Colorado’s cannabis industry has been forced to deal primarily in cash for years due to banking restrictions that pot advocates and banking lobbyists say put shops, growers and others at risk of theft. The industry is now cautiously optimistic this year that, with Democrats in power in Washington, its eight years of trying to lift those restrictions on banks and credit unions will pay off.
Because marijuana remains an illicit drug under federal law — and banking the proceeds of illicit drug sales is a federal crime — credit unions and banks are limited in their ability to work with cannabis companies, and take risks when doing so. As a result, the large and growing marijuana industry still remains cash-only, seven years after legalization in Colorado.
“We’ve got people who are still dealing in cash; we’ve got employees still being paid in cash. It’s just totally irresponsible,” said Chuck Smith, CEO of the cannabis company BellRock Brands and board president at Colorado Leads, a coalition of cannabis companies in the state.
Colorado dispensaries sold $175 million worth of products in November alone, pushing the industry’s annual revenue to $2 billion for the first time last year.
“Most cannabis companies in Colorado are banked at this point, but that’s just a basic checking account,” said Truman Bradley, executive director of the Marijuana Industry Group, a trade association. “There’s no merchant processing, really, and that’s very difficult. I’m talking debit cards, credit cards, that kind of thing. The services that do exist leave a bit to be desired.”
The Secure and Fair Enforcement Banking Act, or SAFE Banking Act, has been introduced every Congress since 2013 by Rep. Ed Perlmutter, an Arvada Democrat, to lift restrictions on banking cannabis proceeds. It has passed the House on a bipartisan basis several times but has never passed the Senate. With Democrats in control of the federal government, and even more states permissive of cannabis use after the 2020 election, Perlmutter says the time may be now.
“I thought we were going to get it passed last (Congress), but I’m pretty confident we are going to get it passed this time,” the congressman told The Post in an interview, “whether it’s as a standalone piece of legislation, or it could potentially be part of some bigger package.”
Sen. Jeff Merkley, an Oregon Democrat, will sponsor the Senate version of the bill, as he has in years past, according to his spokeswoman. But the senator to watch is Sherrod Brown, an Ohio Democrat and incoming chairman of the Senate Banking Committee. He replaced Sen. Mike Crapo, an Idaho Republican who declined for years to hold a committee vote on the bill.
“It matters who is setting the agenda,” said Ryan Donovan, a lobbyist for the Credit Union National Association, which supports the bill. “With just that simple change from Crapo to Brown, different issues are going to come before the Senate Banking Committee than in the past and this is one of those issues that could have a greater chance of being considered.”
Brown’s office did not answer directly when asked if the senator will hold a hearing, but said Congress needs to find ways to grant the cannabis industry access to banking. Brown also is working to ensure communities of color most impacted by the war on drugs are able to participate in the cannabis economy and banking system, according to his office.
“Sherrod Brown and I talked about this last session,” Perlmutter said. “He knows that this is a high priority for me; he and I talked about it. I haven’t talked to him about it yet in this session but I certainly will.”
Not everyone who tracks the SAFE Banking Act expects Brown to advocate for it. Luke Niforatos, executive vice president at Smart Approaches to Marijuana, which opposes national legalization and the SAFE Banking Act, believes pro-marijuana advocates are overly confident.
“Every year is ‘the marijuana industry’s year.’ No matter what happens, it’s always the quote-unquote best time to legalize, they say. So, I’m never surprised when, at the start of every session of Congress, they say it’s going to be a big year. Typically it’s rejected,” Niforatos said, adding that SAM “feels very good right now” about the Senate’s willingness to block the bill.
“We feel like the focus of the Banking Committee is really going to be on things that matter to the American people, especially during COVID,” he said. “The idea that the marijuana industry is going to get a blanket banking giveaway, continue to boost their Big Tobacco investments and enrich their investors — I just don’t think that’s going to be a big priority for the Democratic leadership.” Critics of the bill predict it will lead to large Wall Street investments in cannabis.
Aaron Stetter, a lobbyist for Independent Community Bankers of America, which supports the SAFE Banking Act, disagrees. Not only has Brown shown support for marijuana banking, so too has the top Republican on the Banking Committee, Pat Toomey of Pennsylvania, he notes.
“In the past I think some of these efforts might have been wishful thinking, but we do, with the new makeup of the Senate, really feel that it has a good chance of getting across the finish line,” Stetter said.
Perlmutter says he plans to move fast, beginning with a re-introduction of the bill, followed by either consideration in the House Financial Services Committee, which Perlmutter is a member of, or a direct vote on the House floor. Then all eyes will be on Brown and the Senate.
“I think it will receive a much friendlier reception in the Senate Banking Committee and get to the floor of the Senate relatively quickly by congressional standards — that means, in six months,” said Don Childears, CEO of the Colorado Bankers Association, which supports it.
“I do think it is probable that it will be enacted later this year,” he added.
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