The U.S. House of Representatives passed a bill that would make it easier for state-authorized marijuana companies to access banking services.
The bill, HR 1996, called the SAFE Banking Act, would prohibit federal banking regulators from penalizing banks and other depository institutions for providing banking services to cannabis companies. It happened Monday night in a bipartisan vote of 321-101.
There are a total of 36 states and four territories authorized the use of marijuana for medical purposes and 17 states have authorized it for recreational use. However, the drug is still considered a banned substance under the Federal Controlled Substances Act and banks that provide services to cannabis companies can be penalized under federal money laundering laws.
The legislation passed the House with bipartisan support in 2019, but was ignored by the Republican-controlled Senate. Democrats are optimistic about the possibilities of the measure now that their party controls the chamber, although Republicans can still block most legislation.
Senators Jeff Merkley, an Oregon Democrat, and Steve Daines, a Montana Republican, introduced the Senate bill. It currently has 32 co-sponsors, including six Republicans, but the measure will require even more support to reach the 60-vote threshold needed to advance in the chamber.
Senate Majority Leader Chuck Schumer has said he wants to work to lift the federal cannabis ban. It currently is draft legislation with Senate Finance President Ron Wyden or Oregon and New Jersey Sen. Cory Booker proposing to remove marijuana from the list of controlled substances and regulate it at the federal level.
The SAFE banking law is a long way from what many cannabis companies would like to see in the United States: a federal green light, or at least a decriminalization, for marijuana.
But it could solve some of their most pressing financial problems by allowing them to have bank accounts with traditional banks. So far, the inability to do so has created a number of burdens and risks for the industry, from having to store mountains of cash with small credit unions, to facing additional security issues at the same time. to make cash payments and create your own debit card system. receive payments from consumers.
This version of the act does not include a language to address two other major financial concerns of the cannabis industry. He wants more clarity on whether institutional investors can allocate money to marijuana companies without fear of legal repercussions. To date, these concerns mean that individual investors and family offices are the main investors in the industry, and many U.S. investors have allocated their money to Canadian marijuana companies, due to the federal legality of that country. .
The other regulatory burden that the cannabis industry wants to eliminate is 280E, the tax law that says companies that treat illegal substances federally cannot make deductions in the same way that other U.S. companies do. Many cannabis companies have said that if 280E is raised, they would be immediately much more profitable.
Even without explicit language in the SAFE law, there are some hope that financial institutions could see other changes that would make them more comfortable with investing in cannabis. The Treasury Department’s Financial Crimes Enforcement Network, or FinCEN, which analyzes financial transactions to combat money laundering, may update its guidelines to resolve conflicts with the new SAFE law, Jefferies analyst said Owen Bennett in a March research note. If the language of the agency is applied not only to banks that make deposits, but to all financial institutions, it could open up more institutional investments.