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Democratic Sen. John Hickenlooper of Colorado last week called for the passage of the SAFE Banking Act, saying that the nation’s refusal to allow cannabis businesses access to traditional financial services is a “recipe for disaster.”
While addressing a virtual policy conference last Wednesday, Colorado Sen. Hickenlooper said that federal regulations that deny banking services to state-licensed cannabis businesses are a magnet for criminal activity and are contrary to the goals of marijuana legalization.
“If you really wanted to create an industry that’s dependent on gangs and cartels, make it all cash,” Hickenlooper said at the Regulating Cannabis event hosted by The Hill. “It’s almost like the system that is there now is oriented towards promoting things that we don’t want.”
Under current federal regulations, banks are subject to penalties under money laundering and other laws for servicing cannabis businesses, even those legal under state law, forcing the licensed cannabis industry to operate in a risky environment heavy in cash. Hickenlooper, who served as Colorado’s governor when the state’s voters legalized recreational cannabis in 2012, said the cash-only system that dominates the cannabis economy is “a recipe for disaster” and a “blueprint for catastrophe.”
“If you de-schedule it, banks can start banking it so it’s no longer a cash business,” Hickenlooper said. “There are multiple negative consequences of having it be a cash business. One is that businesses themselves can’t get loans.”
Colorado Supports the Pending SAFE Banking Act
Under pending federal legislation, the Secure and Fair Enforcement (SAFE) Banking Act, federal banking regulators would be prohibited from penalizing banks that choose to serve cannabis firms doing business in compliance with state law. The legislation was initially introduced in the House in 2013 by Democratic Rep. Ed Perlmutter of Colorado, who has reintroduced the bill each subsequent congressional cycle.
Hickenlooper noted on Wednesday that the SAFE Banking Act would not “oppose the will” of states that have not yet legalized cannabis in any form, adding that the reform would benefit the states that have instituted cannabis policy reforms.
“In terms of banking, I don’t think there’s any benefit to penalizing those states where their citizens have voted to legalize,” he said.
In April, the SAFE Banking Act was approved as a stand-alone bill by the House of Representatives. And in September, the House approved the legislation as part of a must-pass defense spending authorization bill. The House and Senate are currently working toward a consensus on the defense spending bill, leaving the fate of the cannabis banking provisions up in the air.
Bill Has Bipartisan Support
The SAFE Banking Act has bipartisan support in Congress, passing in the Democratic-majority House in May by a vote of 321 to 10 with the support of 106 Republicans, including Rep. Nancy Mace of South Carolina. Last month, Mace unveiled a separate bill, the States Reform Act, which would legalize and regulate marijuana at the federal level.
“There’s nothing really controversial about cannabis except for here in Washington where you have some members who are afraid of it, or afraid to touch it,” Mace said last Wednesday. “It shouldn’t be that way.”
Mace’s bill serves as an alternative to the MORE Act, a comprehensive proposal advanced by Democrats that would also legalize cannabis at the federal level. The legislation also includes wide-reaching social equity provisions including expungement for federal cannabis crimes. The MORE Act would levy higher taxes than those in Mace’s bill, with revenue raised dedicated to investments in communities harmed by the War on Drugs.
Mace agreed with Hickenlooper that cannabis banking regulations must be changed, saying that the current system offers an incentive to criminals while putting the owners of legal businesses at risk.
“We’re funding the cartels by having all-cash businesses,” Mace said. “It’s dangerous.”
The SAFE Banking Act also has broad support from governors of jurisdictions that have legalized marijuana. In November, a bipartisan group of 24 governors from states and territories with legal cannabis sent a letter to congressional leaders calling for the passage of the legislation.
The governors noted in the letter that while cannabis has been legalized in some form by a majority of U.S. states, the continued lack of traditional banking services and large amounts of cash throughout the supply chain leave legal marijuana businesses at increased risk of robbery and other crime. Additionally, the lack of access to loans inhibits the growth of the booming industry.
“The SAFE Banking Amendment will remedy these harms and help keep communities in our states and territories safe by allowing legitimate and legal cannabis companies to access banking services,” the governors wrote.
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