The SAFE Banking Hearing: Congressional Committee Hears Testimony On Cannabis, Worker Safety, Legal Protection
By Natan Ponieman, Javier Hasse and Andrew Ward.
If passed by Congress and signed by President Donald Trump, the SAFE (Secure and Fair Enforcement) Banking Act would prevent the federal government from applying sanctions to banks working with cannabis businesses.
The U.S. Senate held a hearing Tuesday on the proposed legislation, which was introduced in March with bipartisan support.
The law would also grant protection to cannabis-ancillary ventures from being accused of money laundering and other related crimes.
Although legal in many states, marijuana remains illegal under federal law.
This situation forces banks to avoid dealing with cannabis businesses, which in turn have to come up with inadequate solutions to their most basic financial operations, like depositing their employees’ salaries or cutting checks to pay taxes.
While some companies have found workarounds through credit unions, most cannabis businesses are still forced to deal entirely in cash. This is not only uncomfortable and inefficient, but it also represents a significant security risk and an operational nightmare.
Seeking to address some of these headaches, the Senate Committee on Banking, Housing and Urban Affairs heard the testimony of lawmakers, cannabis advocates and business executives Tuesday. They spoke about what cannabis businesses experience when being denied access to basic banking services.
Although it is not a perfect solution, the passage of the SAFE Banking Act would legitimize the cannabis industry’s position on a federal level and give immediate relief for one of the industry’s biggest headaches.
Benzinga reached out to industry participants for their opinion on the SAFE Banking Act, as it has the potential to profoundly affect cannabis businesses in the short-term.
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John Vardaman, the chief compliance officer for Simplifya and a former senior Justice Department official focused on banking, said there is a growing urgency for Congress to address the problem of banking laws for the marijuana industry.
“As the industry continues to grow, and with additional state legalization efforts on the horizon, it must have access to the financial system in the same manner as every other business in this country," Vardaman said.
"The SAFE Banking Act would provide banks and credit unions with badly needed legal protection to expand access to marijuana businesses, and in the process bring greater financial transparency and accountability to the industry."
Meet Senator Crapo
Bruce Barcott, deputy editor at Leafly and a longtime cannabis reporter, told Benzinga he believes the hearing served as an introduction to Sen. Mike Crapo, an Idaho Republican.
“Crapo is head of the Banking Committee, and nothing will get out of that committee without his OK. He’s an old-school senator who has a distaste for the issue of marijuana and comes from one of the very few states that still allows no form of legal cannabis whatsoever," Barcott said.
High Times CEO Kraig Fox also emphasized Crapo's importance — and applauded his decision to permit a hearing on the SAFE Banking Act.
"We are hopeful that this will progress and that Congress and the president can unite to support this measure."
Crapo was the only Republican member of the Banking Committee to attend the hearing.
Investments And Employee Safety
Matt Hawkins, the managing partner of Cresco Capital Partners, said a change in federal banking laws for cannabis businesses would result in a massive increase in investment in the sector.
“We should see a domino effect of multiple U.S.-based funding sources pouring money into the cannabis market. We could also potentially see a heavy influx of cannabis-related IPO registrations to the NYSE and NASDAQ," Hawkins said.
"This bill would also open the floodgates for the billions of dollars in revenue generated from the industry to be integrated into the federal banking system.”
Workers in the industry would be able to more easily acquire loans for education, housing and more, he said.
Brad Nattrass, the CEO of urban-gro, also emphasized the benefits the law would bring to the more than 211,000 workers in the cannabis industry.
“A key factor when considering cannabis banking reform is how expanded regulations may positively impact worker safety. Operating in a cash environment poses risks for those involved and can invite criminal activity.”
DionyMed Brands CEO Edward Fields also said the lack of banking for cannabis businesses creates a safety issue.
"It's an absolute moral and ethical failure for Congress to continue to expose Americans operating in state-legal industries to the potential for criminal violence," he said.
"Delivery trucks and vans are being targeted by criminal elements who know that, on account of Congress’s inaction, large amounts of cash are being transported across the state, and employees are being put in potentially life-threatening situations every time they hit the road. This sort of thing doesn’t happen in the liquor or tobacco industries, and it shouldn’t happen to cannabis.”
Eyes On The Future
Scott Hammon, COO of MGO|ELLO, said the SAFE Banking Act act could represent a step toward full federal legalization.
“While it is a first step, granting access to the banking system will eventually lead to broader legislative reform. Such access to banking services will also help to eliminate the stigma of working with licensed cannabis businesses and assist cannabis operators in maintaining compliance with rules and regulations.”
Surterra CEO and Chairman William “Beau” Wrigley Jr. also spoke positively about the legislation.
“The strong, bipartisan support for allowing cannabis businesses access to banking services demonstrates the momentum behind sensible cannabis reform that prioritizes patient well-being and public safety.”
Image from Unsplash.
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