U.S. House of Representatives passes the SAFE Banking act.
SAFE is the first legislation passed by the Democrat-controlled Congress.
The bill has been approved four times so far but has not been taken up by the Senate.
The bill will have to pass the Senate and be signed by President Biden before becoming law.
Biden is still opposed to ending the federal prohibition of marijuana.
On Monday, April 19th, 2021, the U.S. House of Representatives approved a cannabis banking reform to protect banks from penalization for serving state-legal marijuana businesses. The measure was passed by a strong bipartisan vote of 321-101. This groundbreaking move was the first major marijuana legislation approved by the new Democratic-controlled Congress.
The new reform will enable banks and other financial institutions to serve cannabis industry clientele without fear of federal penalties. Currently, marijuana dispensaries have been forced to operate on a cash-only basis, making them prime targets for criminals, as well as creating multiple complications for financial regulators.
Rep. Ed Perlmutter took the House floor after the win and proclaimed:
“The fact is that people in states and localities across the country are voting to approve some level of cannabis use, and we need these cannabis businesses and employees to have access to checking accounts, payroll accounts, lines of credit, credit cards, and more. This will improve transparency and accountability, and help law enforcement root out illegal transactions to prevent tax evasion, money laundering, and other white-collar crime. But most importantly, this will reduce the risk of violent crime in our communities.”
SAFE has been a long time coming
The reform, known as the SAFE Banking Act, was first proposed by legislators in 2019. Initially, the Banking Act was met with resistance from cannabis advocates who felt that Congress should prioritize social equity and legalization before catering to industry interests.
However, certain industry experts strongly support the reform and believe it will play a role in balancing social equity, eliminating crime, and reducing economic strife in poorer communities. Aaron Smith, CEO of the National Cannabis Industry Association believes the bill is “vital for improving public safety and transparency and will improve the lives of the more than 300,000 people who work in the state-legal cannabis industry.”
For many years, members of the state-legal cannabis industry have failed to gain access to banking services. This access would allow for such financial amenities as payroll accounts, lines of credit, and checking accounts.
These archaic restrictions have severely compromised and derailed any fund-raising opportunities for cannabis operations across the U.S. The cash-only system also creates a public-safety issue for marijuana dispensaries effectively making their employees and clientele vulnerable to violent-crime scenarios.
The SAFE Banking Act has now been approved by the House a total of four times. In 2019 a stand-alone cannabis banking reform bill was passed, and then two more times in conjunction with a coronavirus relief measure. However, the reform was unable to progress during the last session when the Senate was under Republican control.
Now that Democrats are in control of the White House and both chambers, industry pundits and advocates believe the bill’s trajectory will not end with the House. Stakeholders remain cautiously optimistic in hopes that the reform will be Senate-approved and ultimately by the current resident of the Oval Office.
Little opposition to SAFE Banking Act
Rep. Patrick McHenry (R-NC) opposes the reform, in stark contrast to other Republican members who firmly supported the bill. Rep. McHenry voiced his prohibitive stance, citing marijuana’s lingering status as a federally illegal substance and vehemently stating:
“Regardless of your position on this bill, I do think the fact remains that cannabis is a prohibited substance under Schedule I of the Controlled Substances Act—and let me further state, by enacting this legislation, we’re effectively kneecapping law enforcement and legalizing money laundering.”
Legislator Rep. David Joyce (R-OH) was quick to defend the long-overdue, much-needed reform and said:
“At a time when small businesses are just beginning to recover from the economic destruction caused by COVID-19, the federal government should be supporting them, not standing in their way.”
David Mangone, of the DC-based Liason Group, an advocate for the National Cannabis Roundtable resoundingly hailed the bipartisan vote and has stated:
“Members on both sides of the aisle view SAFE Banking as a fundamentally sound policy for job growth and economic opportunity, equity, and public safety.”
President Biden’s opposition to legalization
President Biden has been less-than-enthusiastic in regard to his views on marijuana legalization. The subject of marijuana’s removal from the federal Controlled Substances Act, is still on the table, but at present, the reform appears to be on hold while congress focuses on infrastructure spending.
Rep. Chuck Schumer, a long-time vocal advocate of the cannabis industry, has vowed that Democrats would move forward with progressive reforms even if President Biden doesn’t offer his full support.
As legalization measures are pushed forward, addressing the irrational, dangerous denial of banking services to state-legal cannabis operations is a top priority for legislators.
Cannabis industry experts are confident that offering banking services to small operators will be a great boon to the fledgling business. Given the bill’s bipartisan support, this banking bill appears to have the highest potential for marijuana-reform approval in 2021.
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