Could the cannabis industry finally gain access to financial institutions? The latest COVID-19 stimulus bill seeks to ensure it does.
House Democrats have proposed a new $2.2 trillion COVID-19 stimulus package, which includes aid for airlines, restaurants and a second round of stimulus cheques. The updated COVID-19 provision is a stripped-back version of the HEROES Act, which cost $3.4 trillion and was stonewalled by Senate Republicans.
The cannabis industry was included in the initial HEROES Act, with provisions for The Secure And Fair Enforcement (SAFE) Marijuana Banking Act that was passed by the House of Representatives 321-103 in September last year.
The SAFE Act seeks to provide protection for financial institutions that choose to provide loans to cannabis businesses in states where the plant is legal, effectively opening the floodgates for cannabis companies to gain access to loans, as well as handling their cash through banks rather than in paper form.
Now, the latest COVID-19 stimulus package brought by House Democrats once again includes the SAFE Banking Act, potentially allowing cannabis businesses to access financial institutions.
On the bill, the Political Director of the National Organization for the Reform of Marijuana Laws (NORML), Justin Strekal, stated that:
"The inclusion of the SAFE Banking Act in the HEROES 2.0 package is a positive development."
Strekal continued to say that "in the majority of states that regulate the marijuana marketplace, cannabis businesses have been deemed essential during this pandemic. Unfortunately, at the federal level, prohibition compounds the problems that this emerging industry faces. Small cannabis businesses in particular are facing tough economic times and access to traditional financial tools will help ensure that they can weather this pandemic."
"Without access to much-needed capital to maintain throughout the crisis, it is possible that we could see an acceleration of the corporatization of the cannabis industry in a manner that is inconsistent with the values and desires of many within the cannabis space. Enactment of the SAFE Banking Act would ensure that small businesses could compete in this emerging marketplace."
As we've mentioned previously, despite the fact that cannabis is increasingly being legalized on a state level, it's still federally illegal. This means that cannabis and its derivatives come under the schedule I category, alongside other illicit substances like heroin, LSD, and MDMA.
Cannabis' strict federal scheduling has perpetuated fear and stigma around the industry for banks and financiers, who could be charged with aiding and abetting a federal crime if they come into contact with the plant.
This has left the cannabis industry virtually unable to deal with banks, with many stores requiring that shoppers pay in cash.
Companies then have to store their money in vaults, often with armed security guards and vans for when it needs to be transported. When it's tax time, some business owners will hire employees to count their cash, while others have invested in expensive, automated weighing machines to help them count.
Whether or not the SAFE Banking Act provision remains within the latest coronavirus stimulus package remains to be seen.
For this reason, it's possible the cannabis provisions may be eliminated in future discussions.
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