Bipartisan bill in Congress aims to improve access to financing for cannabis businesses

WASHINGTON, D.C. — Most states have legalized or decriminalized marijuana in some way and that means more legalized cannabis shops have been opening around the country in recent years.

But even though these businesses are legal, most don’t have the same access to financing as other businesses in large part because marijuana is still illegal at the federal level.

The legal cannabis industry accounts for more than 428,000 jobs and more than $25 billion in sales in 2021 alone, according to lawmakers.

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Still, most cannabis business owners face barriers when trying to access basic banking needs like opening bank accounts or getting small business loans.

“Only around ten percent of the banks and credit unions in the United States are reporting working with cannabis businesses at all and of those, many do not have on-going relationships with cannabis business clients,” said Morgan Fox, Political Director for the National Organization for the Reform of Marijuana Laws (NORML).

“As long as cannabis is a schedule I drug, the anti-money laundering rules apply. Banking secrecy rules apply. So, a lot of banks are risk averse,” said Michael Correia, Director of Government Relations for the National Cannabis Industry Association. “If you’re a small business owner, you go to your bank and say here’s my idea to open up a pizza joint, open up a restaurant, and they say here is the business plan and open up financing. Cannabis industry, they can’t do that a lot.”

This means most of the cannabis shops operate entirely in cash-only, which is making them a growing target for robberies and other crimes.

This week, the Senate Banking, Housing, and Urban Affairs Committee discussed a bill aimed at giving cannabis business owners the same access to financing as every other business.

It’s called the “Secure and Fair Enforcement Banking Act of 2023″ also known as the SAFE Banking Act.

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“Without full access to the banking and payment system, legal cannabis businesses are forced to operate in the shadows,” said Sen. Sherrod Brown (D-OH). “They can’t access SBA loans and know that even if they try to apply for a bank loan, they may go through all the costs and efforts only to be denied.”

The bill has broad bipartisan support in the House and Senate.

Sen. Jeff Merkley (D-OR) and Sen. Steve Daines (R-MT) introduced the bill in the Senate.

“To be clear, banks will not be forced to provide services to these businesses,” said Merkley. “It simply creates a safe space for both the financial institutions and the legal cannabis industry.”

“This bill would make it much easier for businesses to put their cash into banks,” said Daines.

But Sen. Tim Scott (R-SC) expressed concerns about opposition from some law enforcement agencies during the committee hearing.

“Department of Justice and national law enforcement groups have expressed concerns that the Safe Banking Act would create loopholes in our money laundering laws, making it harder to catch criminals that traffic weapons, fentanyl and even people,” said Scott.

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The Cannabis industry and supporters of the bill, meanwhile, argue having a cash-focused industry makes it easier for criminals.

“Keeping this multi-billion-dollar industry largely off the books and largely in cash is a criminal organization’s dream because there’s absolutely no oversight and transparency,” said Fox.

“It’s a lot harder to run from regulators and have money laundering when you have banking services because it’s not a cash environment,” said Correia. “It would give a layer of security.”

Correia said addressing banking needs is just the first step to improving conditions for the cannabis industry and said Congress also needs to streamline things like tax rules and interstate regulations.

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