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Senator Murray Pushes for Passage of SAFE Banking Act

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“It makes absolutely no sense that legal cannabis businesses are being forced to operate entirely in cash. It’s dangerous—and sometime even fatal—for the employees behind the register, but this situation is also completely preventable.” — Senator Murray

DISTRICT OF COLUMBIA:  U.S. Senator Patty Murray (D-WA), held a press conference in Tukwila on April 20th, to discuss the urgent need to pass the Secure and Fair Enforcement (SAFE) Banking Act in order to update federal cannabis banking regulations and build safer communities in Washington state. During the event, Senator Murray outlined the path forward for the SAFE Banking Act and affirmed her commitment to getting this legislation signed into law. Of note, Senator Murray—is a key negotiator and member of the conference committee which will negotiate the differences between the Senate-passed United States Innovation and Competition Act (USICA) and the House-passed America Creating Opportunities for Manufacturing, Pre-Eminence in Technology, and Economic Strength (COMPETES) Act. The SAFE Banking Act was included in the House-passed COMPETES Act, but not the Senate-passed USICA. Senator Murray announced that she would work to ensure the final bill negotiated by the House and Senate includes the SAFE Banking Act. 

“It makes absolutely no sense that legal cannabis businesses are being forced to operate entirely in cash. It’s dangerous—and sometime even fatal—for the employees behind the register, but this situation is also completely preventable,” said Senator Murray. “I’ve been pushing the federal government—particularly my Republican colleagues—to catch up with Washington state. I am working to update our laws so that these legal small businesses have a safe way to do business. I am urging every one of my colleagues to come together so that we can finally pass the SAFE Banking Act.”

“Over in the other Washington, we have gotten a lot of good bipartisan work done in recent months and weeks: The Bipartisan Infrastructure Law, a major government funding package, a bill to strengthen supply chains and boost manufacturing, badly-needed postal reform to keep USPS solvent, and a whole lot more. I want us to make 2022 the year we send SAFE Banking to President Biden’s desk—and I believe we can do it.”

During the event, Senator Murray was joined by Washington State Treasurer Mike Pellicciotti and Shea Hynes, a local cannabis store owner.

To address the safety concerns resulting from these state legal businesses being shut out of banking services, the SAFE Banking Act would prevent federal banking regulators from:

  • Prohibiting, penalizing or discouraging a bank from providing financial services to a legitimate state-sanctioned and regulated cannabis business, or an associated business (such as an lawyer or landlord providing services to a legal cannabis business);
  • Terminating or limiting a bank’s federal deposit insurance solely because the bank is providing services to a state-sanctioned cannabis business or associated business;
  • Recommending or incentivizing a bank to halt or downgrade providing any kind of banking services to these businesses; or
  • Taking any action on a loan to an owner or operator of a cannabis-related business.

The bill also creates a safe harbor from criminal prosecution and liability and asset forfeiture for banks and their officers and employees who provide financial services to legitimate, state-sanctioned cannabis businesses, while maintaining banks’ right to choose not to offer those services. The bill also provides protections for hemp and hemp-derived CBD related businesses.

The bill would require banks to comply with current Financial Crimes Enforcement Network (FinCEN) guidance, while at the same time allowing FinCEN guidance to be streamlined over time as states and the federal government adapt to legalized medicinal and recreational cannabis policies.

NY State Senator Cooney Introduces Tax Bill to Allow Licensed Cannabis Business Owners to Deduct Business Expenses

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NEW YORK:  Senator Jeremy Cooney (D-Rochester) introduced legislation that will allow future NYS licensed adult-use cannabis businesses to deduct business expenses when filing state taxes. These deductions are standard for existing non-cannabis businesses across the state. 

The recently enacted Marijuana Regulation and Taxation Act (MRTA) legalized recreational adult-use cannabis, and provides a structure to allow New York State (through the Office of Cannabis Management) to license proprietors to legally conduct business in this new industry. However, section 280E of the U.S. Internal Revenue Code prohibits these licensed businesses from making deductions or account for expenses that come with running a business, while filing state taxes. These restrictions result in taxing cannabis enterprises at a higher rate than businesses in other industries in New York. The higher than average taxes will create an unnecessary barrier to entry and discourage or disqualify equity candidates and legacy market participants from joining the new legal market.

Senate Bill S.7518 will amend the state tax law to allow cannabis enterprises licensed by New York State to deduct ordinary and necessary business expenses. The legislation will provide tax equity to licensed businesses in the emerging industry and aims to prevent the new economy from being dominated by large corporations who can afford to pay the higher tax rates. This Bill was modeled after similar legislation in the State of California (AB-37), which passed in October of 2019.

 Senator Jeremy Cooney: 

The MRTA was crafted with a focus on equity at all stages of implementation in the new recreational adult-use cannabis market. We must ensure that this focus includes licensing and taxation of these new businesses is top of mind while we create the foundations of this new sector of the economy. I am proud to sponsor legislation that will create a more equitable taxation system to allow more small business owners and entrepreneurs to participate in the new cannabis market.”

 Allan Gandelman, Executive Founder, NYCGPA:

“The New York Cannabis Growers & Processors Association fully supports Senator Cooney’s efforts to correct this prohibitionist tax law. Amending section 280E of the Internal Revenue Code is a crucial step in achieving New York’s goal of creating a truly equitable, accessible and opportunistic cannabis industry for upstate farmers and locally-owned and family-owned businesses. Without this amendment, New York’s adult-use market could become dominated by large multi-state operators who can afford to pay the higher tax rates and business costs. In order for the state’s adult-use market to reach its full and true potential, New Yorkers need to be positioned to succeed in the legal market and the effective tax rates that cannabis businesses would currently face is a significant hindrance. There is much to be optimistic about for New York’s legal market, but we must continue to be accountable and do the necessary work to establish an industry that is reflective of our state and the goals set out in the MRTA.”

Bob Duffy, President & CEO, Greater Rochester Chamber of Commerce: 

“If New York State hopes to be a leader in this emerging industry, we must acknowledge the reality: outrageous taxes will discourage entry and participation in the market, cause dollars to exit our State for more competitive opportunities, and lead to an exacerbated black market that poses real dangers for our communities. I applaud Senator Cooney for leading the effort to ensure New York encourages entrepreneurship, equity, and economic vitality by sponsoring this measure.”

 Anthony M. Gaddy, Co-Founder & President/CEO, Upstate NY Black Chamber of Commerce (A U.S. Black Chamber):

“Financing and expenses should not create additional barriers for equity applicants, especially seeking to enter the cannabis industry, especially when considering how the failed ‘War on Drugs’ has already impacted the communities from which these new businesses will likely open. This new legislation will help these small businesses, especially Black-owned businesses, launch while also playing a pivotal role in helping equity applicants access this emerging economy.”

 Ken Pokalsky, Vice President, The Business Council of New York State:

“The Business Council supports this legislation as cannabis businesses operating under New York State law should not be barred by the Internal Revenue Code from taking advantage of state-level business expense deductions that are available to all other businesses. These companies should have equal access to state tax credits that promote in-state investments and job creation.”

 Steven Phan, Co-founder of Come Back Daily and Chair, Retail Committee, NYCGPA:

“For retail owners looking to break into the adult-use market, the potential effective tax rates we could deal with as a result of the 280E tax law, on top of the already-inflated rent and cost of doing business that exist in New York, could be a crippling hurdle for establishing a successful legal cannabis business. If the state truly wants to provide legacy market members, social equity applicants and diverse business owners with accessible opportunity in a legal market, Senator Cooney’s lead must be followed in amending this discriminatory law. If the cannabis industry is to be considered fully legitimate and legal in this state, it is absolutely imperative that this step be taken to lift yet another unfair barrier that will disproportionately phase out small business owners and individuals meant to be prioritized by the MRTA.”

 Glenna Colaprete, Owner, Glenna’s CBD & Spa:

“We have seen the inability to write off plant touching activities as a significant part of the barrier to entry in other states. If we truly want social and economic equity then this important legislation is paramount in order to help ensure this, especially for social equity applicants.”

 Kristin Jordan, CEO of Park Jordan, & the Founder and President of the Board of Directors of Asian Cannabis Roundtable:

“We have seen how taxation, as it stands in the cannabis market, ultimately creates inequity, stifles small business and props up the illicit market. This legislation allowing businesses to deduct expenses with the state is key to not only ensuring economic equity but that New York becomes synonymous with thriving entrepreneurship”

 Lauren Rudick, Partner/Co-Founder, Cannabis Law Practice at Hiller PC:

“Senator Cooney’s proposed amendment of this tax law is imperative to pushing forward New Yok’s key goals for its legal cannabis industry, particularly with regard to its goal of awarding 50% of cannabis business licenses to businesses which qualify as social and economic equity applicants.  Priority in licensing, however, means nothing if the business cannot be profitable, and 280E is a direct hindrance in profitability.  Section 280E of the Internal Revenue Code directly contradicts the MRTA’s vision of establishing an equitable and accessible adult-use market in New York. The existing tax laws stigmatize a completely legal industry and ostracize those the MRTA was designed to benefit, all while opening the door for large multi-state operators to swoop in and take on the costs small New York-owned businesses otherwise could not afford.”

Dama Financial Introduces Smart Safe Solution

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CALIFORNIA: Dama Financial, the nation’s largest provider of access to banking and financial services for the cannabis industry, has added Dama Smart Safe to its business toolkit.

Smart safes allow business owners to authenticate and monitor their cash at every step of the handling process. With rapid advancements in counterfeit technology, the detection of fake currency with the naked eye has become nearly impossible. Smart safes are equipped with bill validators that significantly decrease the risk of fraud. At the same time, the cash is reconciled automatically, eliminating the need to spend hours doing it manually. 

With Dama Smart Safe, the safe can promptly record any deposit as a credit to the customer’s Premier Business account, providing access to the money the next business day. Dama Smart Safes can be configured to meet the needs of any size operation.

“Cannabis businesses deserve solutions that solve real problems.” said Anh Hatzopoulos, Dama co-founder and chief executive officer. “Between human error and the risk of theft, handling cash has become one of the more difficult processes for any business to manage, so we’re proud to roll out Dama Smart Safe to help cannabis operators improve both efficiency and public safety.”

Comments from Dama Smart Safe customers:

“We love the quick access to funds. It’s like having a bank teller inside our store twenty-four hours a day to accept our deposits,” said Kaz Ajir, co-founder of Grupo Flor, which owns the dispensary East of Eden.

“Dama’s Smart Safe Solution saves our operation hours every single day,” said Monica Gray, chief operating officer of Nice Guys Delivery.

Dama’s other offerings include access to Premier Banking (FDIC-insured accounts), credit, cash management, and merchant services.

SAFE Banking Act Reintroduced as Momentum for Cannabis Reform Continues to Grow

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Landmark, bipartisan legislation passed U.S. House multiple times in last two years

DISTRICT OF COLUMBIA: U.S. Rep. Ed Perlmutter (CO-07) reintroduced his landmark legislation to reform federal cannabis laws and reduce the public safety risk in communities across the country. The bipartisan Secure and Fair Enforcement (SAFE) Banking Act of 2021 – authored by Perlmutter and sponsored by Reps. Nydia M. Velázquez (D-NY-07), Steve Stivers (R-OH-15), and Warren Davidson (R-OH-08) and cosponsored by more than 100 members – would allow marijuana-related businesses in states with some form of legalized marijuana and strict regulatory structures to access the banking system. The SAFE Banking Act is seen as the first of many cannabis reforms Congress needs to address.

Forty-seven states, four U.S. territories, and the District of Columbia – representing 97.7 % of the U.S. population – have legalized some form of recreational or medical marijuana, including CBD. Yet current law restricts legitimate licensed marijuana businesses from accessing banking services and products, such as depository and checking accounts, resulting in businesses operating in all cash. This is a serious public safety risk for our communities, inviting theft, robberies, burglaries, or worse, as Colorado saw with the murder of Travis Mason in June 2016 and Michael Arthur in Portland, Oregon in December 2020.

“The genie is out of the bottle and has been for many years. Thousands of employees and businesses across this country have been forced to deal in piles of cash for far too long, and it is the responsibility of Congress to step up and take action to align federal and state laws for the safety of our constituents and communities. The public safety need is urgent, and a public health and economic need has also emerged with the pandemic further exacerbating the cash-only problem for the industry,” said Congressman Perlmutter. “In many states, the industry was deemed essential yet forced to continue to operate in all cash, adding a significant public health risk for businesses and their workers. As we begin our economic recovery, allowing cannabis businesses to access the banking system would also mean an influx of cash into the economy and the opportunity to create good-paying jobs. Thank you to Reps. Velázquez, Stivers and Davidson for their continued support and input on the bill, and I look forward to working with Senators Merkley and Daines to get the SAFE Banking Act passed in the Senate and signed into law.”

“The cannabis industry has been operating with great success, with many of these businesses deemed essential as the coronavirus pandemic took hold,” said Congresswoman Velázquez. “However, without the ability to safely utilize the banking system, cannabis-related businesses are left behind and stuck resorting to tactics that can threaten public safety and economic success. That’s why I am proud to join to Reps. Perlmutter, Stivers, and Davidson in introducing the SAFE Banking Act, to allow these business in states that have legalized cannabis to access to the banking system, just as any other business currently enjoys. Doing so will help create jobs in communities throughout America, while stimulating the economy as we recover from the fallout of the pandemic.”

“We have a responsibility to legislate for the reality we live in, and the reality is that legal businesses in thirty-three states, including Ohio, are being denied access to the banking system and forced to assume huge risks as a result of operating solely in cash,” Congressman Stivers said. “The SAFE Banking Act is about keeping people safe, something that 321 of my colleagues recognized last year. I look forward to seeing this bill make it all the way to the President’s desk this Congress.”

“I’m excited we’re reintroducing SAFE Banking, again with bipartisan support. This bill is an important hedge against financial cancellation, and it will protect businesses and industries that find themselves out of favor with the latest trends of the day,” said Congressman Davidson. “Today we’re talking about banking cannabis, hemp, and firearms, but tomorrow there could be another industry that has its access to the banking system threatened by statute or by public opinion. With SAFE Banking, as long as its legal in the jurisdiction, no bank should be compelled to cancel their customers by a mob saying, ‘You aren’t going to bank THOSE people are you?’ Sadly, that has already happened too often in American history and it must end.”

“No one working in a store or behind a register should have to worry about experiencing a traumatic robbery at any moment. That means we can’t keep forcing legal cannabis businesses to operate entirely in cash—a nonsensical rule that is an open invitation to robbery and money laundering,” said Senator Merkley (D-OR). “Let’s make 2021 the year that we get this bill signed into law so we can ensure that all legal cannabis businesses have access to the financial services they need to help keep their employees safe.”

“The ‘SAFE Banking Act’ will help Montana small businesses, create jobs, boost local economies, and improve public safety,” stated Senator Daines (R-MT). “I’m glad to be working on this bipartisan legislation to provide certainty for small businesses in Montana. Montana business owners should have the ability to freely use banks, credit unions and other financial institutions without the fear of punishment.”

In the 116th Congress, 206 members cosponsored the SAFE Banking Act and it passed the U.S. House in a broad bipartisan vote of 321 to 103, with 91 Republicans and one Independent voting in support. The bill also passed as part of the Heroes Act, an earlier COVID relief package which was approved by the House on two separate occasions. In February 2019, the SAFE Banking Act prompted the first-ever congressional hearing on the issue of cannabis banking.

The SAFE Banking Act provides protections from money laundering laws for any proceeds derived from these state-legal marijuana businesses. This will get cash off the streets and into the financial system which is built to root out fraud and illicit activity. This bill also includes protections for hemp and hemp-derived CBD related businesses, which still struggle in accessing financial services despite the legalization of hemp in the 2018 Farm Bill. The current version of the bill has been updated slightly to include minor technical changes to the safe harbor, strengthened hemp provisions, and other technical updates.

The U.S. cannabis industry continues to grow at a rapid rate, with the current value estimated at $17.7 billion, a substantial amount of which remains unbanked. As of January 2021, the legal cannabis industry supports 321,000 jobs across the country. Over the 2018-2028 period, job growth in this market is projected to climb 250%, the fastest rate for any sector in the U.S. Bringing in this cash will make the industry safer and give banks and credit unions more capital to lend during the economic recovery as a result of the COVID-19 pandemic.

Cresco Labs Comments On The Passage Of The Safe Banking Act In The U.S. House Of Representatives

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ILLINOIS:  Cresco Labs, one of the largest vertically integrated multi-state cannabis operators in the United States, today provided comments on the passage of the Secure and Fair Enforcement Banking Act of 2019 (“SAFE Banking Act.”)

“The passage of the SAFE Banking Act by the U.S. House of Representatives represents a significant first step in the effort to provide stability and security to the multibillion-dollar cannabis industry,” said Cresco Labs CEO and Co-founder Charlie Bachtell.

“By allowing cannabis companies to access commercial banking services and end their reliance on cash, the SAFE Banking Act would facilitate a safer operating environment for all stakeholders. We continue to see extremely encouraging progress made from a legislative standpoint at both the federal and state levels that is contributing to the normalization of the cannabis industry. The passage of the SAFE Banking Act will also provide access to banking and capital to fuel diversity and make the cannabis industry more inclusive for everyone. The bipartisan support shown in passing the SAFE Banking Act through the House demonstrates the clear merits of this legislation, and we look forward to similar support being shown as the bill moves to the Senate.”

Report: More Banks Providing Services To Cannabis-Specific Businesses

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DISTRICT OF COLUMBIA: A growing number of banks and credit unions are providing financial services to marijuana-related businesses, according to data released by FinCEN (the US Treasury Department’s Financial Crimes Enforcement Network) and first publicized by the news portal MarijuanaMoment.net.

The report acknowledged that the number of financial institutions actively banking with marijuana-related businesses rose from 401 in October 2017 to 486 in September 2018.

Although the federal classification of cannabis as a schedule I prohibited substance discourages banks from cooperating with state-licensed cannabis businesses, a 2014 US Treasury Department memo provided guidance to financial institutions wishing to transact with the marijuana industry. However, that memo was rescinded by the Justice Department earlier this year.

For more information, contact Justin Strekal, NORML Political Director, at (202) 483-5500.

 

Bitcoin’s Rise Solidifies The Intersection Of Cannabis And Cryptocurrency

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NEW YORK: As bitcoin’s price continues its meteoric rise, which has seen the cryptocurrency skyrocket in value from just under $1,000 at the start of 2017 to above $10,000 in November, a number of companies have taken steps to benefit from the growth of the burgeoning cryptocurrency industry.

One area of the industry that appears to offer significant growth potential is the application of bitcoin and other cryptocurrencies to sectors of the economy, such as the cannabis industry, that are blocked from accessing banking services. 

The intersection of the growth of the cannabis and cryptocurrency markets has created a promising environment for firms looking to capitalize on the robust growth currently occurring in these industries. Legalization of the use of cannabis for medical and recreational use by governments around the world has led to powerful demand for the product, which shows no signs of letting up anytime soon. This is reflected in a report by Grand View Research, which projects that the cannabis market will reach $55.8 billion by 2025.

Similarly, the ability of the blockchain to provide a decentralized, encrypted ledger to store records in an efficient, verifiable manner without requiring assistance from intermediaries has facilitated growth in the cryptocurrency market. The blockchain serves as the backbone of cryptocurrencies such as bitcoin, and its radical transparency has enabled the use of bitcoin to process high risk transactions, such as those in the cannabis industry. In a sign of the growing mainstream acceptance of the cryptocurrency, the U.S. CFTC recently gave approval to the CME CBOE exchanges to start trading bitcoin future contracts on Dec. 18 of this year.

 

CannaScore Offers Free Compliance Auditing Tool After Bank Revoked Its Credit Card Processing Privileges

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COLORADO: CS Compliance Systems, developers of CannaScore – the world’s first real-time regulatory compliance auditing application for the cannabis industry, announced that its credit card processing privileges were revoked after their bank realized that CannaScore was providing services to the marijuana industry. In response, the company announced that it is now offering its products free of charge, on a limited basis.

“It is absurd that we had our credit card processing revoked,” said Thomas Smith, Managing Partner of CS Compliance Systems. “CannaScore is a software application that helps cannabis businesses stay compliant with the complex web of regulations that govern this sector. Ironically, some of our biggest customers are banks, because they like to use our auditing tools to give them assurance that their cannabis-based business customers are following all regulations.”

After the company had its credit card processing revoked, management decided to offer the award winning product suite at no cost, for a limited time. Cannabis growers, producer processors, dispensaries, retailers, extract and edible manufacturers, along with those that do business in the marijuana sector, including insurance companies, landlords, and yes, banks, can now visit the CannaScore website and use the system for no charge.

“Our team comes from within the compliance and cannabis industries,” Smith said. “We are not Wall Street outsiders. We are a team of dedicated professionals that knows this industry inside-out, and has developed an innovative program designed to protect cannabis-businesses,” he added. “Now we share some of the same challenges with banking that our customers face on a daily basis.”

To take advantage of the free use of the CannaScore system, log on to www.cannascore.net and follow the link to “Free Trial.”

Bridging The Gap Between Dispensaries And Banks

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OREGON: In the first week of recreational pot sales, Oregon dispensaries raked in $11 million.

But the multi-million dollar question remains: Where should people in the industry be putting their money?

Because marijuana is illegal federally, most banks won’t take the money.

“We’ve been repeatedly turned down because our company is cannabis based,” said Dan of.

Last year the Justice Department gave the go-ahead to banks to do business with the industry. But many feel there’s still too much risk, leaving business owners to keep the cash in their shops or homes, and opening them up to criminals.