The marijuana movement has finally reached the national stage as the cannabis industry booms into 2019. With the recent legalization of industrial hemp, the current public perception of cannabis, and the introduction of H.R. 1595-Safe Banking Act of 2019; federal legalization is only a matter of time.
A majority of states already have some sort of marijuana legalization or decriminalization in place, which means the federal government can no longer turn a blind eye. The gray area between federal and state law cannot be ignored if the industry is going to continue to grow. Not only must further cannabis research be done in the United States, but marijuana banking is vital to the safety and growth of legal dispensaries, manufacturers, growers, any everyone in the cannabis industry.
The New Year is a big one for marijuana reform, and it’s just getting started. While H.R 420 would be the most significant cannabis bill to date, the H.R. 1595- Safe Banking Act of 2019 has all the attention at the moment.
H.R. 1595-Safe Banking Act of 2019 Passes the House Committees
On March 7, 2019, the House was introduced the H.R 1595-Safe Banking Act of 2019. The same day the bill was introduced to the House, it was sent off to a committee to evaluate the proposal and prepare it for the floor. There were two committees assigned to the marijuana banking bill:
- House Financial Services Committee
- House Judiciary Committee
With the Democrats having a majority in the House, the Safe Banking Act has quite the initial support. Last Thursday on March 28th, the House Financial Services Committee voted on moving the bill forward. After thorough consideration from all members of the committee, it passed with a 45 to 15 vote to advance the legislation to the full body.
Colorado Representative, Ed Perlmutter, is the lead sponsor of the bill and has been for nearly six years. H.R. 1595 now has 152 cosponsors on the bill, and 12 of them are Republicans. Between the approval of the committee and the bipartisan cosponsors, the future is looking bright for the Safe Banking Act of 2019.
While the committee has pushed the bill to the floor, it isn’t backed by every representative in the House. This bill is nothing to think lightly of and would mark quite the precedent for marijuana reform in our nation.
What is the Purpose of H.R 1595-Safe Banking Act of 2019?
The overall purpose of the Safe Banking Act of 2019 is to eliminate the federal gray area of marijuana banking. A majority of the national banks, and even local banks, refrain from working with marijuana business in order to avoid violating federal drug and money laundering regulations. While there are a few banks currently serving marijuana companies in legal states, it is not a widespread practice due to the possible retributions.
The bill’s listed purpose reads as follows:
“The purpose of this Act is to increase public safety by expanding financial services cannabis-related legitimate businesses and service providers and reducing the amount of cash at such businesses.”
This bill aims to fix this major problem by allowing for all banks to work with legal marijuana companies in legal states. Not only does this allow for the industry to begin operating under safe business practices, but it allows for banks to assist with cash-flow for those looking to enter the cannabis industry.
Financial services may now provide ancillary support to the growing industry without fear of federal backlash. It opens the door to a variety of ancillary services that the industry is in dire need of at the moment, as well as, enhancing the professionalism of how the cannabis industry can operate its daily business.
What Does the H.R. 1595-Safe Banking Act of 2019 Do for the Industry?
The Safe Banking Act of 2019 is quite the game changer for the cannabis industry. There are a variety of ancillary services now available to legal marijuana businesses which make for smoother daily operations and safer business practices. However, the bill ultimately just protects the federal banking institutions from receiving penalties for working within the cannabis industry. In other words, the bill establishes a “Safe Harbor for Depository Institutions.”
Section 2 of the H.R. 1595-Safe Banking Act establishes that the Federal banking regulator may not ?
- Terminate or limit the deposit insurance or share insurance of a depository institution under the Federal Credit Union Act, or take any other adverse action against a depository institution under section 8 of the Federal Deposit Insurance Act solely because the depository institution provides or has provided financial services to a cannabis-related legitimate business or service provider.
- Prohibit, penalize, or otherwise discourage a depository institution not to offer financial services to a cannabis-related business or service provider or a State, political subdivision of a State, or Indian Tribe that exercises jurisdiction or cannabis-related businesses.
- Recommend, incentivize, or encourage a depository institution not to offer financial services to an account holder, or to downgrade or cancel the financial services provided to an account holder solely because:a.) The account holder is a cannabis-related business or service provider or is an employee, owner, or operator of a cannabis-related business.
b.) The account holder later becomes an employee, owner, or operator of a cannabis-related business or service provider.
c.) The depository institution was not aware that the account holder is an employee, owner or operator of a cannabis-related business.
- Take any adverse or corrective supervisory action on a loan made to a cannabis-related legitimate business or;
a.) To an employee, owner, or operator of a cannabis-related legitimate business.
b.) To an owner, or operator of real estate, or equipment that is leased to a cannabis-related business.
- Prohibit or penalize a depository institution, or entity performing services for the depository institution, for, or otherwise discourage a depository institution, or entity performing services for the depository institution from authorizing, processing, clearing, settling, billing, transferring, reconciling, or collecting payments for a cannabis-related business, where such payment is made by any means.
a.) Credit Card
b.) Debit Card
c.) Other Payment Card
d.) Account Number
f.) Electronic Funds Transfer
A legal and licensed marijuana business would be able to utilize the banking system the way any other industry does; without any hassle or legal issue. The reach of this bill is remarkable, and it does wonders for the daily operations of a marijuana business. Rather than being a completely cash-based industry, marijuana businesses would be able to take all forms of payment for their products and ancillary services.
The Importance of the Safe Banking Act of 2019
Fixing the banking for the marijuana industry is a massive step in professionalizing marijuana businesses. Not only would the marijuana bill allow for regular banking to occur within the industry, but it makes for safe business practices. Any cash-based business is open to internal and external theft which not only affects the marijuana business but the safety of its employees. The Safe Banking Act of 2019 takes this out of the equation and protects all parties involved.
Other Benefits for the Cannabis Industry:
- The bill would allow for credit card processing and remove the need for cash-less ATM systems.
- The bill would make tracking cash-flow mush easier and safer for a marijuana business.
- The bill protects a marijuana business from losing money to internal and external theft.
- The bill allows for a credit or business loan to be obtained for marijuana businesses.
- Cannabis entrepreneurs have access to bank loans for capital to get into the industry.
- Insurance companies are also protected under this bill which allows for marijuana businesses to work hand-in-hand with insurance institutions.
Aside from the above benefits, the Safe Banking Act of 2019 would mean the federal government sees the state-wide cannabis industry as a legitimate sector. Not only does it set a precedent for widespread legalization, but it foreshadows the potential federal legalization of marijuana.
What’s Next for H.R. 1595-Safe Banking Act of 2019?
The House Committees may have approved the Safe Banking Act of 2019, but it is far from becoming law. The House is yet to set a date for the bill to hit the floor. It is likely to continue its momentum, but these things take time, as everyone knows.
Many Republicans are still against the bill and believe it should wait for federal legalization to occur. With that said, the Democrats have a majority in the House, and they are making a big push for marijuana as the next presidential election inches near.
Trump is rumored by many to become the “Marijuana President,” and utilize federal legalization to land his second term in office. Every one of the Democratic Candidates has jumped on the marijuana bandwagon in hopes to gain as many votes as possible for the upcoming election. Hence, the push for marijuana reform like H.R 420 and H.R 1595-Safe Banking Act of 2019.
Nevertheless, who cares what political party pushes more marijuana reform as long as it gets done. The time is well overdue for the legalization of cannabis, and the H.R. 1595-Safe Banking Act of 2019 is a significant step in the right direction.