As D.C. legislators amend existing COVID-19 legislation, legitimate cannabis businesses might be leaving their financial straits behind.
What is the SAFE Banking Act of 2020?
Approved and passed in September 2019 by the House of Representatives, the Secure and Fair Enforcement (SAFE) Banking Act, protects depository institutions that help legitimate cannabusinesses financially.
The HEROES Act (the Health and Economic Recovery Omnibus Emergency Solutions Act) was introduced in the House of Representatives in May of 2020 to respond to the COVID-19 outbreak’s impact on the economy, public health, and businesses. SAFE has been restated in the HEROES Act, and if signed into law, the legislation would create immense opportunities for cannabusinesses around the country.
SAFE would offset the significant economic damper that the coronavirus pandemic has placed on the industry. Additionally, its passing would enable cannabusinesses to seek Small Business Administration (SBA) relief, particularly in regards to the Paycheck Protection Program, the Economic Injury Disaster Loans program, and the Economic Injury Disaster Loans Emergency Grants program.
Can Dispensaries have Bank Accounts?
Currently, federal banks cannot service businesses that sell cannabis. However, SAFE would enable depository institutions to open bank accounts without government penalties, and without being discouraged from providing financial services to legal cannabis businesses. Of course, the cannabusinesses being served must be located in a jurisdiction where the production, sale, and purchase of cannabis is legal. Such would be an immense change in the marijuana industry that operates mainly in cash, and in turn improve public safety.
Additionally, SAFE would prohibit federal banking regulators from taking any adverse action on a loan given to legitimate cannabis businesses. SAFE would also protect businesses ancillary to the legal cannabis trade. In engaging in cannabis-related business, these ancillary businesses would not be categorized as obtaining income from unlawful activity. Hemp and hemp-derived CBD products would also be protected under SAFE.
Will the SAFE Banking Act pass the Senate?
Despite the House’s overwhelming support of the SAFE Act in 2019, the bill remained in the Senate, as Senate Republicans remain hostile towards cannabis-related lawmaking. The House did pass the HEROES Act, which contains the SAFE Act, on May 15. However, the bill has also remained in the Senate since, and it is unlikely that Senate Republicans will take action any time soon. GOP senators have generally refused cannabis legislation in fear of contributing to rising U.S debt.
Whether it passes as part of HEROES coronavirus relief, or as standalone legislation, SAFE would have tremendous implications for the marijuana industry.