As more states legalize marijuana, bankers find they have a problem on their hands. While more than thirty-three states have legalized the use of this substance, the federal government has yet to do so. As a result, banks may be subject to legal action if they work with marijuana businesses. This issue has been around for several years now, and the banking industry is pushing lawmakers to resolve it. Progress is being made, according to the Marijuana Policy Project, as Congress has begun to hold hearings on the matter. Now, however, it’s simply a matter of time before the issue is fully addressed and everyone knows where they stand.
The SAFE Banking Act
The Secure and Fair Enforcement Banking Act of 2019, also known as the SAFE Banking Act, is designed to protect financial institutions and their employees if they provide services to cannabis businesses in those states where the use of the substance has been legalized. If this legislation is passed, banks will be safe from prosecution, and those in the cannabis industry will find they have more options when it comes to managing their finances.
Why Is This Important?
When a business cannot obtain a bank account, it must operate on a cash basis. This leaves the company at great risk of being robbed and makes it difficult to carry out essential, routine, and mandatory tasks, such as paying taxes. Everything must be done in cash, and tracking the movement of money becomes more difficult as well. Congress must determine how to best address the problem, as the federal government has yet to decide whether the cannabis industry is legal on a national level. This leaves many banks unclear as to how best to proceed.
Fortunately, the cannabis industry does have political support in some areas. John Boehner, the former House Speaker, has come out in favor of the legalization of cannabis, and Cory Booker, the senator from New Jersey, has put forth legislation to expunge marijuana convictions at the federal level. Hopefully, these individuals will be able to help banks navigate these murky waters until the problem is resolved once and for all. Only then can banks fully provide the desired services without fear of repercussion.