Lack of banking access hinders social distancing efforts, increases risk of contagion, creates unnecessary financial hardship and other safety risks for essential businesses and patients
A group of cannabis advocacy and industry organizations sent a letter to Congress earlier this month urging lawmakers to include the Secure and Fair Enforcement (SAFE) Banking Act or similar language in the next pandemic relief package which would create a safe harbor for banks and other financial services providers to work with cannabis and ancillary businesses that are in compliance with state law.
The letter cites the ability of cash to carry contagions and the personal proximity required by cash transactions as reasons for urgency in correcting the lack of banking access in the cannabis industry, beyond the pre-existing safety and transparency concerns addressed by this legislation.
The letter was signed by Americans for Safe Access, Global Alliance for Cannabis Commerce, Marijuana Policy Project, Minority Cannabis Business Association, National Association of Cannabis Businesses, National Cannabis Industry Association, National Cannabis Roundtable, National Organization for the Reform of Marijuana Laws, Policy Center for Public Health and Safety, and Safe and Responsible Banking Alliance.
“Collectively, we represent consumers, patients, and thousands of state-regulated and ancillary cannabis businesses,” the letter explained. “This industry, composed primarily of small to medium-sized businesses, continues to provide safe cannabis medicine to more than 3 million medical cannabis patients in the United States. Despite the essential designation in most states, these essential businesses lack access to the financial services necessary to optimize social distancing measures to ensure the safety of medical cannabis patients, workers, and the public.”
Due to current federal laws and financial regulations, most banks are unwilling to take the risk of prosecution or sanction to work with state-legal cannabis businesses and often ancillary businesses that service the cannabis industry. This forces many businesses in this space to operate almost entirely in cash, creating public health and safety issues that have been compounded by the coronavirus pandemic. These policies hinder the efforts of regulators and law enforcement to effectively monitor the legal cannabis market, and severely limit access to capital for small businesses that are increasingly in need of assistance. Business owners are also becoming more concerned that the presence of cash on their premises will make them larger targets for crime as unemployment rises throughout the nation.
“Locking legal businesses out of traditional banking services—leaving them with no option but to operate exclusively in cash—has long put workers in danger,” said Sen. Jeff Merkley, the lead Senate sponsor of the SAFE Banking Act. “And now in the face of this pandemic, it’s making it increasingly difficult for these businesses to keep their workers and customers safe while they fight to stay afloat. The SAFE Banking Act is more important than ever to these businesses and the families who rely on them, and I’m committed to doing everything I can to get it passed.”
The SAFE Banking Act would prevent federal banking regulators from punishing banks for working with cannabis- and hemp-related businesses that are obeying state laws. The bill would protect ancillary businesses that work with the cannabis industry from being charged with money laundering and other financial crimes, and requires the Financial Institution Examination Council to develop guidance to help credit unions and banks understand how to lawfully serve cannabis businesses.
“Cannabis businesses and their employees already face a significant public safety risk without access to the banking system, and the COVID-19 crisis has only exacerbated this risk with these essential businesses having to move their cash-only transactions outside the store,” said Rep. Ed Perlmutter, lead House sponsor of the SAFE Banking Act. “At the same time, many of these businesses are facing disruptions in their supply chain and in normal operations and they should be eligible for relief just like any other legal, legitimate business during this pandemic. I will continue to push for inclusion of the SAFE Banking Act or other forms of relief for this industry in the next package.”
“The lack of access to banking also prevents legitimate cannabis-related businesses from obtaining emergency relief or securing bank loans to continue providing safe medicine and jobs to their communities,” the letter continued. “Despite essential designations, many cannabis businesses will struggle to remain operational without access to traditional banking products and services… If businesses cannot access the resources to remain operational, patients would be forced into the illicit market of unregulated medicine and transactions.”
Last September, the House passed the SAFE Banking Act in a bipartisan vote of 321-103, making it the first piece of stand-alone cannabis policy reform legislation to ever receive a vote or be approved by either chamber of Congress. Companion legislation is currently being considered in the Senate and is awaiting a markup in the Senate Banking Committee.
Cannabis is legal for adults in eleven states as well as the District of Columbia and the territories of CNMI and Guam, and 33 states as well as several territories have comprehensive medical cannabis laws. The substance is legal in some form in 47 states. Every state with a functional regulated cannabis market has allowed continued access during the coronavirus response.
Representing nearly 2,000 member-businesses and tens-of-thousands of cannabis professionals, NCIA is leading the charge to protect legal cannabis businesses, defend our state laws, and advance federal policy reforms. Successful businesses are joining NCIA every day to become stronger, smarter, and more prosperous by working together to defend and expand the responsible cannabis industry.
Learn more at thecannabisindustry.org.
For reprint and licensing requests for this article, CLICK HERE.