As state after state legalizes cannabis, you’d think it would be easy street for U.S. cannabis businesses. True, cannabis is a booming industry — but it’s one that’s being held back by outdated federal laws that prohibit banks from providing financial services to cannabis businesses that are legally licensed at the state level. Due to federal prohibition, the cannabis industry gets extremely limited access to the U.S. banking system, which means no access to loans, capital, or basic bank accounts. Seven times over, the House has passed a solution, the SAFE Banking Act, but it has yet to reach full Senate approval.

The US Cannabis Council — a cannabis trade organization representing more than 60 member companies and nonprofits — supports the SAFE Banking Act as an essential piece of legislation for the industry, cannabis operators, employees, and communities. We recognize that no single piece of proposed legislation will resolve all the industry’s woes. However, the SAFE Banking Act is an essential stopgap measure and a lifeline for small businesses. The impact would undoubtedly provide direct and indirect benefits, as the ramifications ripple across the marketplace for years.´

SAFE Banking’s Far-Reaching Potential

On its face, the SAFE Banking Act has big direct benefits. Cannabis businesses and organizations, whether they cultivate or provide other services to this industry, would be permitted to access banking and financial services like any other legal industry. If passed, it would give companies a long-awaited green light to conduct business without fear of account closures or predatory terms. 

But the legislation’s real potential is in the indirect benefits it will deliver to not just the cannabis industry but also to the communities most impacted by prohibition and the economy as a whole. 

The SAFE Banking Act would end the cannabis industry’s cash-only predicament and make dispensaries and communities safer for all. It would also remove a major barrier to entry for many small or minority-owned cannabis businesses that rely on access to capital to get started. Additionally, a more stable industry would continue to generate the significant tax and fee revenues that have been a lifeline for state and local governments across the country.

The bill is an ideal companion to the Biden administration’s recent announcements on pardons and on reviewing the federal legality of cannabis. It would be a significant step forward in the fight for comprehensive federal cannabis reform. Like President Biden’s federal cannabis-possession pardon order on October 6, 2022, SAFE Banking is seen by the majority of the reform movement as a milestone that would provide greater certainty to patients, consumers, and businesses, while undoing the harms of the drug war. 

Promote Public Safety

The federal prohibition against cannabis banking poses a serious public-safety risk to all of our communities.

One of the more adverse effects of the current banking situation is its impact on safety. Because banks typically have no choice but to spurn cannabis brands, companies must find their own ways to handle cash on hand. In most cases, the predicament means cannabis companies either store money in safes on-site or at another secured location at a steep cost. Suppose a company is thriving? It may be holding millions of dollars at any given location, making its assets and employees highly sought-after targets for robberies. 

The circumstances elevate the risk for all cannabis companies, from dispensaries to production sites. In response, companies must spend ample sums of nondeductible money for security and cash-handling services. 

It may not be in the text of the bill, but the SAFE Banking Act provides safety. From the largest multi-state operator to the newest mom-and-pop shop, every cannabis operation, employee, and customer would benefit from its enactment, as would the communities they serve. As the father of a murdered dispensary worker tragically put it, “If the federal government had enabled dispensaries to take cash out of the equation, I believe Jordan would still be with us today. It’s time for Congress to act.”

Tear Down Stigmas in Impacted Communities

It is widely recognized that the war on drugs has had horrible, disproportionate effects on Black and brown communities. It may not appear evident on the surface, but SAFE Banking’s passage could help mend past wrongs by furthering inclusion and equity in these communities. 

Under the current federal restrictions, many people of color who would otherwise enter the cannabis industry don’t see it as a viable option. Most of these minority-owned operators aren’t independently wealthy and need access to loans just to get started. They also disproportionately struggle with the security challenges of conducting business in cash and would benefit the most from reduced security risk and overhead. This lack of banking access is also undermining state social-equity programs that were specifically designed with the purpose of making sure that the communities most impacted by cannabis prohibition can now gainfully participate in the burgeoning cannabis industry. 

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After decades of policies and practices that have used cannabis as justification for overpolicing and well as unlawful searches and arrests, cannabis now has the potential for job creation and building generational wealth. Without reforms like SAFE Banking, the harms of the drug war will continue to discourage these communities and individuals from participating in the licensed cannabis industry. We need to make smaller cannabis businesses more viable by providing them with banking access. If we don’t, communities that experience the brunt of cannabis criminalization will continue to encounter barriers to this industry and will rightly view cannabis as a risk to their professional and financial prospects. 

With SAFE Banking comes the potential to bridge the federal-state cannabis disconnect. In doing so, the federal government could send a surge of confidence to all aspiring applicants, especially those who have long been the victim of cannabis enforcement in this country.

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