Congress has been working on trying to pass the SAFER Banking Act for years. Whenever a new version of the bill comes up for a vote, it manages to sail through the House but stall in the Senate. It may happen again before 2024 draws to an end. However, the medical cannabis industry can proceed without SAFER by adopting alternative financial strategies and compliance frameworks to ensure continued growth and stability.
Why SAFER Is Needed
SAFER is a bill that has been on the cusp of passage several times in recent years. Its necessity stems from current federal restrictions that prevent most banks from getting involved with the cannabis industry. Any banks subject to federal oversight would be taking a huge risk offering traditional bank services and financing the cannabis growers, processors, and dispensaries.
If a bank decided to finance operations for Zion Medicinal in Cedar City, Utah, there could be dire consequences. Why? Because marijuana remains illegal at the federal level. Despite Utah giving the green light to medical cannabis, Washington would still frown on the banking industry getting involved.
Zion Medicinal operators say this only makes doing business more difficult for them. Not only can they not obtain traditional financing to fund their operations, but they are also unable to accept electronic payments. But as previously stated, there is a workaround brewing in the Beehive State.
A State Chartered Bank
According to a recent Payments Journal post, Utah regulators have given the green light to Colorado-based CanPay. CanPay can operate in Utah as a state-chartered bank. Being charted by the state means the company is not subject to federal oversight. They can freely offer payment services without worrying about retribution from Washington.
However, there is a caveat: Automated Clearing House (ACH) payments. Payments processed across the ACH network are subject to some federal regulations. So accepting such payments on behalf of cannabis companies is a gray area. Yet a state-chartered bank choosing to operate on the network could benefit from millions of transactions being processed daily.
According to Payment Journal, it would not be hard for a state-chartered bank and its dispensary customers to simply get lost in the volume of daily transactions. No one would be the wiser unless they went looking specifically for cannabis payments.
Bank Accounts Are a Big Help
I am not sure if CanPay offers traditional banking services in addition to electronic payments. I’m thinking business banking accounts. Even separate from electronic payments, just having access to a regular bank account would be a tremendous help to cannabis growers, processors, and dispensaries.
Imagine a local medical cannabis dispensary with no bank account. What happens to all the cash they collect at the end of the day? It needs to go somewhere. Having access to a bank account would change everything for the dispensary operator. Bills could be paid more easily, and the dispensary itself would be at less risk of robbery.
Perhaps It Will Be Moot
There is a way for the cannabis industry to proceed even without SAFER. But perhaps doing so will be moot in the not-so-distant future. Depending on how the 2024 election goes, there may be enough support in the Senate to get SAFER passed late this year or sometime next year.
Passing SAFER would give federally regulated banks the okay to engage with medical cannabis companies. But even if SAFER dies its usual death on the Senate floor, there is a workaround by way of state-chartered banks. One way or another, the medical cannabis industry is beginning to see some light at the end of the tunnel.
