The Secure And Fair Enforcement Banking Act (“SAFE Banking Act”) passed the U.S. House of Representatives by a vote of 321-103 in September 2019, but it stalled in the U.S. Senate. Due to COVID-19, it would appear that at least some of its provisions are being revisited by Congress.
To recap, the previous legislation intended to remove some of the current financial obstacles faced by legal cannabis businesses. It would provide a safe harbor for financial institutions that accept cannabis businesses as clients by removing the threat of criminal prosecution for employees, officers, and directors of commercial and reserve banks. The legislation would allow banks to provide credit cards and checking accounts to state-regulated cannabis businesses. The SAFE Banking Act would not allow cannabis companies to be listed on U.S. securities exchanges or give them access to capital markets. The legislation did not address the relationship between the Small Business Administration (“SBA”) and cannabis companies. If this relationship goes unaddressed in the legislation, the cannabis industry would need to consider another push for recognition from the SBA, as the SBA is an essential tool for small businesses of all kinds. Regardless of any perceived oversights, passing this legislation would be a monumental step in the right direction for the federal legalization movement.
Even though the SAFE Banking Act is in limbo in the U.S. Senate, members of Congress, such as Rep. Ed Perlmutter D-Colo, have been encouraging colleagues to add a revised version of the SAFE Banking Act to the next COVID-19 stimulus bill.1 It is not clear which provisions of the original legislation are being considered for inclusion in the next stimulus bill, but Rep. Perlmutter stated that he has full support from the Democratic leadership, including House Speaker Nancy Pelosi, to continue working on a proposal to incorporate at least a portion of the SAFE Banking Act in the next COVID-19 relief package.2 This support could prove to be the extra push other members of Congress need to ultimately vote in favor of the proposal when the time comes.
Lawmakers are not only supporting the inclusion of the provisions in order to ensure fair treatment of all businesses, no matter the industry, but also due to the potential impact on medical marijuana patients. Many medical marijuana patients are among the most vulnerable to COVID-19,3 and forcing this population to deal in cash not only puts patients at a higher risk of contracting the virus, but it also causes the employees handling the cash to have a higher chance of being impacted as well.4 This interaction could be a contributing factor to the spread of the virus, a fact that is hard to swallow as lawmakers are working diligently to lower the number of cases across the country.
Despite the progress, Rep. Perlmutter acknowledges that the push for, and hopeful passage of, the revised SAFE Banking Act provisions in the relief package does not automatically allow cannabis businesses to be treated equally to other businesses. “We want to pass the SAFE Banking Act, but we also know SAFE Banking alone won’t be enough to give cannabis businesses the relief they need like other businesses,” said Rep. Perlmutter. “I plan to keep pushing to ensure the cannabis industry has the ability to be eligible for SBA relief funds during this COVID-19 crisis. I have spoken to House leadership about this matter and I’m hopeful in one of the next two packages we can get this done.” 5
Although Congress isn’t expected to return to the Capitol until May 4 at the earliest, it is important for members of Congress to continue pushing the inclusion of cannabis businesses in future legislation. The Rodman Law Group plans to monitor the movement of the SAFE Banking Act’s provisions in the next federal stimulus package and the cannabis industry’s inclusion in SBA loans and will update you with any passed legislation resulting from this push from members of Congress.
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