Could this be the first cannabis bill passed by the federal government?
by Natalie Fertig
February 13, 2019 09:00 AM EST
The reason? Cash.
Despite being fully legal locally, cannabis businesses in more than 30 states remain federally illegal and face hurdles in opening bank accounts. With no bank accounts, these businesses instead keep large amounts of cash on hand at dispensaries, farms and offices to pay suppliers, employees and taxes.
"There was a point where I regularly drove around with $12,000 in my glove box," said Lee Henderson, co-founder of HiFi Farms in Hillsboro, Oregon.
Now, the federal government is considering a bill, tentatively titled the Secure And Fair Enforcement (SAFE) Banking Act of 2019, to fix the cannabis industry’s banking problems. If passed, it would also become the first standalone cannabis legislation passed by Congress.
"This is going to be one of the first times in quite a while that we actually have a congressional hearing on a standalone cannabis-related bill," said Morgan Fox, media relations director for the National Cannabis Industry Association.
Currently, banks face barriers to providing accounts to the cannabis industry. Those barriers range from onerous fees to prosecution, and discourage banks and many credit unions from continuing to serve cannabis businesses or the people who work for them. The draft legislation of the new bill, acquired and published by Marijuana Movement, would permit banks to open accounts, issue credit cards, and offer loans to businesses within the marijuana industry without fear of negative consequences.
The draft bill states that federal regulators can't "prohibit, penalize or otherwise discourage a depository institution from providing financial services to a cannabis-related legitimate business."
U.S. House of Representatives via Marijuana Moment
Screenshot of the 2019 SAFE banking act. (U.S. House of Representatives via Marijuana Moment)
And for some cannabis-related legitimate businesses, this legislation can't come soon enough.
"I've been through … three or four personal bank accounts in 4 1/2 years," Henderson explained. Everyone on his staff, he says, has at one point dealt with the dissolution of their personal bank account because they are employed in the cannabis industry.
"It was troubling," he continued. "If you have your credit card tied to your Chase account, and then suddenly you have to pay that off in 72 hours."
And the ripple effects range from paying taxes to armed theft and burglary.
"There’s literally people robbing delivery trucks because they know they’re bringing the product and coming back out with the money," explained Mitch Davis, a central California grower.
A series of store-to-home marijuana delivery driver robberies last week in the San Francisco Bay Area focused more on the cash they carried than the product they delivered.
"In a few robberies that we have, they've targeted cash and not even touched the marijuana," police Lt. Mike Kindorf of Concord, California, told KRON.
Davis points out that in a typical business, the retailer or the customer receiving product would transfer the money electronically to the producer or manufacturer, rather than hand off cash to the delivery driver.
And the dispensaries themselves are often the biggest target. While the use of credit or debit cards in cannabis dispensaries differs from state to state, and sometimes city to city, the overarching trend is an inability among dispensaries to offer card services to customers, or between dispensary and supplier. Because of that, dispensaries keep a lot more cash on hand, resulting, at times, in increased theft and robberies.
Those large amounts of cash, however, are one of the catalysts for getting this bill into a hearing. The American Bankers Association has stepped into the fray on Capitol Hill, pushing to get banking reforms passed for the cannabis industry.
"They've been involved in some pretty high-level talks with lawmakers and with advocates," Fox said. "To see how we can make this happen this year."
The last time a cannabis banking bill was introduced into Congress, it received more than 100 co-sponsors in the House and Senate, including Republicans like Sens. Rand Paul, Ky., and Cory Gardner, Colo., but it never made it to a hearing.
"I've worked on this for years all over the country," said Rep. Earl Blumenauer, D-Ore. "Nobody thinks it's a good idea to prohibit them from having banking services."
Blumenauer has been pushing for cannabis legislation longer than most other legislators on Capitol Hill. His district includes Portland, Oregon, and its surrounding areas that are home to hundreds of cannabis businesses—like Lee Henderson's farm.
Banking is part of Blumenauer's holistic approach to cannabis reform; last fall, he issued a comprehensive plan for Congress with steps that move the federal government down the path toward full federal legalization. According to his plan, full recreational legalization could come as soon as the end of 2019.
Getting banking reform passed is step one, and in the congressman's words, is "as close to a given as you're going to get."
According to Blumenauer, the main reason a change in federal cannabis laws didn't happen sooner was eight years of Republican leadership on key committees. Now, the congressman says, he has Democratic leadership and bipartisan support for many of his initiatives. And he isn't worried about the GOP-helmed executive branch, either.
"Donald Trump I don't think actually cares about this," he said, pointing out that the president has voiced support for states' rights on the issue of legal cannabis in the past. "I think ultimately the administration will approve if not try and run to the front of it. If the train starts moving, somebody might want to get ahead of the party."