Experts say we may be facing up to two years of intermittent lockdowns before the coronavirus is finally eradicated, and the economy will take even longer to spring back to pre-pandemic levels. At the moment, most regions in the U.S. are still under lockdown orders, and while this has helped reduce infections, the effect it has had on the economy has been catastrophic.
The cannabis sector was one of the few industries that were deemed essential and allowed to continue operating amidst lockdown orders. However, due to federal prohibition, the industry has been operating at a stark disadvantage. The federal government released emergency relief funds to help small businesses weather the storm, but the state-legal marijuana industry has been denied access to these funds.
To make matters worse, these businesses have been locked out of most banking services. Banking institutions may be subject to federal retaliation if they transact with the state-legal industry, and this has forced marijuana businesses to transact on a cash-only basis. Not only does having lots of cash on hand put you at risk of theft, but it also puts employees, and customers at risk of infection.
The Health and Economic Recovery Omnibus Emergency Solutions (“HEROES”) Act, a $3 trillion stimulus package, would help the industry immensely. Although it doesn’t grant the industry access to federal emergency relief funds, it contains language from the industry-lauded Secure and Fair Enforcement (“SAFE”) Banking Act, which would give cannabis businesses and their ancillary business partners access to the banking sector.
If it is passed, the HEROES Act would:
- Allow cannabis businesses to access much needed banking services like loans, credit lines and bank accounts. At the moment, the banking sector treats such businesses like pariahs and with the current health and economic crisis, this has put them at a severe disadvantage. The HEROES Act will allow the banking sector to transact with cannabis businesses without fear of federal retaliation.
- Additionally, customers will now be able to use credit and debit cards as the Act will allow marijuana businesses to finally use credit card processing services. They will be subject to lower debit card fees as credit companies compete for the new market. It may also aid bottom lines as studies have shown that people are more likely to spend more when using credit cards compared to cash.
- Consumers will also spend less on fees, specifically ATM fees, which can and will add up if ATM transactions are part of your cannabis purchases. Using debit or credit cards would be more economical in the long run. If firms adapt to a cashless system, they will spend less on security to keep the staff safe from petty theft, and these cost savings can be passed down to the consumers.
- Finally, and most importantly, it will prevent the spread of the coronavirus. It is a known fact that the virus is still viable after extended stays on surfaces like cash and plastic. In fact, money was never hygienic to begin with, and therein lies the danger of cash-only transactions. Eliminating physical currency from the equation would limit the contact between staff and customers, thereby reducing their chances of contracting and spreading the virus.
The progress of this proposed law will no doubt be monitored closely by cannabis sector players like Round Meadow Holdings Corp. and Champignon Brands Inc. (CSE: SHRM) (OTCQB: SHRMF) (FWB: 496) to see how the lawmakers debate and vote on this bill.
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