In 2019, the SAFE Banking Act, a measure that would prevent federal banking regulators from sanctioning banks for working with legal cannabis businesses, passed in the House of Representatives only to languish in the then Republican-controlled Senate. Last week, the bill showed a shred of life when it was reintroduced in the House. Now that the Democrats are in control of Congress and the White House, is there hope that the SAFE Banking Act will finally pass?
The reaction among cannabis professionals has been equivocal, at best. For instance, Nathaniel Gurien, CEO of Fincann, a provider of payment solutions for the cannabis industry, feels the bill is nothing more than a superficial band aid to a larger problem, namely the federal illegality of the plant.
“If Congress passes simple cannabis de-scheduling or the similar MORE Act, [which would decriminalize marijuana] this summer as expected, then the SAFE Banking Act would be moot,” he said.
Yet Gurien has his doubts. “Majority Leader Schumer (D-NY) appears inclined towards more comprehensive legalization, which will likely require a couple years of wrangling with ‘stakeholders’ pushing federal legalization into the next Congress and 2023.”
Matt Hawkins, founder and managing partner of Entourage Effect Capital, is adopting a glass half-full perspective. For him, the passage of the bill would be a boon for the industry as it could pave the way for plant-touching businesses to be able to trade on the NASDAQ and the New York Stock Exchange in the future. “This could open the floodgates for institutional investors who have been hungry to invest in this space and could also allow legal businesses to finally tap into capital markets and become closer to operating like mainstream companies,” he explained. “Additionally, larger operators and ancillary companies flush with cash could have the buying power to more efficiently scale their businesses throughout the country.”
Like Fincann’s Gurien, Joe Crouthers, CEO of Los Angeles-based private equity firm Ceres Group Holdings, which made headlines in late February after announcing that its blank check company was going to take Atlanta-based cannabis producer Parallel public via a merger, is apprehensive. Although Crouthers does feel reintroducing the SAFE Banking Act in the House is welcome news, it’s “not the right news or even overly meaningful news.” Further, the timing of the bill is “out of order” as it should be preceded by decriminalization or legalization measures.
Especially troubling to Crouthers are the mixed messages about cannabis coming from the powers that be. “While the SAFE Banking Act is being reintroduced in the House, the White House is suspending staffers who honestly disclosed their past use of cannabis in states where it is legal,” said Crouthers, expressing frustration. “Seriously? I would still look to the various state governments to continue making the most meaningful advances for all of the industry’s stakeholders.”
Deviating from the skepticism, Salvator Armenia, vice president of development at C21 Investments, a Nevada and Oregon-based cannabis company embraces the SAFE Banking Act as a necessary bank reform. “It is a vital step in promoting a safe, regulated industry which will lower the risk to our communities,” he said. “It will also provide increased economic opportunity and workforce talent in this growing industry.”