A United States congressional panel has advanced a bill that would allow banks to provide banking and financial services to cannabis companies in states where the drug has been legalized. The House Financial Services Committee approved the SAFE Banking Act with a strong bipartisan vote of 45-15.
The SAFE Banking Act would give banks the go signal to do business with the burgeoning cannabis industry. If the bill officially becomes a law, it would finally put an end to the industry’s struggle to gain access to the legal financial system.
While more and more states have already embraced and legalized medical cannabis, or both medical and recreational cannabis, the drug is still illegal at federal level. Because of this federal status, national banks such as Bank of America, Chase, and Wells Fargo refuse to do business with and provide financial services to even state-licensed cannabis companies for fear of running into trouble with the federal government.
As a result of these restrictions, most state-regulated cannabis companies are forced to operate on a cash-only basis. This means cannabis businesses are also forced to pay their vendors and their employees in cash. Customers are also prevented from using debit or credit cards.
State-legal cannabis businesses also cannot avail of bank loans and credit lines, which are supposedly the main financial lifeblood of small enterprises.
There are some retailers, though, that have opened basic financial service accounts with only small local banks and credit unions. But the services that small financial institutions can provide are rather limited.
Thankfully, a number of lawmakers have acknowledged that operating exclusively in cash puts companies at risk. For one, legal cannabis businesses can be a quick target for theft.
The bill was broadly supported by both Democrats and Republicans. It is also backed by the banking industry, where financial firms are eager to get an assurance from the federal government that they can engage in business with cannabis companies without getting into trouble.
In fact, the American Bankers Association has told Congress that while they are not taking a stand on the matter of cannabis legalization, the adoption of pro-cannabis policies by states has raised practical issues that need to be addressed.
The bill now proceeds to the full House and is expected to be passed by the Democrat-dominant chamber. It will then advance to the Republican-led Senate, where, according to analysts, it faces an uncertain future.
Some Republican lawmakers have expressed concern over allowing banks to get involved in a business that is still technically illegal. They have argued that if Congress really wants to permit banks to service the cannabis industry, then it should first legalize cannabis.