Select Page
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.

CCIA Calls For Help Supporting The SAFE Banking Act

CCIA Calls For Help Supporting The SAFE Banking Act

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.

https://cacannabisindustry.formstack.com/forms/ccia_safe_banking_letter

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.

Sincerely,

Lindsay Robinson
Executive Director 
California Cannabis Industry Association (CCIA)

Conrad Gregory 
CCIA Board President 
Senior Vice President Harborside

Swetha Kaul
CCIA Board Vice President

Louisiana Expands State Medical Marijuana Program

Louisiana Expands State Medical Marijuana Program

New laws expanding the medical marijuana program in Louisiana went into effect on August 1. The state’s medical marijuana program has been criticized for being too limited and too restrictive since the program was established in 2016, but the three laws that went into effect on Saturday aim to improve the situation.

Louisiana’s medical marijuana program may have been established three years ago, but patients were not granted access to medicine until August of 2019 when the first round of the product became available. Home cultivation remains illegal for the more than 4,000 registered medical marijuana patients. Only two facilities are allowed to cultivate medical cannabis for the entire state, and only nine pharmacies are licensed to distribute it to patients.

House Bill 819

Previously, the number of physicians that were allowed to recommend medical marijuana therapy was limited and so were the conditions that would qualify a person for the program. Under the new regulations established by HB 819, any physician licensed by the state of Louisiana has the authority to recommend medical cannabis to his or her patients. Previously, only physicians registered with the program were permitted to discuss it with patients. As a result, the program struggled to recruit physicians to participate.

This legislation also expands conditions which qualify a person to apply for the program and puts more emphasis on the patient-physician relationship by opening the program’s door to any person suffering from “any condition” which is deemed to be debilitating by the physician. Under the prior regulations, only patients suffering from a certain list of conditions, like cancer, epilepsy, or HIV, could qualify for the medical marijuana program.

House Bill 418

Even though more than half of the states in America have legalized some form of cannabis use, whether medical or recreational, the plant and its derivatives remain federally illegal. House Bill 418 aims to provide extra protection for those businesses that operate within the parameters of Louisiana state law. This legislation certifies that: “Any facility that is licensed by the Louisiana Department of Health and has patients in its care using medical marijuana shall be exempt from the prohibitions provided in this Section for possession and distribution of marijuana.”

House Bill 211

House Bill 211 addresses another major restriction placed on state-legal cannabis businesses by the federal government. While cannabis remains illegal under the Controlled Substances Act, businesses licensed by the federal government, like those that provide banking services, are not able to work with any cannabis-related company without fear of federal prosecution.

Unlike federal regulations, the enactment of House Bill 211 is meant to motivate financial institutions to service those cannabis-related businesses that are licensed and operating legally in the state of Louisiana.

This legislation sets the expectation that the state will not: “Penalize a state bank or credit union for providing financial services to a cannabis-related legitimate business or service provider solely because the account holder is a cannabis-related legitimate business or service provider or is an employee, owner, or operator of a cannabis-related legitimate business or service provider.”

Federal Law: SAFE Banking Act

Many proponents think that federal lawmakers should take a page out of Louisiana’s playbook regarding the relationship between financial institutions and legitimate cannabis businesses. As long as cannabis remains illegal under federal law, banks that choose to work with cannabis industry businesses are at risk even though those businesses are operating legally under state law.

The United States Congress is currently considering legislation known as the Secure and Fair Enforcement Banking Act (SAFE Banking Act) which would effectively lift the restrictions preventing banks and insurance service providers from openly working with cannabis businesses.

The House has already approved the SAFE Banking Act, and the legislation is currently being held up by the Senate Committee on Banking, Housing, and Urban Affairs. Some Senators may need encouragement from you, the constituents, to support the SAFE Banking Act. NORML has made it incredibly easy to contact your state’s Senators to let them know that you want them to approve the SAFE Banking Act. Click here to be redirected to NORML’s website where all you have to do is enter your information and it will automatically send your letter of support.

Subscribe To Our Newsletter

Join our mailing list to receive the latest news and updates from our team.

You have Successfully Subscribed!

[data-image-id='gourmet_bg']
[data-image-id='gourmet_bg']
[data-image-id='gourmet_bg']
[data-image-id='gourmet_bg']
[data-image-id='gourmet_bg']
[data-image-id='gourmet_bg']
[data-image-id='gourmet']
[data-image-id='gourmet']
[data-image-id='gourmet']
[data-image-id='gourmet']
[data-image-id='gourmet']
[data-image-id='gourmet']
[data-image-id='gourmet']
[data-image-id='gourmet']
[data-image-id='gourmet']
[data-image-id='gourmet']