By Jean Lotus
Hemp industry advocates celebrated Monday as the US House passed banking safeguards that could protect financial institutions from being prosecuted under federal laws for working with cannabis businesses.
The Secure and Fair Enforcement (SAFE) Banking act, sponsored by Rep. Ed Permutter, D-CO, passed 321-101 with a two-thirds majority and support from more than 100 House Republicans. It now proceeds to the U.S. Senate.
The legislation previously passed the House in 2019, but died in the then Republican-controlled Senate during the Donald Trump administration.
Perlmutter called it “bipartisan, commonsense legislation to allow marijuana-related businesses in states with some form of legalized marijuana and regulatory structures to access the banking system,” in a tweet.
Banking has been a problem for cannabis businesses, which sell a product legal in states while illegal federally. Companies often have to resort to cash-only transactions, exposing them to burglary and other inconveniences.
The banking issues have spilled over into federally legal industrial hemp.
Industrial hemp has been lumped in with marijuana in the banking world, even though hemp and CBD are non-intoxicating and were delisted from the federal Schedule 1 narcotics roster after the passage of the 2018 Farm Bill.
That means some larger banks have shied away from working with hemp companies, and some hemp entrepreneurs have had their accounts frozen by the big banks without notice. Other companies find they have to pay extra insurance because they work with hemp.
“Hemp is a multi-billion dollar industry that is currently being stifled by a patchwork of onerous and arbitrary banking rules and fees, most of which are in place because of a lack of federal regulation,” said Jonathan Miller, attorney for the U.S. Hemp Roundtable in a statement. “The SAFE Banking Act will go a long way toward reducing these obstacles while providing stability and clarity to the financial industry,” he added.
In 2019, the Lexington, KY-based non-profit U.S. Hemp Authority was “dumped” by their credit card processing company without warning, the organization’s executive director, Marielle Weintraub told Let’s Talk Hemp.
Although the organization does not grow hemp or sell any hemp items, “We were told that USHA was too high of a risk, when in fact it is our mission to minimize risk for both hemp companies and consumers,” Weintraub said.
“The SAFE Banking Act is imperative for our continued development as an industry as it will help to protect financial and credit card transactions for the entire hemp and cannabis value chains,” she added.
Eric Steenstra of Vote Hemp said the act was an “important first step to removing irrational restrictions on banking for hemp and cannabis businesses,” he said in a statement to Let’s Talk Hemp.
“Blocking access to financial services creates an unreasonable burden for farmers and businesses and limits economic growth. We are hopeful that the Senate will pass this legislation soon,” Steenstra said.
Banking has been getting easier for hemp-related businesses over the years as alternate payment processors for hemp and CBD have sprung up, Boulder-based Patrick Rea, managing director of Poseidon Garden venture capital fund, told Let’s Talk Hemp.
With banking rules ironed out, the situation will only get better, he said.
If the SAFE Banking act passes in the U.S. Senate and is signed into law by President Joe Biden, that will lead to more capital freeing up for hemp entrepreneurs, Rea said.
“Prices should go down for these banking services,” Rea said. “Decreasing the cost for capital will present new opportunities for entrepreneurs as they go to get loans and access more capital to grow.”
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Jean Lotus is a Colorado-based award-winning journalist and hempreneur who writes about the American West and sustainable food and technologies.