The cannabis industry could soon access traditional banking systems depending on decisions from the Senate Banking Committee.
- Today, the Senate Banking Committee is holding its first hearing on a bipartisan bill that could grant those in the cannabis industry access to traditional financial services.
- Though legalized in several states, marijuana is still illegal on a federal level, making it difficult for those in the industry to access some financial services—like receiving payments from credit cards.
- Cannabis industry leaders view the SAFE Banking Act as a crucial step to the sector’s survival, CNBC reports.
- The committee will hear from Senators Jeff Merkley (D-OR) and Steve Daines (R-MT), who introduced the bill last week.
- It will also hear from representatives of the Cannabis Regulators of Color Coalition, Drug Policy Alliance, and the United Food and Commercial Workers International Union.
Why it’s news
Results from the committee hearing will determine the next steps as the bill makes its way to the Senate floor for a vote. Senate Majority Leader Chuck Schumer (D-NY) and several other lawmakers have expressed support for the bill.
Though more states are approving marijuana for legal sale, the industry is facing a downturn.
“Without full access to the banking and payments system, legal cannabis businesses are forced to operate in the shadows,” Senator Sherrod Brown (D-OH) says.
“Congress has a responsibility to ensure that all legal industries have access to financial institutions and services,” Senator Tim Scott (R-SC) says. However, he expressed concern that the legislation should be careful to avoid the possibility of loopholes that would allow money laundering to occur in the business.
Many cannabis-related businesses cannot secure loans from banks and instead rely on personal loans or donations from friends and family.
Those in the industry are hopeful that Congressional action will result in better business. Uncle Budd NYC owner Craig Sweat explains that the current laws have hindered his business and made it difficult for him to pay his employees.
“I’ve been held up for so long that I have product that is sitting and getting old,” Sweat says. “I have no way of transferring funds, I can’t pay staff, I’m just sitting on my hands.”
Difficulty navigating the banking system often prevents cannabis business owners from expanding their operations without access to traditional business loans.
Current federal law means banks and credit unions could face prosecution for providing their services to cannabis businesses, even if they are legal in that state. Cannabis is still listed as a Schedule I substance, according to the Federal Drug Enforcement Administration. Because of these laws, marijuana businesses are forced to operate on a cash-only basis, which opens them up to risks such as robbery and involvement in money laundering or organized crime, CNBC reports.
The new bill would give banks protection for working with state-legal cannabis businesses. The American Bankers Association, representing banks from all across the U.S., sent a letter of support for the legislation.