In September of 2019, the United States House of Representatives passed the “Secure and Fair Enforcement (SAFE) Banking Act of 2019”. It was the very first stand-alone marijuana legalization to receive approval from the House of Representatives. Of course, revised versions of the bill were introduced in both the House and the Senate, in an effort to “reform federal cannabis laws and reduce the public safety risk in communities across the country.”
In April, 2021, the SAFE Banking Act was again approved by the US House of Representatives, with a 321 to 101 vote. The bill claims that it would alleviate the financial burdens that are associated with the legal operation of cannabis-related businesses. As such and understandably, a lot of cannabis industry organizations, including growers, support the bill; however, before you get fully behind the bill, you really need to fully understand it. There is provision that is of concern, as it states that the only organizations that would be protected would be those that operated under the 2018 Farm Bill.
What exactly is the bill and how will it impact cannabis growers? Keep on reading to learn more.
The SAFE Banking Act Explained
The Secure and Fair Enforcement (SAFE) Banking Act of 2021 was reintroduced by the House and Senate. The SAFE Banking Act grants legal cannabis businesses fair and equal access to the financial system. For those in the hemp industry, this means that the playing field will be leveled so that the businesses of cannabis farmers will be regulated like any other commodity.
The cannabis industry has seen rapid growth in the United States over the past few years, and it continues to expand. According to recent estimates, the industry is valued at more the $17 billion, and a sizable amount of that isn’t banked. As of January,2021, more than 320,000 jobs across the United States were supported by the legal cannabis industry.
Furthermore, between 2018 and 2028, it’s projected that job growth will increase by an impressive 250%, which happens to be the fastest growth rate for any sector in the country.
Racking in such substantial amounts of money will further enhance the safety of the industry and provide banks and credit unions with more capital to lend out during the economic recovery that is needed as a result of the disastrous handling (which is ongoing and doesn’t seem to have an end in sight) of the so-called pandemic; says those who support the legislation, anyway.
What Does the SAFE Banking Act Do?
The SAFE Banking Act was introduced by Senator Jeff Merkley, a Democrat from Oregon, and Senator Steve Daines, a Republican from Montana. The week before the pair joined forces to introduced the bill, Representative Ed Perlmutter, a Democrat from Colorado, Representative Nydia M. Velazquez, a Democrat from New York, Representative Steve Stivers, a Republican from Ohio, and Representative Warren Davidson, another Ohio Republican, introduced the same legislation in the House. The legislation was co-sponsored by more than 100 members.
Under the SAFE Banking Act, legally operated cannabis-related businesses that are located in states that have some legalized marijuana for medicinal and/or recreational use and that have stringent regulatory structures, would be permitted to gain access to the banking system. As of 2021, there are 47 states, four US territories, and the District of Columbia, have legalized marijuana, including CBD, in some form.
This represents an impressive 97.7 percent of the population of the United States. Despite this fact, current laws prevent validly licensed cannabis businesses from gaining accesses to the financial services and products that the banking system offers; checking accounts and depositories, for example.
As such, many businesses are forced to operate under an all-cash system. Really, this isn’t a bad thing, given the shady background of the US banking system; nevertheless, the SAFE Banking Act proposes that federal banking regulators would be prevented from subjecting cannabis businesses to any of the following:
- Barring, punishing, and/or discouraging federal reserve banks from providing financial services to cannabis businesses that are legitimately sanctioned and regulated by the state, as well as businesses and entities that are associated with said business, such as legal counselors or property owners that are offering their services to legal cannabis businesses.
- Terminating or minimizing the federal deposit insurance that a bank that is part of the US banking system provides for the sole reason that a bank is offering their service to a marijuana business that is sanctioned by the state, or a business that is associated with a state-sanctioned cannabis business.
- Suggesting or incentivizing a bank that is part of the federal reserve banking system to stop or to minimize any type of banking services to state-sanctioned cannabis or associated organizations.
- Taking any type of action against a loan to the owner or operator of a state-sanctioned marijuana-related organization.
What It Means for Hemp Farmers
According to Stivers, the US government has a “responsibility to legislate for the reality we live in”, and that reality is that legal state-sanctioned businesses that are located in 33 states that are not being provided with access to the banking system.
As such, cannabis businesses are forced to take on significant risks, as they have to operate on cash alone. The goal, therefore, of the SAFE Banking Act, is to provide legally operated cannabis businesses, including hemp farmers, with access to the banking system so as to protect them.
But, is the SAFE Banking Act really beneficial for hemp farmers? Is it really in their best interest? That really depends. Considering the fact that US federal reserve banks have a really shady – even nefarious – background, one really has to wonder if this bill actually is in the best interest of hemp farmers, or rather, if it is in the best interest of the banks and those who are behind them, such as the US government and the big global bankers.
When you stop and take a look at the state of the economy at present, which only seems to be getting worse, and is largely due to the federal reserve, you really have to wonder how politicians go about rationalizing their illogical leadership.