The latest round of COVID-19 relief legislation has just come down the pike from the Senate, and while provisions have been made to protect several industries dealing with struggles stemming from the pandemic and the resultant economic crisis, the plan makes no attempt to provide protections for banks that service the cannabis industry.
Republicans in the Senate, including Majority Leader Mitch McConnell, question the relevance of protecting the cannabis industry. But advocates know that propping up this highly lucrative industry would stimulate America’s economy during these turbulent times. Cannabis banking protections would also allow for alternatives to purchasing with cash. Right now, the vast majority of cannabis transactions are handled with cash, and the hand to hand contact inherent in currency exchange is a potential vector for the spread of the virus.
The cannabis industry is very lucrative and very highly taxed. But because cannabis is still illegal at the federal level, it’s complicated to provide federal services—such as banking—to businesses within the industry. Even if they want to, banks are often barred from working with cannabis businesses because of federal law.
It affects more than just the way cannabis businesses conduct transactions. They also aren’t able to declare bankruptcy as this is a benefit offered through the banking system. Obviously, no business aspires to bankruptcy, but if you can’t stay afloat, doing so can help to manage the problem of debt. In times like these, it’s important that businesses have that option available to them. But the owners of cannabis businesses don’t.
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In September of 2019, the House of Representatives passed the Secure and Fair Enforcement (SAFE) Banking Act. This act sought to prevent federal banking regulators from stopping financial institutions from offering services to legally operating cannabis businesses. It would have allowed businesses in the cannabis industry to access the same protections and services as businesses in any other legal industry are privy to.
Unfortunately, the SAFE Banking Act has stalled in the Senate. House leaders and cannabis advocates hope to see this act included in the next version of the Senate’s COVID-19 relief plan, but at present, things don’t look especially promising. It seems clear that Republicans in the Senate have no plans to prioritize this industry when it comes to putting together relief for businesses.
The economy is suffering a recession, and without banking protections, that could hit the cannabis industry harder than most. It doesn’t help matters that for many, cannabis is a luxury. Lots of people depend on medical cannabis to help them manage various illnesses and chronic conditions, but if those who use recreationally decrease their usage, it’s going to have an impact on businesses’ ability to stay open and operational. And it’s possible that recreational use will decline. For one thing, the fact that the purchase of cannabis often requires cash transactions might turn some consumers off. Passing things from hand to hand isn’t ideal during COVID-19. For another thing, though the high tax rate applied to cannabis is a good thing for the economy, it’s not as good for the pocketbooks of individual consumers. People looking to cut their expenses during the recession might well start here.
You can help. Call or write to your Senator and encourage them to see the benefits of supporting the cannabis industry. The first pioneers to open businesses in this new industry need all the support they can get, both from the government and from the people who make up their customer base. Let’s give it to them.
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