The U.S. Senate has been sitting on the Secure and Fair Enforcement Regulation (SAFER) Banking Act for a year. If passed and signed into law, the bill would reform banking regulations so as to allow financial institutions to do business with companies in the marijuana sector. But the bipartisan bill remains stalled with no end in sight.
What is the problem? As is usually the case in the Senate, one party does not exercise enough control to get the legislation through. The senate is effectively tied 50-50, with the vice president casting the deciding vote. But in an election year, overcoming such a slim margin on controversial bills is nearly impossible.
The Problem With Banking
The problem with banking right now is the fact that marijuana is still a Schedule I controlled substance. Because banks are federally regulated, doing business with marijuana companies constitutes breaking the law. Banks do not want to risk federal retribution. As a result, most choose to stay away from the marijuana industry.
This is an issue for companies like Beehive Farmacy in Utah. The company has dual locations in Brigham City and Salt Lake City. Under the current regulatory environment, Beehive Farmacy needs to run a mostly cash-and-carry business. They need to accept cash because they do not have access to regular banking services. But the problem is not limited just to marijuana pharmacies and dispensaries.
Growers and processors face the same problems. Not only do they have to operate on cash, but they also do not have access to things like business credit and debit cards, small business loans, and even checking accounts. It is amazing that the state-legal marijuana business has thrived without access to banking services.
What the SAFER Banking Act Does
Without getting into all the details, the SAFER Banking Act removes most of the shackles that prevent banks and credit unions from doing business with companies in the marijuana sector. There are some exceptions. Banks would still not be free to work with marijuana businesses in prohibitionist states. Currently, there are eleven such states.
In the remaining 39, banks could offer traditional services including credit cards and small business loans. Credit card processors could also get in on the deal. They could help facilitate electronic transactions so that marijuana businesses would not have to rely exclusively on cash.
Not Likely to Pass
Despite how helpful SAFER would be for the marijuana industry: it’s not likely to pass. The current version of the bill is the most bipartisan to date. If it were offered on the senate floor with absolutely no amendments attached, it would probably pass. Therein is the sticking point.
The Senate rarely conducts an up or down vote on a single topic bill. Nearly every bill that goes to the floor for a vote has amendments attached. And unfortunately, the amendments Democrats want to attach tend to be no-goes for Republicans, and vice-versa.
Partisan bickering in the Senate only escalates during election years. In my opinion, last year would have been the ideal year to try to get SAFER passed. Senate Democrats not bringing the bill to the floor as a single topic bill was a mistake. The chances of getting it through this year are pretty slim.
The entire exercise could be rendered moot if the DEA reschedules marijuana to Schedule III. Should that happen, the SAFER Banking Act immediately becomes obsolete. Perhaps that’s what Senate Majority Leader Chuck Schumer is planning on. Maybe he has been delaying all along so that certain senators don’t have to publicly come out for or against. Rescheduling solves the problem for him.
