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With the sale of cannabis, for medical or recreational use, legal in 40 states, it makes no sense that this growing industry is largely barred from the country’s banking system.
Because the sale and possession of cannabis is still illegal at the federal level, cannabis businesses are barred from many federally backed loan programs and banking services.
Without access to bank accounts, credit card processing and other financial services, many cannabis businesses operate strictly in cash, leaving operators and their customers and staff vulnerable to crime.
In addition, the status quo perpetuates a legal system that has disproportionately sent Black Americans to jail for possessing and using cannabis, while largely shutting them out of the growing industry.
Congress has an opportunity to fix this with legislation that could move forward in the Senate this week.
The Secure and Fair Enforcement Regulation (SAFER) Banking Act would allow cannabis companies to access traditional banking services. Similar legislation has been passed by the U.S. House of Representatives seven times.
Both U.S. Sens. Susan Collins and Angus King sponsored an earlier version, called the SAFE Banking Act. A new version of the bill was introduced last week.
U.S. Rep. Jared Golden of the 2nd District co-sponsored a House version of the bill. Golden and U.S. Rep. Chellie Pingree of the 1st District voted for the 2021 version of the bill, and Pingree co-sponsored an earlier iteration of the bill.
“A business that follows all state laws should be able to access the banking system — that’s pretty commonsense,” King said in a statement in May. “As Maine’s cannabis industry has grown in recent years, it has been forced to operate on a cash-only basis. This presents a number of safety, logistical, and legal concerns.”
“The SAFE Banking Act addresses this unnecessary challenge and ensures that all our legal Maine businesses can access the banking system,” King added. It’ll bring more customers to local banks, improve public safety, and support the success of Maine’s many small business entrepreneurs.”
This comes as the Biden administration has moved toward reclassifying cannabis that would ease the restrictions on it.
Last year, President Joe Biden issued an executive order pardoning those with federal cannabis possession convictions. He urged governors to follow suit.
Federal drug policies, including the criminalization of cannabis, have especially hurt minority communities.
Black men receive federal drug sentences that are 19 percent longer than sentences imposed for white men, according to the Sentencing Project. Black Americans are more than three times as likely to be arrested for cannabis possession than their white counterparts and Latinos are more than six times as likely to receive a federal sentence for cannabis possession than non-Hispanic white people.
Beyond the criminal injustice of this, these arrests and detentions often make it harder for people of color to access jobs and benefits, which further increases poverty in their communities.
Banking restrictions have also made it difficult for Black entrepreneurs to start cannabis businesses.
“The lack of banking options available because of federal prohibition means anyone who wants to start and support a business in the market needs a generous amount of cash on hand. It takes hundreds of thousands if not millions of dollars just to start such a business — money that most people of color don’t have,” Al Harrington, a former NBA player and the chief executive of a Los Angeles-based cannabis company, wrote in a recent column that was published by the Bangor Daily News.”As a result, less than 2 percent of legal cannabis businesses in the United States are owned by people who look like me.”
Cannabis businesses are operating legally in dozens of states. Excluding them from traditional banking services is dangerous and discriminatory. It’s time for the restrictions to end.
