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BLOG: What Really is the SAFE Banking Act of 2019?

Posted by Lynnea Bolin on

What Really is the SAFE Banking Act of 2019?


If you've been reading up on news in the cannabis space, you may be familiar with consistent credit card processing and banking issues over the past few years. The cause of this issue is due to many cannabis and hemp businesses suffering from lack of fair access to banking. It's been a mess, but the government will finally start to take steps towards allowing cannabis businesses full access to the banking system if they pass the SAFE Banking Act of 2019.


So, what's been happening?


For a while now, hemp and cannabis businesses have been unable to do normal processing on eCommerce platforms. These banking issues lock businesses "out of the banking system, making it difficult for them to maintain a checking account; access credit; accept credit and debit cards; meet payroll; or pay tax revenue" (Let's Talk Hemp). Generally speaking, it's been a pretty messy process. Specifically, on the marijuana side of the industry, they've been performing business transactions in cash, which has been quite dangerous. In the hemp space it's been a little bit better, but not too much. If this act is passed, House of Representatives member Ed Perlmutter states that this act will apply to 97.7% of the population. What he means is that that's how many people have access to legal cannabis at this time, but those cannabis businesses can't actually be banking properly.



Perlmutter states, "...the SAFE Banking Act seeks to harmonize federal and state law by prohibiting federal regulators from taking punitive measures against depository institutions that provide banking services to legitimate cannabis-related businesses and ancillary businesses (e.g. electricians, plumbers, landlords, etc.) that serve them. The bill establishes a safe harbor for any depository institution that chooses to provide banking services to a cannabis-related legitimate business which holds and maintains a license from a state or local government to engage in manufacturing, growing, or producing, as well as any business who handles, sells, transports, displays or distributes cannabis or cannabis products.” In short, you don't have to worry about any sketchy monetary transactions and businesses can have full access to everything at modern banking institutions. 


Is this likely to pass? Will things still be separated by state and federal level?

 

One of the many perks of the SAFE Banking Act is that there's a specific section that includes reaffirmation of the legal status of hemp. Even though marijuana and hemp are legally separated on a federal level, the hope is that this will apply to both of them equally. This act is likely to pass because the House vote received nearly 100% of the Democrats and nearly 50% of the Republicans vote. This is not only promising going forward, but shows that many people are getting behind this act because it's clearly the right thing to do. Additionally, Mitch McConnell, the Republican Senator of Kentucky, has been one of the largest proponents of legalizing hemp, and played a huge role in getting the Industrial Hemp Farming Act of 2018 passed!



This act is definitely one to watch, and hopefully makes it through legislation safely. This is crucial to making business transactions in the cannabis and hemp space more fair and secure. These spaces deserve access to normal banking, whether that be accepting credit cards or taking out loans. The SAFE Banking Act will harmonize federal, state, and local laws, and basically confirm that if that business has the right license, permits, or whatever it might be, then it will be completely legitimate for banking and all issues will be resolved.

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