The Cannabis Industry Wants SAFE Banking Act to Advance, But Concerns Remain


Sen. Mike Crapo’s inbox is overflowing. 

Over the last month, the republican from Idaho -- who serves as the chairman of the Senate Banking Committee -- has received several letters concerning the Secure and Fair Enforcement (SAFE) Banking Act, which would protect financial institutions working with state-approved cannabis companies.

Recall, the SAFE Banking Act was passed by the U.S. House of Representatives by a vote of 321-103 last September, but Crapo has insisted on studying the potential pitfalls before advancing the proposed legislation. 

The latest communications to hit Crapo’s desk have come from opposing voices. On February 12, a letter “urging” Crapo to hold a markup of the bill was delivered. 

The very next day, 12 republican members of the House of Representatives who voted against the SAFE Banking Act last year “thanked” Crapo for “introducing a public health perspective to the question of banking for marijuana enterprises.”

Put simply, proponents of cannabis banking reform are begging Crapo to move things along while opponents are applauding him for dragging his feet.

The more than 1,300 entrepreneurs and advocates who signed the Feb. 12 letter wrote that passage of the bill was “crucial” for small cannabis businesses selling the still federally-illegal substance in 33 states.

“We know from our personal experiences, and those of our customers, suppliers, and employees, that the SAFE Banking Act as passed by the House of Representatives is the right approach to secure banking and payment processing services,” the letter reads.

SAFE Banking Act supporters have argued that it would improve public safety and help dismantle an illicit marijuana market that continues to thrive across the country. 

For their part, the 12 U.S. reps who oppose the measure expressed concerns about marijuana potency, vaping related lung injuries (EVALI) and impaired driving.

“While we have reservations with the unprecedented approach of allowing banking access for a schedule I drug, in addition to increasing investment in marijuana enterprises even as they remain federally illegal, we view the following items as the most critical problems with legislation that liberalizes federal law surrounding marijuana and would result in increased promotion of marijuana use,” they wrote. 

The dueling letters arrived in Crapo’s inbox one week after the Credit Union National Association (CUNA) asked the Idaho senator to advance the bill out of his committee. 

“CUNA strongly believes that federal legislation providing these protections is essential to bringing revenue from state-sanctioned cannabis entities and hemp businesses into the financial services mainstream and, as a result, keeping communities safe by removing vast amounts of cash off the streets," CUNA president and CEO Jim Nussle wrote.

Last month, 33 federal and state cannabis industry groups --  including the National Cannabis Industry Association (NCIA) and Cannabis Trade Federation (CTF) -- also called on Crapo to “work with the state-regulated cannabis industry, the financial services sector, and other interested stakeholders” on a cannabis banking solution. 

Also in January, the four lead sponsors of the SAFE Banking Act – Ed Perlmutter (D-CO), Steve Stivers (R-OH), Denny Heck (D-WA) and Warren Davidson (R-OH) -- penned their own letter to Crapo saying they were “ready to partner” with him and other members of the Senate on a path forward.

While the consensus amongst cannabis industry stakeholders is that passage of the SAFE Banking Act would be a positive step forward for both businesses and consumers, other thought leaders have expressed concerns.

Aaron Lazor, the founder and CEO of banking dispute technology platform Finscend Ltd., recently authored a white paper examining the pros and cons of passing the SAFE Banking Act.

Speaking to THCnet, Lazor said that while the bill is intended to help legitimize the cannabis industry, it has several shortcomings. It does not adequately address issues of debt repayment or “Know Your Customer (KYC)” policies, Lazor argued, noting that financial institutions would be left exposed to future liabilities.

“Both consumers and merchants of medical cannabis need to be very carefully vetted, and not enough attention has been given to this problem,” he wrote in the white paper.

Lazor also disagreed with the notion that passage of the SAFE Banking Act would help curb illicit market sales, suggesting that customers could use credit cards to purchase -- and ultimately resell -- marijuana products through the secondary market.

“Either because a patient has an existing relationship with illegal drug dealers or because of financial constraints, there will be incentives to divert some or all of their prescriptions to destinations unrelated to medical need,” he wrote. 

Any movement on the SAFE Banking Act would be a win for cannabis industry stakeholders, but Lazor believes the chances of the bill finding its way to President Donald Trump's desk this year is unlikely.

“I don't see a scenario where the federal government would say, ‘we will continue to perceive cannabis as illegal, but we are going to allow our banks to move that money across jurisdictions,” he told THCnet, highlighting concerns about the potential for money laundering and wire fraud. 

“I believe very strongly that they have to recategorize marijuana,” Lazor added.

The SAFE Banking Act was the first standalone cannabis bill to pass through either chamber of the U.S. Congress. The senate version of the bill (S.1200) still has just 33 cosponsors and a 4% chance of being enacted, according to GovTrack.

Meanwhile, the Marijuana Opportunity, Reinvestment, and Expungement (MORE) Act -- which would deschedule cannabis, require federal courts to expunge cannabis-related offenses within one year of its passage, and establish a 5% sales tax on marijuana products -- has 70 cosponsors in the House but just a 4% chance of passing, according to GovTrack

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