After the U.S. has made it through an already challenging year in the cannabis industry, these past two weeks the industry has been disappointed by the reports that the SAFE Banking Act has failed to pass. Senate leadership would not include the cannabis banking legislation in a defense budget bill. Reportedly, the measure also failed to get attached to an omnibus funding package. After first being introduced in 2019, this marks the third time that the SAFE Banking Act has failed to get through the Senate. Cannabis executives discuss the impact of this missed opportunity and what we can now expect when it comes to the future of the industry.
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Missed opportunity
“Once again, our elected representatives missed an opportunity to implement the will of the people,” says Anthony Coniglio, CEO of NewLake Capital. “Polling consistently demonstrates the American public’s support for legalizing cannabis, not to mention simple banking services. This lack of action will result in lack of access to capital for many in the industry and unfortunately lead to business closures and job losses. We have consistently cautioned the industry not to expect action on SAFE in this Congress and we have managed our business accordingly. Hence, NewLake is well positioned to provide capital to the industry, with approximately $100 million of capital to deploy. We believe cannabis will continue to be a political football in the near term and hope that continued progress at the state level provides the political confidence needed for our elected representatives to deliver what the clear majority of the American people want.”
Credit card payments
According to Adam Stettner, CEO of FundCanna, the biggest impact of cannabis banking legislation would be the ability for consumers to use credit cards for purchases. “By allowing national credit card companies to offer services to cannabis customers, there would be a significant improvement in payment processing for cannabis purchases. However, I don't think the SAFE banking legislation would have had much of an impact on banking or lending,” Adam says. “I highly doubt that major financial institutions like Bank of America and Chase Bank would start offering cannabis banking services right away. It will take some time before major financial institutions and branded-card networks start collaborating with the cannabis sector. This won't happen until sometime after federal legalization, and most likely in a restricted capacity.”
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More holistic cannabis banking regulation
“While not a perfect fix, the passage of the SAFE Banking Act could have jumpstarted growth in cannabis job markets across the country. Now that it appears it will not pass in this lame-duck session, more holistic cannabis banking regulation should be the goal,” says Liesl Bernard, Founder and CEO of CannabizTeam. “This begins with the ability of smaller cultivators, manufacturers, distributors, and dispensaries to obtain loans at regular rates from a local bank or credit union. The reality is that the smaller single-state operators currently account for most of the growth and job creation in our industry. The old saying that ‘All Politics is Local’ has a modern counterpart in cannabis, ‘Most Cannabis Businesses are Local Too’ with an astonishing 33,441 active cannabis licenses in the United States.”
According to Liesl, another important aspect of any future cannabis banking legislation is the need to codify the ability of major payroll processing companies to offer their services to the industry. “Almost every cannabis business has a weekly need for payroll processing services which have been hard to come by at normal prices, given processor concerns from major companies over federal banking issues with cannabis. Having major domestic payroll processing companies embrace the cannabis market will provide significantly expanded services to cannabis employers and dramatically lower payroll processing costs across the industry.”
"SAFE Banking would have been a pivotal chapter for the cannabis industry and one that aligns with our mission of breaking down the barriers between cannabis and the mainstream," adds Chad Bronstein, CEO of Fyllo and Co-Founder and President of Tyson 2.0. "We are still committed to that mission and hope that ours and others' continued growth in this pursuit will put pressure on future legislators to finally address the banking inequities that exist for cannabis operators."
For more information:
NewLake Capital
www.newlake.com
FundCanna
www.fundcanna.com
CannabizTeam 
www.cannabizteam.com
Fyllo 
www.hellofyllo.com