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Colorado Senator Says Lack of Cannabis Banking a ‘Recipe for Disaster’

Democratic Sen. John Hickenlooper of Colorado last week called for the passage of the SAFE Banking Act, saying that the nation’s refusal to allow cannabis businesses access to traditional financial services is a “recipe for disaster.”

Colorado senator Hickenlooper stated last Wednesday that federal regulations that prevent banks services from cannabis-licensed businesses in the state are an attraction for criminal activity. This is contrary to marijuana legalization’s goals.

“If you really wanted to create an industry that’s dependent on gangs and cartels, make it all cash,” Hickenlooper said at the Regulating Cannabis event hosted by The Hill. “It’s almost like the system that is there now is oriented towards promoting things that we don’t want.”

Current federal regulations make it illegal for banks to service cannabis businesses. This makes the legal cannabis industry vulnerable to money laundering penalties. Hickenlooper, who served as Colorado’s governor when the state’s voters legalized recreational cannabis in 2012, said the cash-only system that dominates the cannabis economy is “a recipe for disaster” and a “blueprint for catastrophe.”

“If you de-schedule it, banks can start banking it so it’s no longer a cash business,” Hickenlooper said. “There are multiple negative consequences of having it be a cash business. One is that businesses themselves can’t get loans.”

Colorado Backs the Pending SAFE Banking Act

A federal bill, Secure and Fair Enforcement Banking Act (SAFE), is currently in the House. Federal banking regulators will be forbidden from penalizing banks who choose to provide cannabis services for businesses operating under state law. It was originally introduced by Ed Perlmutter (Democratic Representative of Colorado), who has brought it back to Congress each successive congressional cycle.

Hickenlooper noted on Wednesday that the SAFE Banking Act would not “oppose the will” of states that have not yet legalized cannabis in any form, adding that the reform would benefit the states that have instituted cannabis policy reforms.

“In terms of banking, I don’t think there’s any benefit to penalizing those states where their citizens have voted to legalize,” he said.

The House of Representatives approved the SAFE Banking Act as an independent bill in April. The House also approved the legislation in September as part of the must-pass defense spending authorisation bill. The Senate as well as the House of Representatives are trying to come to a compromise on the defense budget bill. This leaves the fate for the marijuana banking provisions largely up in the air.

Bill is supported bipartisan

Congress has bipartisan support for the SAFE Banking Act. It passed in the Democratic-majority House by 321 votes to 10, with support from 106 Republicans including Nancy Mace, South Carolina. Mace also unveiled the States Reform Act last month. This bill would allow for the legalization and regulation of marijuana at the federal level. 

“There’s nothing really controversial about cannabis except for here in Washington where you have some members who are afraid of it, or afraid to touch it,” Mace said last Wednesday. “It shouldn’t be that way.”

Mace’s bill serves as an alternative to the MORE Act, a comprehensive proposal advanced by Democrats that would also legalize cannabis at the federal level. This legislation includes broad-reaching social equality provisions, such as the expungement of federal cannabis criminals. The MORE Act would levy higher taxes than those in Mace’s bill, with revenue raised dedicated to investments in communities harmed by the War on Drugs.

Hickenlooper agreed with Mace that regulations governing cannabis banking must be amended. He said that while the system encourages criminals and puts the safety of those who own legal cannabis businesses in jeopardy, it also makes the law more difficult for them to get into the market.

“We’re funding the cartels by having all-cash businesses,” Mace said. “It’s dangerous.”

Governors in legal marijuana-legalized jurisdictions support the SAFE Banking Act. The legislation was requested by 24 bipartisan governors of states and territories where legal cannabis is available to be passed. 

According to the governors, despite cannabis being legalized by the majority of U.S. States in one form or another, lack of traditional banking services along with large quantities of cash in the supply chain make legal marijuana businesses more vulnerable to robbery. The industry’s growth is also hindered by a lack of loans.

“The SAFE Banking Amendment will remedy these harms and help keep communities in our states and territories safe by allowing legitimate and legal cannabis companies to access banking services,” the governors wrote.