A coalition of marijuana advocacy groups is asking that a bipartisan marijuana banking bill be expanded to include provisions ensuring that cannabis businesses have access to all forms of financial services—including the ability to be listed on senior U.S. stock exchanges.
In a letter sent to Senate Banking Committee leadership on Thursday, the coalition SAFE Banking for Equity said that it appreciates that the panel is “treating this issue with the urgency it demands” by holding a hearing focused on cannabis industry financial barriers last week.
But the groups—which include California Minority Alliance, Minorities for Medical Marijuana, Women Grow and National Hispanic Cannabis Council—also said that it was important that the standalone Secure and Fair Enforcement (SAFE) Banking Act be amended in a fairly significant way that may be a bridge too far for certain advocates focused on comprehensive legalization.
As it stands, the SAFE Banking Act would protect banks that work with state-licensed marijuana businesses and certain depository institutions from being penalized by federal regulators.
What the coalition is asking for is a broader safety net that would free up industry access to “all regulated financial institutions and services, including depository services, lenders, debt and equity financing, capital markets and investment services, insurance, broker dealers, fiduciaries, and credit card and payment processing.”
“Providing the state-legal cannabis industry equal access to financial institutions and resources is key for economic growth,” the letter says. “Without broader access to financial institutions, many entrepreneurs are left without anywhere to turn to secure the funding needed to launch their company or to expand existing operations.”
“#SAFEBanking addresses crucial needs for the cannabis industry, especially small and minority-owned operators. Without access to capital, we remain at a significant disadvantage, and the industry will never reach its full potential” – Antonio Valdez of @nhccouncil.
— #SAFECANTWAIT (@safe4equity) May 16, 2023
The groups wrote that limiting cannabis industry financial services access forces operators “to fight for survival against the illicit market—including Chinese-backed investors—with both hands tied behind their backs.”
“If small and minority-owned cannabis companies do not have the capital needed to compete or stay afloat, the state regulated cannabis market will be ceded to criminal enterprises that do not adhere to stringent testing or labeling standards, that do not institute child resistant packaging or care about age limitations, and that do not pay taxes or invest back in their communities. Ultimately, an unchecked illicit market would be catastrophic to legal, regulated businesses, and compromise public health and safety.”
They further asserted that access to U.S. senior exchanges, as opposed to junior exchanges, would “significantly” increase the valuations of small marijuana businesses, “resulting in a dramatic decrease in the amount of equity an entrepreneur would have to cede to get the same investment.”
“Maintaining equity is critical for those operators who hold social equity licenses that require them to maintain majority ownership of their company,” the letter says. “Without access to meaningful capital to convert these social equity licenses or for minority operators to succeed, the states’ efforts to support a more equitable industry are merely checking a box and allowing for small businesses to be shut out while the illicit market profits in the void.”
There was a bill that was filed by Reps. Troy Carter (D-LA) and Guy Reschenthaler (R-PA) last Congress that would have allowed cannabis businesses to be listed on national stock exchanges and access other key financial services, but it did not advance.
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So far, congressional leadership hasn’t identified the more expansive financial protections as a priority for the so-called SAFE Plus package that’s being worked on. The plan is to pass the standalone bill as introduced, then take up amendments on the floor.
Senate Minority Leader Chuck Schumer (D-NY) has emphasized that those amendments should be focused on promoting equity and addressing the harms of the drug war. He and other colleagues have specifically called for the inclusion of language to facilitate marijuana expungements.
Sen. Jacky Rosen (D-NV) also recently said that she wanted the SAFE Banking Act to pass with an amendment allowing cannabis businesses to access federal Small Business Administration (SBA) services.
The idea of giving small marijuana businesses access to those federal services may be more easily viewed as an equity contribution, whereas the ability of the industry to list on major stock exchanges is a tougher sell that could receive pushback from advocates who are generally skeptical of any incremental reforms that principally benefit corporate interests.
“Allowing Wall Street to invest in marijuana while it remains federally criminalized would demonstrate the federal government prioritizing corporate interests over criminal justice reform,” Cat Packer, vice chair of Cannabis Regulators of Color Coalition (CRCC) and director of drug markets and legal regulation at the Drug Policy Alliance (DPA), told Marijuana Moment on Thursday.
“It’s a joke to think that access to stock exchanges will significantly benefit Black businesses in a way that would justify prioritizing this issue before others that actually impact that lives of individuals and communities most impacted by cannabis criminalization and enforcement,” Packer, who testified as an invited witness at last week’s Senate Banking Committee hearing, said.
Meanwhile, Schumer said that he wants a committee vote scheduled in the panel “in the near future” so that it can advance to the floor where members can discuss proposed additions. Banking Committee Chairman Sherrod Brown (D-OH) also said recently that senators planned to “move quickly” on the SAFE Banking Act.
The majority leader has emphasized his commitment to advancing the marijuana banking legislation with criminal justice provisions included, calling the broader effort to repair the harms of the drug war a “moral responsibility” for Congress.
To some advocates, part of that responsibility means advocating against adding language that could contribute to the industry’s corporate consolidation or threaten to undermine broader legalization efforts.
“I can’t follow the logic that giving large national companies the ability to be publicly traded on Wall Street helps small businesses at all—let alone the idea that stock exchange access is the most urgent cannabis issue and should be prioritized by Congress over freeing incarcerated people or protecting cannabis patients,” Shaleen Title, founder and director of the Parabola Center, told Marijuana Moment.
Last month, Schumer said that he was “disappointed” that a so-called SAFE Plus package of cannabis reform legislation didn’t advance last year, saying “we came close,” but “we ran into opposition in the last minute.” He said lawmakers will continue to “work in a bipartisan way” to get the job done.
The majority leader has been holding meetings with Democratic and Republican members in the early months of the new Congress to discuss cannabis reform proposals that might have bipartisan buy-in this year.
Booker said recently that lawmakers are working to “resurrect” the cannabis reform package, acknowledging that failure to advance a banking fix for the industry “literally means that hundreds of businesses go out of business.
Rep. Earl Blumenauer (D-OR), who is sponsoring the House version of the SAFE Banking Act, said at a recent press briefing that thinks it’s important that advocates and lawmakers align on any incremental proposals to end the drug war, warning against an “all-or-nothing” mentality.
The American Bankers Association (ABA) also recently renewed its call for the passage of the legislation. And all 50 of its state chapters did the same, as did insurance and union organizations, in recent letters to congressional leadership.
Read the advocacy coalition’s letter on expanding the marijuana banking bill below:
Politicians And Government Agencies Mark 4/20 As Marijuana Legalization Movement Expands