Legislation allowing banks to offer credit cards, checking accounts and other financial services to legal cannabis businesses passed the U.S. House Friday, the sixth time that the Democratic-controlled chamber approved such a measure.
The Secure and Fair Enforcement, or SAFE Banking Act was included in legislation providing federal assistance to help U.S. manufacturers better compete with China. That measure was approved largely along party lines, 222-210.
The Senate earlier passed a similar bill on a bipartisan basis, so both chambers will try to come up with a final version that can clear Congress.
“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,” said the measure’s chief sponsor, Rep. Ed Perlmutter, D-Colo.
Booker, who is leading efforts in the Senate to end the federal ban on cannabis, has opposed efforts to pass SAFE Banking without also including restorative justice provisions to help largely minority communities and individuals who were most injured by the War on Drugs.
Federally regulated banks have been caught in the middle between U.S. law, which outlaws cannabis, and the laws of dozens of states, including New Jersey, that now allow some use of cannabis.
Concerns about who actually benefits
Some cannabis advocates say they do support the criminal justice provisions, but would rather see something rather than nothing. Even some minority-owned cannabis businesses have endorsed passing SAFE Banking on its own, saying it would allow them to raise the money they need to compete with well-heeled cannabis companies.
One of the most staunchest advocates on Capitol Hill has been the U.S. Cannabis Council, a powerful lobbying arm that represents a substantial portion of the largest legal cannabis operators in America.
“The U.S. cannabis industry is growing rapidly and already supports over 300,000 American jobs,” said Steven Hawkins, chief executive of the U.S. Cannabis Council. “Yet the industry is subject to banking restrictions and taxation levels that are unheard of elsewhere in the economy. The SAFE Banking Act would make American cannabis businesses of all sizes more competitive.”
Another influential organization, the Cannabis Regulators of Color Coalition (CRCC), a group representing multiple government officials tasked with overseeing cannabis programs, has met with Senate Majority Leader Chuck Schumer alongside other cannabis advocates to push back against that narrative.
The coalition said the bill would do little to actually help small businesses, and would make it easier for big companies to control the legal market.
In a discretionary process dealing with markets designated as high-risk, banks shy away from smaller businesses and usually still continue to opt for bigger businesses, said Portland, Oregon cannabis czar and CRCC chair Dasheeda Dawson.
“Whenever it’s up to discretion, the banks are mostly risk-adverse — that history is clear, that data is shown, so we anticipate only seeing benefits going to larger more capitalized, well-established businesses, which is actually the opposite of the story that’s being told,” she said.
The SAFE Banking Act can sound like a good idea because it has found people in positions of desperation for any sense of perceived relief or progress, Dawson said. Taking advantage of that, without legislative provisions that could guarantee small businesses would not be locked out of an opportunity some of them are advocating for is something she has described as akin to predatory behavior.
“It’s being sold well because we are in the midst of a crisis,” she said.
Dawson also added that states could help by setting up their own cannabis banking infrastructure and provide emergency relief funds for small cannabis businesses on a local level.
Many of the corporate cannabis companies operate in what’s known as limited-license states, where the amount of licenses that can be applied for in certain categories of cannabis licensure are capped. Companies with access to large amounts of capital have dominated those markets.
New Jersey is one of those markets.
If big cannabis companies in markets that have already been built on oligopolistic structures gain more power, it could widen the disparity, a factor that bears acknowledgement, Dawson said.
“It’s just what we hope will happen,” Dawson said of assuming banks would open up to smaller businesses and people of color. “Everybody wants to have hope, we all really want to believe in hope, that’s something that’s easy to get people to rally behind. I also think it’s important for us to rally around the truth.”
“Call everyone back in and let’s say ‘hey, here’s what’s really happening and here are some of the real solutions that will provide relief,’ (they) will be very upset if this passes and we’re still suffering with the same issues.”
What’s on the horizon
Perlmutter said that conversations are going on with Booker aides. While there may not be the votes yet for an overarching cannabis legislation, he said there are at least 60 votes in the Senate to pass SAFE Banking.
If the Senate doesn’t go along with the provision this time, Perlmutter said he will bring up the bill again and again as amendments to other legislation.
“I’m committed to putting it on anything I can,” he said. “I hope the Senate sees this as inevitable.”
In order for the bill to have a chance at receiving the coalition’s support, Dawson said the bill would have to provide provisions that could guarantee opportunities for small businesses that would normally be passed over in the discretionary process, measures that would protect against interests that dominate or monopolize markets.
Booker reiterated his support for more comprehensive measures as well.
“My hope was that the industry side that’s supporting SAFE banking, the businesses that are now creating hundreds of millions, if not billions of dollars in profits, and this is important to them, use your power to help us to make sure that we get the restorative justice provisions as a part of that,” he said.
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