Marijuana Banking: SAFE Banking Act is Dead on Arrival. Again.

The hopes for better and increased marijuana banking, which were tied up in the Secure and Fair Enforcement (SAFE) Banking Act (a serious and common sense federal marijuana banking bill), are currently dashed since the SAFE Banking Act has been left out of the Senate’s changes to the National Defense Authorization Act (“NDAA“). The impact? Licensed businesses are left hanging high and dry (again) when it comes to marijuana banking.

Despite the fact that this bipartisan piece of legislation passed the House no less than five times over the past three years, the Senate just isn’t having it. And it’s not necessarily your usual suspects in the GOP that are among resisters. It’s actually a set of powerful democrats (looking at you Senate Majority Leader Chuck Schumer and Senator Cory Booker) who insist that we can’t pass piecemeal federal cannabis reform because it will lessen the pressure on Congress to legalize/decriminalize cannabis in a bigger, broader sweeping bill.

To that position, all I can really do is shake my head. Especially given that these Democratic politicians have touted cannabis legalization, reform, and progress for sometime now. It’s pretty clear that everything we’ve heard is just routine lip service to constituents and stakeholders. Marijuana banking reform seems like a no brainer and an overall win for the industry.

In this latest Congressional misadventure for cannabis, significant negotiation took place around including the SAFE Banking Act in the massive NDAA. And it’s not unusual to get individual pieces of law passed in things like the NDAA that have nothing to do with national defense. The big joke of the day here is that we can’t get cannabis banking in the NDAA, but Congress was more than happy to include the creation of a permanent office to study UFO activity. Priorities, amiright?

The entire cannabis industry has been begging for standard access to bank accounts and financial services from financial institutions since at least 2010. It’s imperative to have banking at all levels of the industry, big, small and in every state, because of the massive public safety issues caused by running all cash businesses. Case in point, cannabis businesses in Oakland that can’t secure bank accounts have found themselves the constant victims of theft with little to no recourse. Running an all-cash business also makes accounting, paying taxes, and employee payroll a complete nightmare.

The overall lack of marijuana banking, and the routine shutdowns of cannabis bank accounts once financial institutions get wise to things, also prevents cannabis businesses from accessing money from institutional capital/financiers. This has had the effect of seriously undermining financial support for this grand democratic experiment.

In addition, ancillary businesses that only support the industry (but don’t engage in trafficking) are also handicapped by the current marijuana banking situation due to resulting secondary criminal liability stemming from potential aiding, abetting, and conspiracy charges. Translation–ancillary businesses are also in violation of the Controlled Substances Act, so financial institutions are wary of banking them.

The Senate’s changes to the NDAA must now go back through both chambers of Congress before President Biden signs the bill into law. Representative Ed Perlmutter (from Colorado), the main sponsor of the SAFE Banking Act, vowed to file an amendment to the NDAA to get the SAFE Banking Act back in; he ultimately backed off though where such a move could upend the total progress around getting the NDAA passed at all.

At the end of it all, cannabis companies are back to square one. The best they can do is to locate and hopefully bank with financial institutions following the 2014 FinCEN guidelines, which currently represent the only lifeline to banking services for state-licensed cannabis companies. While other cannabis reform bills are floating around Congress (like the MORE Act and States Reform Act), no one knows their chances of actual passage, and none of these bills were as close to serious consideration as the SAFE Banking Act. Along with meaningful federal tax reform, marijuana banking just got sent to the back of the line. Again.