After enduring decades of the feds hounding her about her cannabis advocacy, Marin Alliance CBC founder Lynnette Shaw would love it if her pit bull didn’t have to accompany her on the way to make payments with cash from dispensary business.
“I’m walking around with $10,000 in cash. Luckily, Fairfax is safe” she said. Shaw either takes her dog or a person with her to ensure her safe return. There, she relies on alarms, safe and vaults to protect the proceeds of her business, the first cannabis dispensary in California.
The Marin Alliance CBC founder battled the feds for decades to secure cannabis for medicinal patients before Proposition 215 passed.
Now she and other marijuana stakeholders are hopeful Congress might make things a little easier and safer for the largely cash-based cannabis industry.
On Feb. 9, Rep. Ed Perlmutter, D-Lakewood, Colorado, announced the reintroduction, for the sixth time, of the SAFE (Secure and Fair Enforcement) Banking Act intended to ensure access to financial services for cannabis-related legitimate businesses.
Those businesses have had issues with banking because the federal government considers marijuana a Schedule 1 drug labeled illegal.
Even in a state that surged from illegal to legal for all adults, U.S. Sen. Mike Rounds, R-S.D., fell back on an old argument in a Feb. 22 Wall Street Journal report that came out against decriminalizing cannabis on a national scale. According to the report, the South Dakotan senator said: “It sends the wrong message to our youth,” calling cannabis a “gateway drug” to others.
“This is 2022. This disinformation is still pervasive. We’re still being treated as second-class citizens,” Shaw said, further admitting she thought the country “was over” that line of thinking.
Sen. Chuck Schumer, D-New York, said about a year ago he would entertain the idea of reintroducing a legislative package that would “decriminalize” marijuana. And as ammunition, about two in three Americans support making cannabis legal according to a Gallup Poll reported last November. Plus, 18% admitted in the survey to having used the drug.
The U.S. cannabis market is projected to reach $30 billion by 2025.
For now, the real dilemma among advocates and their legislative supporters lies with whether to go with guns blazing for across-the-board legalization or chip away at some of the stumbling blocks like banking.
The longtime sticking point for cannabis businesses is banks fear retribution that may come from doing business with cannabis operators in even legal states like Shaw’s in California. It’s one in 37 states that has legalized cannabis either for medicinal purposes or for adult, recreation use.
The legislative push for SAFE banking has stalled in the U.S. Senate three times.
This time, the latest introduction modeled after the stand-alone bill from 2019 was attached to the America COMPETES Act, an economic stimulus bill that stands for “America Creating Opportunities for Manufacturing, Pre-Eminence in Technology and Economic Strength. The bill that includes wildfire research funding has already passed the House.
“Cannabis-related businesses — large and small — and their employees are in desperate need of access to the banking system and access to capital in order to operate in an efficient, safe manner,” the congressman told the Business Journal.
To many stakeholders on the front line, sooner rather than later would be welcome considering much of the business is unbanked in an industry that’s been considered essentially during the coronavirus crisis over the last two years.
“It’s not clear how the Senate is going to deal with it. However, it is a bipartisan issue,” said Lauren Mendelsohn, a cannabis legal expert with The Law Offices of Omar Figueroa in Sebastopol. “I think one of our concerns is that, for many people, this is enough.”
But in many respects, it’s not enough for Mendelsohn, an active cannabis industry attorney, who wants more far-reaching reform like legislation that decriminalizes it.
But she and others are willing to accept something less like passage of the SAFE Banking Act.
“Many of these businesses have been relying on family and friends and predatory investors (for banking services),” Mendelsohn said. “I think getting (SAFE Banking) passed would be helpful.”
Is it a gamble the Democrats are willing to make in a divided Congress?
Even cannabis dispensaries that do banking with the select financial institutions that offer it would endorse legislation that makes the process simpler and more relaxed.
“When we’ve tried to go for all or nothing it hasn’t worked as well. Incremental (change) has worked well,” said Eli Melrod, CEO of Solful in Sebastopol.
Melrod has an account with the North Bay Credit Union, but said the process is “expensive and cumbersome.” The Santa Rosa credit union, one of the first to support cannabis banking, is forced to review reams of documents to satisfy government guidelines.
National industry insiders are watching closely to see how the issue will play out.
“(SAFE Banking) has a greater propensity for success. The question on comprehensive reform (involving the broader decriminalization) is will they have enough time in the calendar to get it debated and ruled on before the mid-terms,” National Cannabis Industry Association economist Beau Whitney told the Business Journal. “We welcome these attempts to generate positive reform for cannabis regardless of if it’s incremental or comprehensive.”
Susan Wood covers law, cannabis, production, tech, energy, transportation, agriculture as well as banking and finance. For 27 years, Susan has worked for a variety of publications including the North County Times, Tahoe Daily Tribune and Lake Tahoe News. Reach her at 530-545-8662 or susan.wood@busjrnl.com.