Federal prohibition has been a massive thorn in the state legal marijuana industry’s side for years, and the coronavirus pandemic has made this abundantly clear. Despite cannabis being declared an essential service by most states with legal cannabis programs, businesses in the sector have been subject to federal restrictions that have made it nearly impossible to operate safely in these trying times. Aside from being denied access to relief funds dispensed by the federal government, marijuana businesses do not have access to the banking system, forcing them to operate on a cash only basis.
This not only puts them at risk of theft and crime, but it also puts staff, customers and anyone who comes into contact with the money at risk of being infected by the coronavirus. For months, advocates have implored lawmakers to correct this and grant cannabis-related businesses access to the banking system. Utah seems to be headed in that direction after state Attorney General Sean Reyes and Treasurer David Damschen called on Congress to pass a bill allowing marijuana-related businesses to access the banking system.
“Utah worked hard to find a sensible, humane and balanced approach to medical marijuana policy. But current federal law prevents access to insured financial institutions for businesses in this industry. That creates significant practical and public safety issues for both the general public and for Utah businesses operating legally in the medical cannabis space,” Reyes says. In a letter signed by 34 state attorney generals, he urged Congress to support the Secure and Fair Enforcement (SAFE) Banking Act, stating that it would help the state’s newly up-and-running medical cannabis dispensaries.
“The inability of insured financial institutions to handle cannabis-related transactions has forced businesses and governments throughout the U.S. to resort to cash to settle transactions. This represents an enormous public safety issue, including risk of violent crime, fraud and theft. Providing regulated and insured financial services to cannabis businesses allows law enforcement, and specifically the Financial Crimes Enforcement Network [FinCEN] within the U.S. Department of Treasury, the transparency needed to distinguish legal cannabis businesses from illegal activity,” says Treasurer Damschen.
The letter to Congress states that the “COVID-19 pandemic has sharply focused the need for legislative relief in three key areas. First, threats to public safety caused by a cash-intensive business model, often the target of criminal activity, have intensified in the months since the pandemic began. Next, the presence of large cash transactions places law enforcement, tax regulators, customers and patients at risk of exposure to the virus. Finally, the ability to efficiently collect tax revenue from the marijuana industry, estimated to have generated $15 billion in sales in 2019, will provide critical relief for state and local governments predicting budget shortfalls due to the pandemic.”
Analysts believe that the entire cannabis industry, including companies like The Supreme Cannabis Company Inc. (TSX: FIRE) (OTCQX: SPRWF), hope the SAFE Banking Act will soon be enacted into law so that cash transactions in the sector become a thing of the past.
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