Updated on August 16, 2020.
Medical content reviewed by Dr. Joseph Rosado, MD, M.B.A, Chief Medical Officer
The House of Representatives is expected to vote this week on the SAFE Banking Act (SBA), which would provide protections to financial institutions that work with state-licensed cannabis businesses.
In an editorial on Politico, Brookings Institution fellows Makada Henry-Nickie, John Hudak, and Aaron Klein explained that though the SBA is not perfect, it will help businesses working in the legal marijuana industry. Currently, banks are nervous about funding cannabis-related businesses due to federal laws, meaning these businesses have to rely on cash-only models and borrow from private investors. Each option comes with its own set of risks.
The authors argued that SAFE’s passage will likely
encourage more community banks and credit unions to serve marijuana businesses,
even if it may not do enough to get bigger banks to invest. “This should lower
costs, increase security, make the cannabis black market even less appealing,
and create new customers for community banks, credit unions and [minority-depository institutions],” they wrote. The
law is meant to reduce barriers for all businesses, but especially minority-owned businesses, which are
currently underrepresented in the industry.
SAFE also requires the Government Accountability Office to
study barriers facing minority- and women-owned cannabis-related businesses. “Rejecting the SAFE Banking Act because it
does not solve the entire problem will only make problems worse in the short
and long terms,” the editorialists concluded.