Pending legislation would allow U.S. cannabis businesses access to financial institutions

Allen Leister / The Daily World

While most cannabis businesses in Washington operate on a strict cash-only basis, some dispensaries such as Sweet Leaf Cannabis, in Aberdeen, have found loopholes to allow debit card transactions. The SAFE Banking Act would allow all cannabis businesses in states where marijuana is legal to access financial institutions.

The history of marijuana use in America is not something that was crafted overnight.

While swaths of individuals illegally possessed and used marijuana for much of the 20th century, legalization efforts have been in the works for nearly 30 years. In 1996, California was the first state to legalize medical marijuana. On Dec. 6, 2012, Washington became the first state in the country to legalize the recreational use of marijuana as well as the first to allow recreational marijuana sales.

As of 2022, voters in 47 states, four U.S. territories, and the District of Columbia have spoken and legalized some form of recreational or medical marijuana, including hemp and CBD products. However, cannabis remains illegal under the federal Controlled Substances Act, and individuals who grow, possess, use, sell, transport or distribute cannabis remain subject to federal criminal prosecution.

Under current law, financial institutions providing banking services to legitimate and licensed cannabis businesses under state laws are subject to criminal prosecution under several federal statutes such as “aiding and abetting” a federal crime, and money laundering.

As a result, legislators have said this has created a significant public safety risk, as these businesses are forced to operate as cash-only businesses in an industry with billions of dollars in transactions.

However, a solution could be on the horizon — the SAFE Banking Act.

This legislation, also known as H.R. 1996 or the Secure and Fair Enforcement (SAFE) Backing Act of 2021, would aim to protect banking institutions — as well as their insurers — that choose to offer services to legitimate cannabis-related businesses operating under their respective state laws. The bill would also prevent federal banking regulators from imposing penalties on depository institutions that offer services to cannabis-related businesses.

Democrat Mike Pellicciotti, the Washington state Treasurer, said implementing this type of legislation would help mitigate targeted crime against marijuana businesses.

“We’re seeing robberies, we’re seeing a lot of issues in terms of public safety,” Pellicciotti said. “In the state of Washington, there is an average of one robbery a day of legal cannabis stores.”

Pellicciotti said cannabis sales in Washington generate a yearly average of $1.4 billion. He has been working with other state treasurers and federal legislators to push through the bill. His hope is to pass the bill during the lame-duck session of congress citing bipartisan support amounting to the necessary 60 votes needed to pass the U.S. Senate.

The bill has passed the U.S. House of Representatives seven times since it was drafted and sponsored by Democratic Congressman Ed Perlmutter, who represents the 7th District of Colorado. The most recent passage of the bill occurred in July 2022, as an amendment to the 2023 National Defense Authorization Act. It passed by a vote of 277-150.

While most cannabis businesses in Washington operate on a strict cash-only business, some have found loopholes to avoid the high influx of cash.

“Ours is a little bit different because we already take debit cards. There is a loophole in the point-of-sale system that is approved by the Liquor and Cannabis Board,” said Shawna Moody, the manager of Sweet Leaf Cannabis in Aberdeen. “We don’t have that worry but we did for years. One of the biggest things if they pass the banking act is that the cannabis stores wouldn’t have to worry about having so much cash on hand all the time.”

Moody said her business has been using a point-of-sale machine for three years although it mostly serves as a cashless ATM since it can only take debit. In those three years, she said cash sales have dipped by nearly half. When the business was cash-only, Moody claimed the store would see an influx of thousands of dollars every day, prompting multiple robbery attempts.

“I’ve worked here for seven years and over that time we’ve had four attempted robberies with one of them being successful,” Moody said. “The last robbery attempt we dealt with was in December 2021.”

Although Moody said that while luckily none of the robbery attempts resulted in cash theft, there has been product theft. She said safety precautions are in place so there isn’t a large sum of cash in the building at any one time as well as panic buttons in the store in case of suspicious activity to protect employees. Moody has faith the bill will pass eventually due to rising crime.

“I think that it will (pass) because people are literally dying. Budtenders are losing their lives. People are coming in and shooting them all for some money,” Moody said. “So, I’m hoping that because those instances are unfortunately happening, that is the wake-up call that they needed. My employees should not be coming into work afraid for their lives.”

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