Tag: SAFE Banking Act

IRS Commissioner Agrees that Cannabis Businesses Need Banking Services

The lack of banking services for cannabis businesses is a national embarrassment at this point. The cannabis industry has been deemed essential during the COVID pandemic, supporting jobs and generating record-breaking tax revenues each and every quarter. Billions upon billions of dollars are flowing into retailers’ cash registers, but all too often, state-regulated companies are without bank accounts or are forced to jump through unnecessary regulatory hurdles and pay arbitrary fees just for the “privilege” of keeping an account.

The cannabis companies’ inability to maintain bank accounts impacts all of the other vendors and businesses that the industry must interact with, creating inefficiencies that shouldn’t exist. People associated with the cannabis industry, such as lawyers, consultants, and property managers have lost bank accounts as well. On top of the burdens and extra costs, the prohibition on banking creates a danger, including for state and federal workers who have to handle the ever-increasing mounds of cash that are used to pay local, state, and federal taxes.

Internal Revenue Service (IRS) Commissioner Charles Rettig testified before the House Appropriations Financial Services and General Government Subcommittee, detailing how his agency would prefer that state-legal cannabis businesses had access to banking services that would allow electronic deposits, as Marijuana Moment reported:

Rep. David Joyce (R-OH), who serves as a co-chair of the Congressional Cannabis Caucus, said that barring marijuana companies from traditional financial services is “inefficient for business and the IRS alike, obviously, not to mention ample opportunity for fraud and abuse it creates, as well as potential for criminal acts as far as robbing and stealing from those.”

Rettig replied that “the IRS would prefer direct deposits moreso than receiving actual cash payments.”

“It’s a security issue for the IRS. It’s a security issue for our employees in our taxpayer assistance centers, [which] is actually where we receive these payments,” he said. “We created special facilities in the tax to receive the payments. Then we similarly have to transport the payments themselves.”

Reefer Madness prohibition policies have hurt too many people for far too long, even years after states have passed legalization laws and 2/3 of Americans support ending cannabis prohibition. Prohibitionists that claim they support public safety and health are actually endangering more people. Our nation claims to support entrepreneurship and small businesses, but federal prohibition is stifling hard-working Americans and strangling mom-and-pops while multinational corporations with deep pockets can ride out these regulatory obstacles while buying up the little guys. It’s a small miracle that locally-owned craft cannabis boutiques like Kind Leaf are able to survive and even thrive under these circumstances. It’s past time that Uncle Sam legalize cannabis, but let’s at least get the SAFE Banking Act signed into law on our march towards freedom and equality.

Like GameStop, Cannabis Stocks Are Currently on a Reddit-Inspired Adventure

The financial world was set ablaze by the Reddit-inspired GameStop stock purchases that pit everyday investors against billion-dollar hedge funds. Wealthy hedge funds placed huge bets that video game retailer GameStop’s stock would decrease, so members of the Wallstreetbets forum (known as a subreddit to those that utilize the Reddit website) urged folks to purchase GameStop stocks, causing the price to skyrocket and costing hedge funds billions of dollars.

The entire Reddit vs. the Hedge Funds GameStop battle created quite the kerfuffle, especially when some brokerages like the Robin Hood app prohibited purchases of Gamestop. It was a whole thing and if you need an explanation, there the GameStop Short Squeeze Wikipedia page provides a breakdown. As I previously blogged, Canadian cannabis company Tilray was involved in a short squeeze itself. Several cannabis stocks have recently been publicized by the Wallstreetbets subreddit this week, sending the stocks up for a day, but then they tumbled back down.

While this Reddit-inspired rollercoaster-like adventure for cannabis stocks has some similarities with the GameStop saga, a big difference is that the cannabis industry is poised to have a brighter future, while video game stores are likely on their way out as the industry has moved online. While there is some gambling involved in trying to gauge when cannabis is going to be regulated federally like beer and wine and who the winners and losers will be, investors can, and should, do their due diligence in figuring out which companies have bright futures and which are more likely flash in the pans.

With cannabis will likely be in the news a lot over the coming years as piecemeal legislation gets passed, such as the SAFE Banking Act and speculation will arise if and when the House takes up the MORE Act again in an attempt to end cannabis prohibition at the federal level, cannabis stocks will probably be a volatile investment to own. However, to those that weather the storm and find the right companies that are poised to capture significant market share, the sky will be the limit. I’m no stock expert, so please do your research and listen to those that know a log more than me about the market, but it is apparent that opportunities will abound both short and longer term. Buyer beware and best of luck, investors.

How Confident Are You that Cannabis Will Be Legal by 2024?

The website Fivethirtyeight.com is a go-to website for many of us political poll watchers as the site compiles polls and provides a sober analysis of the political issues of the day. For a sports fan like myself, the site throws in a few sportsballs takes as well. The site features a “Confidence Interval” segment where one or more of their analysts lays out their confidence level regarding a certain political take. Today, the site tackled whether cannabis will be legal by 2024 at the federal level, with the insight provided by senior writer Amelia Thomson-Deveaux. I agree with her analysis.

First, some of the good news, as Thomson-Deveaux lays out: cannabis legalization has grown increasingly popular across political demographics, with a supermajority among Democrats and majority support with Republicans and the House passed the MORE Act last year. But, the more sobering news: political support by the people doesn’t equate with automatic support from politicians; just because support among Republicans has hit 50%, that doesn’t mean that GOP politicians will now support legalization.

As I’ve previously blogged, Thomson-Deveaux agrees that we can expect a more piecemeal approach, with Congress passing positive legislation, such as the SAFE Banking Act, as we inch step by step closer to ending cannabis prohibition. I agree with this “hot take” and would love to be proven wrong. One one hand, it can be very discouraging that we are still having to fight for such an obvious change in federal law. On the other hand, it can be encouraged by the fact that we have come a long way over the past decade. Ten years ago, there were no states with legal cannabis. Now, we have 15 states, with more on the horizon. While we may not get the legalization bill that we want by 2024, we are making great progress and just need to keep speaking the truth and holding our elected officials accountable. Step by step, state by state, the truth and common sense are setting us free.

CLICK HERE TO CHECK OUT THE VIDEO ON FIVETHIRTYEIGHT.COM

Congress Should Pass Cannabis Banking for Economic and Public Safety Benefits

The fight to end federal cannabis prohibition is a multi-step process that sees the cannabis community win one political and cultural battle after another. From decriminalization to medical to legalization to equity, progress across the nation takes twists and turns as each state addresses its needs, with the federal government always playing catch up. One issue where the states need Uncle Sam to step up is banking. (And yes, the 280e IRS code as well.)

State-regulated cannabis businesses are providing an essential service in states, creating jobs and generating record-breaking revenue, but they are hamstrung by a lack of banking services that force too many businesses to conduct transactions in all-cash, without the benefit of potential loans or other financial services that they may need. While some banks will take on cannabis businesses, they often put in place extra fees and restrictions on those accounts, especially hurting smaller, locally-owned companies.

American Banker reported on the potential for Congress to pass the SAFE Banking Act, as well as broader cannabis reform measures in the next two years:

A more welcoming political environment for marijuana banking also raises the odds that financial institutions will need to incorporate new compliance processes. This includes ensuring that any business they do with the legal marijuana sector complies with anti-money-laundering rules, regardless of any legislative reforms.

“The biggest undertaking for a financial institution interested in serving the cannabis industry is detailed compliance protocols and the staffing to implement them,” said Rachel Pross, chief operations officer at the Oregon-based Maps Credit Union, which already provides services to the industry. “At Maps, we maintain a ratio of one full-time employee for every 40 cannabis business accounts.”

The cannabis industry has long been seen as a golden opportunity for financial institutions, particularly community banks and credit unions, to expand revenue via a growing sector. But regulatory concerns about the federal marijuana ban have made many depository institutions nervous, despite continued efforts by states to legalize pot.

While big, multinational corporations can easily handle spending extra and hiring more people to deal with the additional workload, mom-and-pops just get extra hurdles placed in front of their American Dream. When you’re shares are being traded on the stock market, you have the cash reserves to easily hire extra security and oversight staff. If elected officials support small businesses and public safety, then they need to step up. Thankfully, help may be on the horizon.

Step by Step Towards Legalization, Congress Should Pass SAFE Banking Act

Yes, it’s way past time that cannabis be legalized. Science and common sense as swept Reefer Madness into the dustbin of history. A supermajority of Americans support ending prohibition and view legalization as inevitable. Vice President Kamala Harris co-sponsored the MORE Act last year. And the new Senate Democratic Majority is on the record supporting the removal of cannabis from the Controlled Substances Act and just included cannabis reform as a part of his racial and economic justice policy platform. Momentum is clearly behind the cannabis community and there has never been a better time for federal drug policy reformers.

However, political momentum is about to crash into political reality once again. There’s a saying in baseball that momentum is the next day’s starting pitcher. The baseball cliche means that a team can be on a great winning streak, but a fantastic game by the opposing team’s pitcher or a bad game by their own pitcher, can cause them to lose the next game. Previously, Mitch McConnell controlling the Senate was an immovable object that could stifle both legislation introduced in the Senate, even if supported by fellow Republicans, and reforms passed by the House. Now, McConnell is in the minority, but the filibuster, the hotly debated Senate rule that allows any senator to force legislation to need 60 votes to pass, instead of a simple majority. With a 50-50 Senate, it seems likely that full legalization, whether it’s the STATES Act or the MORE Act will be filibustered and have a difficult time garnering 60 votes.

Where should cannabis reformers look to continue the momentum over the next two years? The SAFE Banking Act. Allowing state-regulated cannabis businesses to utilize banking services will be huge for the industry, especially for craft cannabis boutiques like Kind Leaf. Small businesses and mom and pops are at a huge disadvantage compared to multinational corporations without arbitrary banking regulations and fees, let alone being prohibited from banking and loans with most financial institutions.

Forbes, reporting on potential cannabis reforms over the next two years:

In addition to the STATES and MORE Acts, another notable pro-cannabis measure that has been languishing in the Senate since its passage in the House of Representatives has been the SAFE Banking Act, which allows banks and other financial institutions to work with cannabis companies without fear of prosecution. This is a critical piece of legislation, which if passed, would be a watershed as many cannabis businesses are forced to operate as cash-only enterprises because of the federal illegality.

Fighting for legalization can be maddening at times, when it is so obvious that the war on cannabis is a terrible failure, but we must be realistic and not be discouraged to continue what has worked for us thus far: positive change step by step. Oregon first decriminalized in 1973, California passed medical in 1996, and then Colorado and Washington legalized in 2012. Success begets success. Passing the SAFE Banking Act will help out cannabis businesses and improve public safety and it will be a prudent next step to build upon as we march towards true freedom and equality for the cannabis community.

U.S. Treasury Secretary Tells Congress to Deal with Cannabis Banking Issues

As cannabis legalization has moved more mainstream, we have seen more and more progress at the federal level, but much-needed reforms are moving entirely too slowly, especially for those operating businesses that could use normal banking services and tax policies. With support across demographics, it can be extremely frustrating to the cannabis community and industry to see bills stalled, such as the SAFE Banking Act that managed to pass the House, but still awaits a Senate hearing. It appears that you can add Trump Treasury Secretary Steve Mnuchin to the list of those growing irritated with Congress as he told congressional members how the lack of banking services is impacting the IRS, as The Hill reported:

“This creates significant problems for the IRS,” Mnuchin said at a hearing held by a House Appropriations subcommittee.

Many states have legalized medical or recreational marijuana. However, banks have been hesitant to serve marijuana businesses even in states that have legalized use of the drug because they want to avoid violating federal anti-money laundering and illicit finance laws. That has led to cash-only marijuana businesses.

Without taking a stance on how he thinks the federal-state conflict concerning marijuana should be resolved, Mnuchin urged Congress “to deal with this one way or another.”

As The Hill noted, Idaho Republican Senator Mike Crapo is an obstacle to passing sensible cannabis banking legislation in the Senate. Spread the word and make sure that he hears from plenty of people, especially his constituents.

 

 

 

The American Bar Association Passes Resolutions Supporting Cannabis Banking Rights

No matter your stance on legalization, everyone that wants safe neighborhoods should support legal banking services for state-regulated cannabis businesses. The lack of access to banking services severely hinders the ability of entrepreneurs to conduct business, pay taxes, and expand operations. Along with the despicable 280e IRS tax code, access to normal banking services is a top policy change needed to allow the cannabis industry to thrive. As with most issues, banking reform is needed most by small craft cannabis boutique’s like Kind Leaf, which don’t have the deep pockets of multinational corporations.

Thankfully, we are seeing great momentum for normal banking services for the cannabis industry. The SAFE Banking Act has passed the House of Representatives, awaiting some movement in the Senate. As Marijuana Moment reports, the American Bar Association added its voice to the cause:

The group’s House of Delegates voted in favor of proposals endorsing pending federal legislation to protect banks that service cannabis businesses and calling for a clarification of rules to ensure that lawyers will not be penalized for representing clients in cases concerning state-legal marijuana activity.

Under the banking resolution, ABA “urges Congress to enact legislation to clarify and ensure that it shall not constitute a federal crime for banking and financial institutions to provide services to businesses and individuals, including attorneys, who receive compensation from the sale of state-legalized cannabis or who provide services to cannabis-related legitimate business acting in accordance with state, territorial, and tribal laws.”

ABA added that “such legislation should clarify that the proceeds from a transaction involving activities of a legitimate cannabis-related business or service provider shall not be considered proceeds from an unlawful activity solely because the transaction involves proceeds from a legitimate cannabis-related business or service provider, or because the transaction involves proceeds from legitimate cannabis-related activities.”

It is great to see some allies coming around to help out the cannabis community. Let’s keep the pressure up and momentum going. Idaho Senator Mike Crapo is currently the Senate Banking Committee Chair that will determine the fate of the SAFE Act. Please contact him and let him know that you support banking services for cannabis businesses and spread the word.

Cannabis Community Must Rally to Pass Banking Bill in the U.S. Senate

Those thinking that the cannabis industry is a get-quick-rich plan are most likely to be severely disappointed. A long list of obstacles hinder cannabis businesses from over regulation to over taxation, at all levels of government. The lack of access to banking services is one major hurdle for hard working entrepreneurs that are foundational pioneers in the burgeoning industry. The lack of a bank account poses enough problems, but without the business loans and other programs available to other industries, growth is severely stifled.

Thanks to the diligence of advocates, we won a major victory by passing the Secure and Fair Enforcement (SAFE) Act at the United States House this year, but unfortunately the much-needed banking bill faces a tough path in the Senate. Passage in the Senate will take a strong lobbying effort by the cannabis community after Idaho Senator Mike Crapo, while open to passing banking legislation, announced his opposition to the SAFE banking Act, as Marijuana Moment reported:

A powerful Senate committee chairman said on Wednesday the he opposes House-passed marijuana banking legislation and laid out potential changes he would like to see to the bill before he takes it up in his panel.

Among other amendments being floated for public feedback is a 2 percent THC potency limit on products in order for cannabis businesses to qualify to access financial services as well as blocking banking services for operators that sell high-potency vaping devices or edibles that could appeal to children.

“I remain firmly opposed to efforts to legalize marijuana on the federal level, and I am opposed to legalization in the State of Idaho,” Sen. Mike Crapo (R-ID), who chairs the Senate Banking Committee, said in a press release. “I also do not support the SAFE Banking Act that passed in the House of Representatives. I have significant concerns that the SAFE Banking Act does not address the high level potency of marijuana, marketing tactics to children, lack of research on marijuana’s effects, and the need to prevent bad actors and cartels from using the banks to disguise ill-gotten cash to launder money into the financial system. I welcome input from all interested parties on how to thoughtfully address these concerns.”

Regardless of one’s stance on cannabis legalization, everyone should support banking access for industry participants. The SAFE Banking Act will help businesses grow, creating more jobs and generating more revenue. Public safety and prompt tax payments will also improve if banking services are fully legalized. The lack of banking services hurts small and medium businesses the most and these mom-and-pops and craft cannabis boutiques need our support, both with our dollars and our political activism.

The future of the cannabis industry depends upon our community shopping with local companies and urging our elected officials, especially United States Senators, to treat the industry like any other business sector. It certainly seems like Idahoans need to contact Senator Crapo and it is imperative that we make our voices heard. We’ve come a long way, we just need to remain vigilant and keep making progress for the cannabis community step by step, piece by piece, law by law.