A Milestone for U.S. Cannabis Industry
The U.S. marijuana sector takes a significant step forward as the Senate Committee approves the SAFER Banking Act by a 14-9 vote on September 27. The approval comes after weeks of bipartisan negotiations and modifications to the bill.
The SAFER Banking Act supersedes the previously debated SAFE Act, which had failed to gain traction in the Senate. This time, its journey commenced in the Senate, signifying greater hopes for its enactment.
The amended proposal retains the essence of the SAFE Banking Act—making it easier for cannabis businesses to access bank accounts, insurance, and various financial services. It also includes minor changes in wording, a result of compromises between Democrats and Republicans who had blocked the bill in past years.
The committee’s approval has been greeted warmly by cannabis industry participants, signaling a legislative leap for an industry still operating in a federal grey area.
Tim Barash, CEO of Dutchie, a tech platform serving the cannabis industry, stated that the SAFER Banking Act would accelerate the growth of the sector by providing more straightforward access to financial resources.
After the Senate’s decision, some cannabis stocks experienced a brief surge, followed by a decline. Matt Karnes, founder of Greenwave Advisors, notes that these price movements often result from event-triggered enthusiasm, later influenced by broader economic factors.
Karnes also acknowledges that while federal reclassification of marijuana remains the ultimate game-changer, the SAFER Banking Act considerably lowers operational risks by facilitating safer cash management for cannabis companies.
Peter Su, director of specialty banking at Hanover Bank, argues that while the act’s practical impact may currently be limited, its eventual enactment would broaden financial options for cannabis businesses. It would help address issues such as underbanking and operational constraints affecting profitability.
The SAFER Banking Act could also set the stage for tax benefits for cannabis companies by facilitating a reclassification of marijuana, allowing them to claim tax credits under Section 280E of the Internal Revenue Code.
Barash believes that the act should be a part of broader cannabis legalization, aiming to ensure unrestricted access to legal cannabis for American adults and rectify past policy failures.
Karnes optimistically notes the increasing public and legislative support for cannabis legalization, especially given that almost half the states have already legalized marijuana.
The SAFER Banking Act will now move to the House, which has passed previous versions of the SAFE Banking Act. However, any impending government shutdown could delay the legislative timeline for the bill.
