Last week the House of Representatives approved the SAFE Banking Act, which was part of another bill. It is the sixth time that the lower chamber of Congress has passed legislation to give cannabis companies access to financial services.

On Friday, members of Congress adopted the provisions of the banking bill. This amendment was to the legislation drafted to help U.S. manufacturers and increase competition with China, known as the America Creating Opportunities for Manufacturing, Technology Pre-Eminence and Economic Strength Act of 2022, or the America COMPETES Act.

Banks and financial institutions cannot provide service to cannabis business owners, even if they operate legally. This is because federal law prohibits banks from providing services to these businesses. Many cannabis businesses are required to transact in cash. This puts them at higher risk for theft and robbery. In the SAFE Banking Act (originally introduced by Ed Perlmutter from Colorado), banks will be allowed to provide financial services for state-legal cannabis firms.

“Cannabis-related businesses—big and small—and their employees are in desperate need of access to the banking system and access to capital in order to operate in an efficient, safe manner and compete in the growing global cannabis marketplace,” Perlmutter said in a statement quoted by Roll Call.

“We need to bring some sense to what is really dangerous right now in this space that so many states allow for dispensaries, for grow operations,” he added. “There’s just a lot of cash and that cash can really pose problems.”

Friday’s vote in favor of the SAFE Banking Act as an amendment to the China bill marks the sixth time that the House has approved the legislation. Recent provisions included the measure in a defense budget bill. Later, the cannabis banking amendment was dropped from the spending bill by a congressional conference committee.

Matt Hawkins is the founder and managing partner of Entourage Effect Capital’s cannabis investment company. He called for senators to adopt the House of Representatives’ cannabis banking legislation.

“While this is a step in the right direction, albeit, for the sixth time, it is imperative for the Senate to finally take SAFE Banking across the finish line,” Hawkins wrote in an email to Chronic News. “Cannabis is the next great American sector, and the industry can only sustain its dominant global standing if it can legally engage with mainstream financial institutions.”

Final Approval Uncertain

The final America COMPETES Act will decide if the SAFE Banking Act makes it into the final version. Sen. Cory Booker from New Jersey is one of the Senate Democrats who wants to include cannabis banking in a larger marijuana legalization bill that includes provisions to deal with the effects of decades of prohibition. Perlmutter however advocates an incremental approach for cannabis legalization.

“The SAFE Banking Act is the best opportunity to enact some type of federal cannabis reform this year and will serve as the first of many steps to help ensure cannabis businesses are treated the same as any other legal, legitimate business,” Perlmutter said.

Kassia Graham, director of community strategy at Cannaclusive is a media company that aims to promote fair representation for minorities cannabis users through education and imagery. Kassia Graham believes that cannabis banking legislation should be modified to benefit both small and large companies (MSOs). 

“On the surface, the SAFE Banking Act seems like legislation that benefits all businesses in the cannabis industry. However, banks have very specific processes to determine loans and other offerings, and compliance regulations they must adhere to when determining if they’ll work with a client,” Graham told Chronic News. 

“Historically, Black, Indigenous, and non-white Latine people have been denied loans for less risky businesses. Although cannabis was considered an important industry in the wake of the pandemics, it is still classified as a Schedule 1 drug at the federal level. In order for SAFE to be viable for more than MSOs, there’d need to be provisions that ensure interest rates are fair, the process is accessible and void of class and racial bias.”

Senate Republicans are fighting for the SAFE Banking Act. On Monday, Republican minority leader Mitch McConnell referred to the provisions of the bill in the America COMPETES Act as a “poison pill” in the legislation.