Aaron Smith, chief executive officer of the National Cannabis Industry Association, speaks at a news conference regarding the Safe Banking Act outside the U.S. Capitol in Washington, DC, on Wednesday, September 14, 2022.
Ting Shen | Bloomberg | Getty Images
The Senate banking committee will hold its first-ever hearing on Thursday on a bipartisan bill that would give the cannabis industry access to traditional banking services — which marijuana businesses consider critical to their survival.
The meeting, titled “Examining Cannabis Banking Challenges of Small Businesses and Workers,” will hear testimony from lawmakers on both sides of the aisle, including Sens. Jeff Merkley, D-Ore., and Steve Daines, R-Mont., who re-introduced the standalone account last week. The commission will also hear from witnesses including the Cannabis Regulators of Color Coalition, Drug Policy Alliance and the United Food and Commercial Workers International Union.
Thursday’s hearing will determine next steps in getting the bill to the Senate floor for a vote, as Senate Majority Leader Chuck Schumer and other key lawmakers express their support for it. It’s because the marijuana industry, which has been in a downturn even as more states approve legal markets, has pushed Congress to take action on the issue.
“Without full access to the banking and payments system, legal cannabis companies are forced to operate in the shadows,” Sen. Sherrod Brown, an Ohio Democrat and chair of the committee, said during the opening address.
Many business owners also rely on money from friends and family rather than small businesses and bank loans, because “they might go through all the costs and effort, only to be denied,” Brown said.
Echoing Brown, Senator Tim Scott, RS.C., a member of the committee, said that “Congress has a responsibility to ensure that all legal industries have access to financial institutions and services.”
But he added that lawmakers must eliminate the possibility of money laundering loopholes before the law becomes law. Any loophole could make it more difficult for law enforcement to catch drug and arms traffickers, Scott said.
The Senate’s action on the bill is welcome news to executives across the industry, including Craig Sweat, the owner of Uncle Budd NYC, the company that first brought mobile pharmacy trucks to New York City.
“I’ve held up so long that I have a product that sits and gets old,” says Sweat, who, after years of running his mobile pharmacy business and then a delivery service, has entered into a lucrative manufacturing and licensing deal with Omnium Canna to market its products. produce.
“There’s no way I can transfer money, I can’t pay staff, I’m just sitting on my hands,” Sweat said, adding that his latest business venture failed to launch as banks, fearful of federal prosecution, have given him the ” detour” given.
The Secure and Fair Enforcement Banking Act, also known as SAFE, hit a wall in Congress last year after lawmakers excluded it from a $1.7 trillion government funding bill. It was the seventh time that the legislation, which has always had strong bipartisan support, failed to pass the Senate after being passed in the House of Representatives.
Last month, the bill, which has been modified since the previous session, was reintroduced by Sens. Merkley and Daines, and Reps. Dave Joyce, R-Ohio, and Earl Blumenauer, D-Ore. The bill has strong bipartisan support with 38 additional cosponsors in the Senate and an additional eight cosponsors in the House.
Under federal law, banks and credit unions face federal prosecution and fines if they provide services to legal cannabis businesses, as it is still a Schedule I substance along with heroin and LSD. Schedule I Substances, This is reported by the federal Drug Enforcement Administrationare defined as drugs with no currently accepted medical use and a high potential for abuse.
Without access to traditional banks, legal marijuana businesses cannot access loans and capital, or even basic bank accounts. As such, businesses are forced to operate in a cash-only model, which can lead to theft, money laundering and organized crime.
Key parts of the bill protect banks that work with state-legal cannabis businesses. The legislation would protect them from punishment by federal regulators, creating a safe haven from criminal prosecution, liability and asset forfeiture for banks, their officers or employees.
The new version of the plan also provides safe haven for organizations that help disadvantaged communities, including the Community Development Financial Institutions and Minority Depository Institutions – smaller institutions that adapt to communities that often lack access to banking services.
This week, the American Bankers Association, which represents banks of all sizes from every state in the country, sent out a letter thanking the committee for taking up the matter and urging senators to “mark and move the legislation forward as soon as possible.”