Over the summer, proponents of the Secure and Fair Enforcement (SAFE) Banking Act had hoped that the bill would be taken up and passed this fall. Then the shutdown happened. With the government now fully open once again, what of the chances of the SAFE Banking Act getting some much-needed attention? Pretty slim.
Reports out of Washington suggest that the legislation has been shuffled to the back burner once again. There has been very little chatter about moving it forward before the end of the year. Prospects for the bill early next year are not all that bright either. So for now, supporters do not have any good news to hold on to.
What the Bill Does
The SAFE Banking Act reforms a number of federal banking regulations for the purposes of allowing financial institutions to do business with cannabis companies. As things currently stand, American banks and credit unions avoid cannabis companies out of fear of federal retaliation.
Because cannabis remains a Schedule I controlled substance under the Controlled Substances Act (CSA), financial institutions aren’t allowed to get involved with cannabis companies. And although the federal government has never definitively said regulators would go after banks for doing so, the banks do not want to take their chances.
This reality leaves cannabis companies with the prospect of doing business without access to traditional financial services. They don’t have access to checking accounts, savings accounts, credit card processing services, and small business loans. You can imagine what it all means.
Cash Only, Please
A lack of access to banking services leaves cannabis companies no other choice but to deal mainly in cash. While this might not seem like such a big deal at the retail level, remember that state-legal cannabis sales generated an estimated $30 billion in 2024. That is a lot of cash floating around.
Doing business on a cash-only basis is more than inconvenient for business owners. But it is also problematic for customers. Consider the simple act of purchasing medical cannabis.
If a patient walks into the Beehive Farmacy location in Salt Lake City, Utah, he needs to bring cash for his purchase. The medical cannabis pharmacy cannot accept credit or debit cards. That means the patient must visit an ATM before stopping at the pharmacy.
Most of us do not carry large amounts of cash around. Moreover, the combination of prolific credit cards, mobile payment apps, and digital wallets on our phones has reduced the need for cash even further. The once-venerable ATM is disappearing. Check Beehive Farmacy’s website.
Eliminating a Significant Barrier
SAFE Banking Act proponents say that the legislation eliminates a significant barrier to business activity. It is hard to argue against such assertions. Not having access to banking services just makes doing business a lot more difficult. To some degree, it also makes business less safe.
Medical cannabis pharmacies and recreational dispensaries deal with tremendous amounts of cash. They are prime targets for armed robbery. In addition, what is a business owner to do with all that cash if he can’t open a business bank account? It needs to go into a personal bank account or be converted to something like cryptocurrency. But both options have significant tax implications.
Federal lawmakers have been trying to push through some version of the SAFE Banking Act for years. Every time they get close, the legislation stalls. It is not clear why. However, there is enough opposition to federal cannabis legalization to justify turning away any bill that might help the state-level cannabis industry. For now, the SAFE Banking Act is on the back burner.
