Quick Guide: Cannabis Banking Reform

Proper financing and banking services are some of the biggest hurdles that many cannabis businesses face. With more legislation being passed, will change happen for the industry in 2022?

After another legislative measure passed in November of 2021, this now marks five times that legislation has been passed to make it easier for cannabis companies to access financial accounts and process customer payments. This is not an issue for any other industry and is unique to that of cannabis.

The current bill, called the SAFE banking act, is the latest attempt to provide financial institutions with the proper way to allow cannabis businesses to have accounts. Over 20 state governors have called for the bill to be signed but the bill has yet to hit President Biden’s desk. The bill is led by Rep. Ed Perlmutter (D., Colo.) and the Banking Act is being lumped into the National Defense act, a much larger bill that will no doubt pass again this year.

Why is Cannabis Banking Reform Essential?

The goal behind all of these five deals is to make customer transactions and cannabis business accounts fully legal for banks and credit unions operating in legal cannabis states. As we’ve discussed in the past, the lack of proper banking means that a grey area exists, forcing cannabis businesses to operate dangerous cash-only businesses. The plant medicine’s federal illegality is one of the reasons why black markets are thriving, despite cannabis being legal in these states.

"The lack of proper banking means that a grey area exists, forcing cannabis businesses to operate dangerous cash-only businesses."

Why is Cannabis Banking Reform Stalling?

One of the main reasons that cannabis banking reform has been stalling is because senators have been dragging their feet. The most vocal of these senators is perhaps Cory Booker (D., N.J), who has been outspoken since 2017 about the need to legalize cannabis at the federal level.

Senators like Booker see the passing of cannabis banking reform as a hindrance to the need to legalize federally. In fact, Booker has repeatedly made statements such as he would “lay himself down” to block legislative efforts for banking reform before any larger federal cannabis prohibition laws were repealed or at least addressed.

The problem is that while there is bi-partisan support and clear voter support for federal legalization, the votes currently aren’t there in the House or the Senate to pass such a legalization bill. The votes are there for the reform such as the SAFE Act, and this is where the conundrum has lied for about five years.

Could Cannabis Banking Reform Finally Happen in 2022?

It is unclear whether advocates like Perlmutter will be able to successfully maneuver a cannabis banking section into Congress’s massive annual defense spending bill. It was included in the House version and a bipartisan group of senators is pushing to include SAFE banking provisions in the Senate version. Outright legalization efforts like Senator Booker rightfully state that these types of long-needed cannabis reform measures should not have to be shoe-horned into other bills.

Naturally, the busy month of December gives Congress yet another easy excuse as to why they will refuse to pass a cannabis banking reform measure. In addition to the main focus of the massive National Defense bill, Congress faces a possible outright shutdown, a default on the debt ceiling, as well as President Biden’s Build Better Act. If the SAFE banking act is to be passed and implemented, it would pass in December 2021 and likely be implemented in Q2 2022.

With all of this in mind, the fact that yet another bill has been presented to provide the cannabis industry with much-needed banking reform is promising. Only time will tell whether politicians will make good on their promises to actually address the underlying problem with passing a cannabis reform bill, and that’s repealing the age-old prohibition on the plant medicine.

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