The U.S. House of Representatives has passed a bill that would give state-owned marijuana businesses easier access to banking services.
The account, HR 1996, called the SAFE Banking Act, will prohibit federal banking regulators from penalizing banks and other deposit institutions for providing banking services to cannabis businesses. It took place Monday night on a two-party system of 321-101.
A total of 36 states and four territories have approved the use of marijuana for medical purposes and 17 countries allowed it for recreational use. However, the drug is still considered a banned substance under the federal law on controlled substances and banks that provide services to marijuana businesses can be penalized under the federal money laundering laws.
The legislation passed the House in 2019 with dual support, but it was ignored by the Republican-controlled Senate. Democrats are optimistic about the chances of the measure now that their party controls the chamber, although Republicans can still block most legislation.
Senators Jeff Merkley, an Oregon Democrat, and Steve Daines, a Republican in Montana, introduced the bill to the Senate. It currently has 32 cosponsors, including six Republicans, but the measure will still require more support to reach the threshold of 60 votes needed to advance in the chamber.
Senate leader Chuck Schumer has said he wants to work to lift the federal ban on cannabis. He is currently draft legislation with Senate Finance Chairman Ron Wyden of Oregon and New Jersey Senator Cory Booker proposing to remove marijuana from the list of controlled substances and regulate it at the federal level.
The SAFE Banking Act falls far short of what many cannabis companies in the US would like to see – a complete federal green light, or at least decriminalization, for marijuana.
But it can solve some of their most pressing financial problems by enabling them to have bank accounts with traditional banks. The inability to do so has so far caused a number of burdens and risks for the industry, from calculating mountains of cash at small credit unions, to extra security issues when making cash payments and creating their own debit card system receiving consumer payments.
This version of the law does not include language to address two other major financial concerns of the marijuana industry. It wants to provide more clarity on whether institutional investors can invest money in dagga companies without fear of legal consequences. So far, such concerns mean that individual investors and family offices are the main investors in the industry, and that many U.S. investors have rather poured their money into Canadian marijuana companies because of the federal legality in that country.
The other regulatory burden that the marijuana industry wants to lift from it is 280E, the tax law that says companies that use federal illegal drugs cannot deduct in the same way as other U.S. businesses. Many cannabis companies have said that if 280E is abolished, it would be much more profitable immediately.
Even without explicit language in the SAFE law, there are some hope that financial institutions can see other changes that make them more comfortable with cannabis investments. The Ministry of Finance’s enforcement of financial crimes, or FinCEN, which analyzes financial transactions to combat money laundering, can update its guidelines to resolve conflict with the new SAFE law, said Owen Bennett, analyst at Jefferies. a research note from March said. If the agency’s language applies not only to banks that take deposits, but to all financial institutions, it could yield more institutional investments.