The Senate Banking Committee advanced a new bill on Sept. 27, 2023, that would grant marijuana businesses access to banking services. The bipartisan measure, the Secure and Fair Enforcement Regulation (SAFER) Banking Act, seeks to provide legal safeguards for financial institutions that choose to offer services to state-regulated cannabis enterprises.
Senator Jeff Merkley (D), the bill’s lead sponsor, celebrated this progress as a historic event, highlighting the remarkable spirit of cooperation across party lines.
He expressed his concerns about the current scenario where legal cannabis businesses are forced to operate solely in cash, terming it an invitation to criminal activities such as organized crime, robberies and money laundering. Merkley articulated his commitment to fostering bipartisan support to ultimately enact legislation that eradicates the cash-driven marijuana economy, thereby bolstering public safety nationwide.
The bill also boasts support from Senate Majority Leader Chuck Schumer (D) and Senators Steve Daines (R), Kyrsten Sinema (I) and Cynthia Lummis (R). The lawmakers issued a joint statement underscoring the legislation’s potential to create safer environments for small businesses and local communities by granting legal marijuana enterprises access to conventional financial services, such as bank accounts and small business loans.
Despite the legalization of marijuana for medical and recreational use in 39 states, the industry has grappled with growth limitations due to its classification as a Schedule I substance under federal law. This has deterred many banking institutions from offering financial services to cannabis-related businesses, thus restricting their access to capital and broader markets. As a result, state-regulated marijuana enterprises have been compelled to conduct their operations exclusively in cash, exposing them to the perils of theft, organized crime and money laundering.
Given the expansion of recreational marijuana markets in various states, analysts from the MJBizFactbook anticipate that the combined sales of recreational and medical marijuana in the United States will reach $33.6 billion by the close of 2023.
The recent Senate vote represents a historic milestone, marking the first time the Senate has considered such legislation. While a previous iteration of the bill, the SAFE Banking Act, enjoyed multiple House approvals, it faced repeated obstacles in the Senate under both Republican and Democratic control.
The latest version of the bill also includes stringent provisions for federal regulators, preventing them from closing cannabis-related accounts without valid justification and from denying banking services based on political motivations and personal beliefs. The fate of the bill now hinges on the potentially more challenging terrain of the Republican-controlled House.
The entire cannabis industry, including major entities such as Tilray Brands Inc. (NASDAQ: TLRY) (TSX: TLRY), is waiting with bated breath as they follow how this landmark bill will be handled on the U.S. Senate floor.
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