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How SAFE Banking Act Could Benefit US Cannabis Companies

How SAFE Banking Act Could Benefit US Cannabis Companies

The Secure and Fair Enforcement (SAFE) Banking Act, was reintroduced in Congress, on March 19th. A version of the bill in 2019 garnered 321 votes in its favor, and 103 in rejection. However, the bill floundered in the then Republican-controlled Senate. There is renewed optimism now that Democrats hold a slight control of the Senate.

The bill seeks to offer federal-wide protection from prosecution for US bankers that serve the cannabis market. 

Cannabis companies must be cautiously delighted but deepen lobbying on federal-wide uniform rules; insurance access rather than just retail banking and robust data capture. 

State/federal dilemma

The biggest dilemma of the US cannabis market is that trade, consumption, or banking for participants is lawful in select states but there is no federal blanket protection. From 2012, adults over the age of 21 can lawfully use marijuana in 15 states and Washington DC. Additionally, 36 states have legalized the usage of medical cannabis meaning – loosely – the majority of Americans can possess marijuana for medical or recreational purposes.  

This arcane patch of rules is a headache to marijuana market participants. “The biggest risk the cannabis industry faces is uncertainty. Not only around regulation but around the nature of the lawsuits that could arise,” an authoritative report about the industry, compiled by New Dawn Risk consultancy, states.

Marijuana companies in the US incur millions of dollars in consulting lawyers to weave through a maze of intimidating, non-uniform state laws that can change from state to county. For example in Pennsylvania, a web of rules means marijuana traders have to part ways with up to $2 million upfront in paperwork and proof of assets alone. 

So the re-introduction of the SAFE Act is a very important opening for marijuana companies to lobby for a law that gives blanket federal protection. That way, American marijuana corporations get a competitive footing and don’t have to coy around the rules, and list on indexes in nearby liberal jurisdictions like the Toronto Stocks Exchange in Canada.

We spoke to Andrew Bowden, CEO of Item 9 Labs Corp, who had this to say:

“We believe the passing of the SAFE Banking Act will advantage all U.S. cannabis operators. For Item 9 Labs, we’ll see direct benefit in access to further financing our Arizona cultivation site buildout and cannabis products to fulfill our customer demand. With our upcoming merger with OCG, Inc. and their Unity Rd. franchise, the robust pipeline of prospective franchise partners will gain additional access to financing – much like SBA loans assist other franchise concepts. We also expect the passing will open the broader exchanges, like NASDAQ and NYSE, with investment banking and institutional investors able to participate, and make it easier for U.S. citizens to purchase shares.”

Don´t forget insurance

The re-introduced bill mandates that federal banking regulators cannot “terminate or limit the deposit insurance or share insurance” or “take any other adverse action against a depository institution” just because it provides banking services to licensed cannabis corporations. 

Cannabis companies must not fall into the trap of focusing their lobbying too heavily on retail banking whilst overlooking insurance. As cannabis cultivation, harvesting and trade heat up in the US domestic market, don’t forget that marijuana is a business that´s galloping beyond our shores. China, as bullish as ever, already plants 50% of the total area of cannabis grown in the world today. The World Intellectual Property Organization, states that 306 of the 606 patents involving cannabis today are in the hands of Chinese corporations and individuals. 

It is almost given that US marijuana businesses will venture abroad to pick virgin markets or diversify harvests, and this is where insurance shines. Global and domestic US marijuana logistics are complex and fraught with risks of shipping, fire, or climate change disrupting harvests. The legalized cannabis industry in the US would pay $1 billion in annual insurance premiums if the trade was insured to levels offered for other sectors. 

Lobbying must intensify to make it easier for cannabis corporations to obtain legal insurance at competitive rates thus they can safely hire more workers and expand operations. As a National Association of Insurance Commission report stated in 2018: “Lack of insurance for the industry adds layers of unnecessary risk and exposure for all market participants.”

Data is savior

The re-introduction of the SAFE Act bill could unleash an avalanche of pent-up data that will enrich both cannabis traders, healthcare agencies, users, and bankers. 

Right now due to patchwork of mysterious rules, the cannabis sector runs by word-of-mouth figures, and insider chats (not structured data). “Thousands of employees and businesses across this country have been forced to deal in piles of cash for far too long,” Rep. Perlmutter, the pusher of the re-introduced bills said via a news release

Without a modern, high-quality data registry on the marijuana market, it is double difficult for retail insurance companies to fairly price packages, or for cannabis traders to haggle for competitive interest rates. Without data, insurers are piloting in the dark. Cannabis growers lose, and health agencies can´t track the impact on consumers.

House Reintroduces SAFE Banking Act To Protect Cannabis Businesses

House Reintroduces SAFE Banking Act To Protect Cannabis Businesses

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 Evolution of Kamala Harris’ Views On Marijuana

The Evolution of Kamala Harris’ Views On Marijuana

On Tuesday, presumptive Democratic presidential nominee Joe Biden announced he was selecting Kamala Harris (D-CA) as his running mate for the 2020 election.

Harris, a former prosecutor, has experienced an evolution regarding her views on marijuana prohibition during the last decade.

Views Prior to 2015

In 2003, Harris began her foray into electoral politics by challenging Democratic incumbent Terrence Hallinan for the San Francisco attorney general position. During the campaign, Harris criticized Hallinan’s office for its low conviction rate and vowed to take a tougher stance on crime. After successfully defeating Hallinan, Harris did just that. While at the helm, her office oversaw a 6 percent rise in marijuana convictions. Despite those high numbers, Paul Henderson, Harris’ chief of administration, stated, “Our policy was that no one with a marijuana conviction for mere possession could do any (jail time) at all.”

In 2010, while Harris was making a run for state attorney general, she came out against Proposition 19 — a bill designed to legalize and tax marijuana in California. Her campaign made the statement, “[Harris] supports the legal use of medicinal marijuana but does not support anything beyond that.”

Four years later, during re-election, she was flanked to the left by her Republican opponent Ron Gold who stated, “[marijuana] needs to be legalized immediately.” When told about Gold’s statement by a local news station, Harris simply laughed and said, “He’s entitled to his opinion.” 

2015 Through the Present 

In 2015 her position began to soften. During a speech at the California Democrats Convention, Harris came out in support of ending the federal ban on marijuana. She echoed this statement in 2016 after being elected to congress. Harris addressed noted marijuana prohibitionist Jeff Sessions directly while speaking at the Center for American Progress by saying, “Let me tell you what California needs, Jeff Sessions. We need support in dealing with transnational criminal organizations and dealing with human trafficking – not in going after grandma’s medicinal marijuana.”

She continued, “While I don’t believe in legalizing all drugs — as a career prosecutor, I just don’t — we need to do the smart thing, the right thing, and finally decriminalize marijuana.”

Her shifting views on cannabis prohibition became even more apparent in 2018 when Harris signed onto the Marijuana Justice Act — Presidential rival Cory Booker’s (D-NJ) far-reaching bill designed to end federal prohibition.

In 2019, Harris went a step further and co-sponsored the Marijuana Opportunity Reinvestment and Expungement Act (MORE). The MORE Act called for not only complete federal legalization but also the expungement of prior marijuana convictions.   It marked the first time in history a congressional committee has approved a bill to end federal marijuana prohibition.

“Right now in this country, people are being arrested, being prosecuted, and end up spending time in jail or prison all because of their use of a drug that otherwise should be considered legal,” Harris said in a press release regarding her involvement with the MORE Act.

“Making marijuana legal at the federal level is the smart thing to do; it’s the right thing to do. I know this as a former prosecutor, and I know it as a senator.”

Harris went on to co-sponsor the SAFE Banking act —  an essential piece of legislation that would allow cannabis dispensaries access to financial institutions like banks and credit unions.

Marijuana Emerges As Key Issue In Nevada U.S. Senate Race

Marijuana Emerges As Key Issue In Nevada U.S. Senate Race

This year’s U.S. Senate race in Nevada has become one of the most watched of the cycle, and marijuana is increasingly a central issue as Congresswoman Jacky Rosen (D) ramps up her challenge to incumbent Sen. Dean Heller (R).

During the campaign, Rosen has consistently drawn attention to what she says is Heller’s lack of pushback against U.S. Attorney General Jeff Sessions’s moves to rescind protections for state cannabis laws.

Rosen herself had written to Sessions in January, urging him to reverse his decision to end Obama-era guidance on the issue — known as the Cole Memorandum — that generally allowed states the freedom to enact legalization and regulate their own cannabis industries without federal interference.

Meanwhile, Heller also made a statement in response to Session’s decision: “Knowing Attorney General Sessions’ deference to states’ rights, I strongly encourage the DOJ to meet with Governor Sandoval and Attorney General Laxalt to discuss the implications of changes to federal marijuana enforcement policy. I also urge the DOJ to work with the congressional delegations from states like Nevada that have legalized marijuana as they review and navigate the new policy.”

However, as Rosen pointed out in January, Heller is the only Republican senator up for re-election this year who’s both from an adult use cannabis state and also voted to confirm Sessions as attorney general.

On various counts, Rosen has vocalized her support for legal marijuana — citing benefits like job creation and tax revenue — as well as her commitment to protecting state cannabis industries from federal interference, all while simultaneously attacking Heller for his relative passivity on the issue.

In addition to public commentary, Rosen has taken a stand by cosponsoring several congressional bills relating to cannabis, including the STATES Act to strengthen states’ rights on marijuana, the VA Medicinal Cannabis Research Act of 2018, the SAFE Act of 2017 to secure banking for the cannabis industry and the Regulate Marijuana Like Alcohol Act, as well as legislation to ensure tax fairness for cannabis businesses and to remove roadblocks to marijuana research.

“Nevada voters chose to legalize recreational marijuana in 2016, and states like Nevada have shown that allowing responsible adults to purchase marijuana legally supports our state budget, creates new jobs and businesses, and drives our economy instead of making our broken criminal justice system worse,” Rosen said in a press release about signing on to the Regulate Marijuana Like Alcohol Act. “I believe it’s time to end the federal prohibition on marijuana, start regulating this product like alcohol, and get rid of barriers for states like ours where voters have made this decision to move forward.”

Though publicly less vehement on the issue than Rosen is, Heller has cosponsored a handful of cannabis bills during his time in the Senate, namely the Marijuana Businesses Access to Banking Act of 2015 and the Compassionate Access, Research Expansion, and Respect States (CARERS) Act of 2015.

But he has not signed onto the CARERS Act or the banking bill in their current iterations during the 115th Congress.

Though Heller has discussed cannabis under the umbrella of states’ rights, in 2007, as a House member, he voted against an amendment shielding state medical marijuana laws from federal interference.

By 2015, Heller made a statement that “the time has come for the federal government to stop impeding the doctor-patient relationship in states that have decided their own medical marijuana policies.”

Meanwhile, NORML gave Heller a B grade in its congressional scorecard last year. Rosen will receive an A in the organization’s forthcoming analysis of the current Congress, and Heller is being downgraded to a C for “not representing his constituents,” NORML Political Director Justin Strekal told Marijuana Moment.

Since January, Rosen has been active on Twitter, posting about marijuana at least two dozen times. Heller, on the other hand, has not tweeted anything on cannabis issues.

Two years ago, Nevada voters approved legalization by a margin of 54 percent to 46 percent. This year, it could end up being the case that a contrast on cannabis issues makes the difference in what is expected to be a very close Senate race.

See the original article published on Marijuana Moment below:

Marijuana Emerges As Key Issue In Nevada U.S. Senate Race

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