On Friday, key sponsors of cannabis banking legislation held a news conference during which they said the SAFE Banking Act needs to pass now as a solution to an urgent public health threat.
While dozens of states now have legal medical cannabis and 15 and Washington D.C. have passed adult use laws, cannabis remains federally illegal, so banks are more often than not unwilling to assume the risk of working with the cannabis industry. This means that many cannabis businesses are forced to operate as cash-only, making them targets for robberies and other violence. Or, as longtime cannabis legalization advocate and Oregon Rep. Earl Blumenauer called it on Friday, “a public safety crisis.”
This week, two bills were introduced in Congress that seek to fix some of the industry’s highest hurdles: the Secure And Fair Enforcement (SAFE) Banking Act would provide safe harbor to financial institutions that want to serve the cannabis industry, and the Clarifying Law Around Insurance of Marijuana (CLAIM) Act of 2021 would open to door to insurance of many kinds to the industry. (As Cannabis Wire previously reported, many insurance companies and groups have lobbied on SAFE, as it would resolve both banking and insurance woes.)
The House passed the SAFE Banking Act in a historic vote back in 2019, but it then stalled in the Senate. Lawmakers now say that the tide is turning on Congressional cannabis legislation, due in part to the domino effect of so many states coming on board with medical or adult use programs.
“When I first started bringing it up, people would chuckle,” Colorado Rep. Ed Perlmutter said Friday, adding that he has reintroduced versions of this legislation since 2013. ”There’s no more chuckle factor. Everyone knows this is a serious issue that Congress needs to address.”
Ohio Rep. Steve Stivers said that he’s “had conversations” with Pennsylvania Senator Pat Toomey, Ranking Member of the Senate Banking Committee and Idaho Senator Mike Crapo, a current member of the Committee and its former chair.
“We showed that we can get great Republican support on this bill last year with 91 Republican votes for it. And I feel confident that there will be a lot of Republican senators that will vote for this when it gets a vote in the Senate,” Stivers said.
During the COVID-19 pandemic, the cannabis industry was deemed “essential,” like grocery stores and pharmacies, as Cannabis Wire has reported.
“The conflict in state and federal law and banking cannabis related businesses has forced the industry to operate on a cash-only basis and has created a serious public safety risk for our communities. The public safety risk has always been my primary focus, but as more states have legalized some form of marijuana and with the COVID-19 pandemic, the case for allowing these businesses to access the banking system has become even stronger,” Perlmutter said.
“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,” Perlmutter said.
Rep. Nydia Velazquez, chair of the House Small Business Committee, will introduce the companion legislation in the House. Velazquez said she watched small businesses struggle during the stay-at-home orders, including cannabis businesses.
“Failing to allow cannabis businesses to utilize services not only creates additional barriers for these small businesses,” Velazquez said, but it also presents “a public safety risk in our communities as these high volume cost businesses are frequently the target of violent criminals.”
Velazquez, also a key sponsor of the CLAIM Act, spoke about the overlapping needs of the cannabis industry on both access to financial services and insurance.
“Importantly, this will provide a safe harbor for insurance companies to provide services to cannabis-related businesses,” Velazquez said. “We must recognize that allowing cannabis businesses access to services like banking and insurance will be a step to helping them recover from the fallout of the pandemic.”
Stivers calls himself “probably the most unlikely of co-sponsors of this bill” because he does “not support legalization of recreational marijuana.” His support rose out of hurdles that ancillary business owners faced.
“I was really convinced by businesses from Ohio that aren’t even in the marijuana space, that have customers in the cannabis business,” Stivers said, using the example of a fertilizer company that fears their banking services will be jeopardized by working with cannabis businesses.
Stivers also made the case that opening up the cannabis industry’s access will help law enforcement do their jobs better, which is why “a lot of law enforcement” are supporting the SAFE Banking Act, Stivers said.
“You can’t freeze cash. You can freeze bank accounts. Access to the banking system will actually allow us to have more control over the bad actors and at the same time make everybody safer. It also will create an auditable record because it’s hard to audit cash because you can write anything in a cash ledger,” Stivers said.
Blumenauer emphasized on Friday that broader cannabis reforms are “coming,” but that the SAFE Banking Act needs to be prioritized, and that it is “distinct” from how some lawmakers “feel about comprehensive reform.”
“There’s no need,” Blumenauer said, “for us to wait on the banking issue. This is an issue that is putting the public at risk.” “
