Although government-issued coronavirus-related measures were designed to curb the spread of the virus, they had an unintended consequence, economic downturn. With all but the most essential businesses ordered to close during lock-downs, the economy was in a free fall. More than 20 million Americans have lost their jobs since the start of March, and the government ended up deploying a massive $2 trillion coronavirus relief bill to help people and small businesses weather the storm.
However, due to ongoing federal prohibition, businesses in the state-legal marijuana industry were denied access to these relief funds. Federal prohibition has made banking institutions avoid cannabis businesses, dooming them to cash only transactions which in current times are a big no. Advocates, stakeholders and lawmakers decried the cannabis industry’s exclusion from these funds, stating that it pays taxes just like any other business and many small businesses in the sector are facing financial hardship due to the coronavirus pandemic.
On May 15, the U.S. House of Representatives passed a $3 trillion coronavirus stimulus bill which includes a provision that would allow banks to serve state-legal marijuana businesses without fear of federal retaliation. Dubbed “The Health and Economic Recovery Omnibus Solutions [HEROES] Act,” the bill includes the SAFE Banking Act which granted banks permission to transact with cannabis businesses without fear of federal reprisal. It was approved by the House last fall but has since been stuck in a Senate Committee.
“The inclusion of cannabis banking in the HEROES Act is a positive statement from the House and strongly supplements the decision that the majority of states have made by designating cannabis businesses as essential.” says Washington DC lobbyist David Mangone who lobbies for the National Cannabis Roundtable. Cannabis was one of the few industries that were designated as essential by state governments. However, since marijuana businesses do not have access to cashless payment systems, they have to transact on a cash only basis, greatly increasing the workers’ and customers risk of infection.
“The pathway forward in the Senate is both uncertain and challenging, but SAFE banking is one of the few provisions that not only has strong bipartisan support but also generates revenue rather than adds to the deficit,” Mangone says.
The bill now heads to the Senate which has never passed cannabis banking legislation and has already shown some push back. “I would be surprised if it passed the Senate, just given Senate Majority Leader Mitch McConnell’s comments on the SAFE Act previously, and given his statements about his reaction to it in the last 24 hours,” says Jonathan Havens, co-chair of the Cannabis Law Practice.
“It’s not enough that the House is going to do this. The Senate really needs to act in concert, and it doesn’t sound like they are going to do that if you take your cues from McConnell.”
Cannabis industry watchers say sector players like SinglePoint Inc. (OTCQB: SING) must be wondering what it will take for the Senate to consider the issue of cannabis banking objectively and pass the pending bills before them.
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