The US House of Representatives passed a much-awaited SAFE bill aimed at easing financial restrictions placed on the cannabis industry.
The SAFE (Secure and Fair Enforcement) banking act allows financial institutions to provide services to cannabis operators in states where it is legal therefore removing a massive barrier to the development of the industry.
If passed by the Senate and approved by POTUS Biden, the SAFE bill would allow the cannabis industry to easily access traditional banking services. Under the current bill, the SAFE ACT would protect banks and credit unions from federal prosecution when operating with cannabis companies compliant with their state’s laws.
The bill passed the House with broad bipartisan support and was approved by a vote of 321-101.
It’s noteworthy that until now, banks have been unwilling to do business with companies that sell marijuana or related products fearing it could breach federal laws. As a result, the sector has largely been cash-driven or relied on upcoming FinTechs in the sector.
The American Bankers Association pushed the government for the SAFE Banking Act bill and wrote a letter to lawmakers. It said, “Banks find themselves in a difficult situation due to the conflict between state and federal law, with local communities encouraging them to bank cannabis businesses and federal law prohibiting it. Congress must act to resolve this conflict.”
Alongside this letter, 20 state governors, one US territory, bankers from each state as well as a coalition of state treasurers sent their approval to show support towards the legislation to House leadership.
This is hardly the first time the SAFE ACT passed the House of Representatives. A previous version of the bill passed the House in 2019 but was rejected by the Senate committee.
In reaction to the bill passing, the National Cannabis Industry Association CEO Aaron Smith said, “We are incredibly grateful to the bill sponsors who have been working with us for the last eight years to make this sensible legislation become law and have shepherded it through the House time and again.
“The SAFE Banking Act is vital for improving public safety and transparency and will improve the lives of the more than 300,000 people who work in the state-legal cannabis industry. It will also help level the playing field for small businesses and communities with limited access to capital. It is time for the Senate to start considering the companion legislation without delay.”
Unsurprisingly, cannabis stocks rallied across the board with the Cannabis ETF THCX, -5.20% up 4.6% according to MarketWatch.
Indeed, the sector is set to scale up as cannabis-focussed payment startups such as AeroPay and Leaf Trade scored funding from VCs last month.
In the US alone, medicinal cannabis is legal in 36 states, four territories and the District of Columbia, according to the National Conference of State Legislatures.
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