The SAFE Banking Act would give cannabis companies access to bank loans
By Erin Albright, Staff Writer
Two congressmen from Ohio are sponsors of a recent federal push to allow legal medical and recreational marijuana businesses access to banking services.
The bill, which originally failed to pass in the Senate in 1996, is known as the Secure and Fair Enforcement (SAFE) Banking Act. It was reintroduced last Thursday, previously passing the House in 2019 but failing to clear the then-GOP controlled Senate.
It would allow marijuana-based businesses to hold bank accounts, obtain loans and access other financial services available to other legal businesses.
Representatives Steve Stivers, R-Ohio, and Warren Davidson, R-Ohio, are two of four sponsors of the latest version of the SAFE Banking Act. Reps. Nydia Velasquez, D-N.Y., and Ed Perlmutter, D-Colo., introduced the bill alongside the Ohioans.
While recreational marijuana is only legal in Perlmutter’s home state, the bill also extends to medical cannabis sales. It would not affect illegal recreational marijuana use in states that have decriminalized the drug, including Ohio and New York.
Current federal law prohibits banks from working with cannabis businesses because they are federally illegal. Most of Ohio’s medical cannabis industry leaders have bank accounts with a local independent bank or credit union, despite marijuana being an illegal controlled substance under federal law.
Davidson, a member of the House Financial Services Committee, explained that the bill extends beyond the sales of marijuana. He believes it will also protect future businesses from financial cancellation if their product falls out of favor with the “latest trends of the day”.
“Today we’re talking about banking cannabis, hemp and firearms, but tomorrow there could be another industry that has its access to the banking system threatened by stature or by public opinion,” Davidson said.
Ohio is one of 47 states that has legalized some sort of marijuana cultivation and sales. The state passed a medical marijuana law in 2016, and sales began in January 2019. Non-prescription products legally available include cannabidiol, or CBD.
Ohio marijuana sales since 2019 reached $338.3 million in March. The cannabis industry, which is extremely cash-heavy, has asked legislators to pass a bill like the SAFE Banking Act for years.
Banks are regulated by federal law and have been reluctant to provide services to the industry. Banks are required to follow extra reporting requirements and have the choice to drop businesses without notice, often leaving them scrambling for another place to deposit savings and cash.
Stivers supports the bill to increase safety for already-legal businesses.
“We have a responsibility to legislate for the reality we live in, and the reality is that legal businesses in 33 states, including Ohio, are being denied access to the banking system and forced to assume huge risks as a result of operating solely in cash,” Stivers said in a news release.
While Stivers doesn’t support the legalization of marijuana for recreational use, his support of the bill could be crucial for passage.
The bill has the ability to grant a safe harbor to banks that choose to service the cannabis industry. With customers being mostly required to pay in cash, businesses will be allowed to now access basic banking services like loans, credit and debt funding.
Along with Reps. Stivers and Davidson, Reps. Bob Gibbs (R-Ohio) and Dave Joyce (R-Joyce) are other Ohioans acting as cosponsors on the House bill.