A credit card is being used to pay for Cannabis. Buying legal recreational marijuana, The SAFE Banking Act would allow banks to do business with companies that are legal in states that have legalized cannabis.
The bill failed to pass in the Senate, leaving communities at risk of crime and cannabis businesses without cash. The impact of this legislation on the cannabis industry is unknown.
Congress did not approve the SAFE Banking Act in December, which left communities at risk of crime and forced cannabis businesses to use cash. Companies won't have access to financial services from banks.
The SAFE Banking Act would allow most banks to do business with cannabis companies that are legal in some states. Marijuana's federal illegality prevents traditional financial institutions from facilitating cannabis transactions.
Financial institutions that provide services to cannabis companies would not be punished by federal regulators.
Funds obtained from state-regulated and compliant cannabis businesses would not be considered as proceeds from illegal activity and provide protection against federal liability for banks, insurers, and other financial institutions that work with such companies.
The SAFE Banking Act was close to being voted on in the Senate but didn't pass at the last minute. The Senate did not vote on the bill, which had already passed seven times in the House. The SAFE Banking Act could not be given as a stand-alone bill or as a rider on one of the appropriations bills because of the limited time available during the last days of Congress. The statement did not make it to the Senate floor due to a lack of time. The practical impact of the SAFE Banking Act would have formalized the existing connections between financial institutions and marijuana businesses, according to some industry experts. Marijuana-related companies can be deposited in financial institutions.
The approval of the SAFE Banking Act would not have a significant effect on the industry, according to Peter Su, the senior vice president at Green Check. I work with banks and credit unions that want to bank cannabis, and the SAFE Banking Act would be a massive boon to my business.
I don't think it would have a big impact on the industry. According to the Financial Crimes Enforcement Network, 755 financial institutions are currently banking cannabis.
There are already hundreds of financial institutions banking cannabis. Despite the lack of specific legislation, the existence of hundreds of financial institutions currently banking cannabis businesses suggests that a de-facto situation similar to what the SAFE Banking Act would establish has already been set. To clarify the expectations for financial institutions under the Bank Secrecy Act when providing services to marijuana-related businesses, the Financial Crimes Enforcement Network has issued guidance. The guidance helps financial institutions comply with their BSA obligations and align the information they provide with federal and state law enforcement priorities. The advice helps banks know how to handle transactions with businesses that are related to marijuana, and it helps the government track suspicious activity.
The SAFE Banking Act could increase the number of financial institutions that provide financial services to cannabis-related businesses and give businesses more options for banking. It could lead to better pricing and terms for marijuana businesses. Cash is not the best option for cannabis transactions. Access to financial services has challenged dispensaries as marijuana becomes more legal.
Because marijuana is still illegal at the federal level, traditional banks have hesitated to offer banking services to a cannabis dispensaries.
Innovative solutions have been found to address this issue. Cashless ATMs and PIN debit options are becoming increasingly popular among dispensary customers who want to purchase marijuana products without the need for cash. These solutions not only increase cannabis revenue and streamline the checkout process, but they also give dispensaries a way to reduce the risks associated with handling large amounts of cash.</p><p>Su says that consumers prefer the convenience of using credit cards over these options.</p><p>Consumers don't like using cashless options because it's more work than they're used to. Consumers are opting for cash instead of cashless options even when they are in the store.</p><p>Dispensary handling cash can be dangerous as it increases crime risk. In countries where cannabis has been legalized nationwide, such as Canada, where dispensaries and marijuana-related businesses often have difficulty accessing the banking system, the SAFE Banking Act is not a complete solution.
Despite the legalization of marijuana in Canada, banks are still hesitant to open bank accounts for businesses related to the drug. Even though something may be legal, some banks and credit unions may still be reluctant to work with these cannabis businesses because of the complex regulations and laws.
What is next for the SAFE banking act?
The failure of the SAFE Banking Act resulted in a decline in marijuana stock prices.
The cannabis industry faces challenges from the current economic environment and regulatory uncertainty, a stark contrast to the high demand for cannabis stocks in the upcoming year.
Changing the capital markets would open up a new world of cannabis possibilities.
It's similar to a Mergers and acquisitions standpoint. The results have not always been favorable regarding listing on the Canadian Stock Exchange.
The downturn of the cannabis industry is not the sole reason for this. Su said listing on the New York Stock Exchange would make a big difference. The future of the SAFE Banking Act is uncertain. The Act had the potential to decrease crime, promote diversity and boost the economy, but it failed to pass this year. It is believed that it will be brought forward again.
The SAFE Banking Act didn't pass. There was a lot of cheerful chatter about it. I think it will be brought back. It would be great for the industry if it gives. Politics can be similar to a game of chess, where the cannabis Act needs to be captured. It makes sense for tax-paying businesses to have the same banking rights as everyone else. Su thinks it will be brought forward again this year.
Keywords: SAFE Banking Act, Banking,Act, SAFE