would go towards social equity programs.
Image by David Mark from Pixabay