Recent weeks have seen movement on two important pieces of federal cannabis reform. First, the House of Representatives passed the National Defense Authorization Act.
While defense spending isn’t normally meaningful for cannabis, Rep. Ed Perlmutter (D-CO) attached an amendment to the must-pass bill. It included the language of the SAFE Banking Act, providing the state-legal cannabis industry with access to financial services.
The NDAA amendment still needs to get through the Senate, but the House seems on board with reform. This is the fifth time they’ve passed cannabis banking reform, including the SAFE Banking Act of 2021 that passed with overwhelming support in April. Six months later, it appears to be all but dead in the Senate banking committee.
In other House news, the Marijuana Opportunity Reinvestment and Expungement (MORE) Act received a judiciary committee hearing. The following day, September 30, the committee chaired by Rep. Jerrold Nadler (D-NY) voted 26 to 15 in favor of moving the legislation forward.
“This long overdue and historic legislation would reverse failed federal policies criminalizing marijuana.” Nadler said, in a statement, following the vote. “It would also take steps to address the heavy toll this policy has taken across the country, particularly among communities of color.”
The bill now awaits a vote of the entire House. While the signs are encouraging, it may face partisan snags in the Senate. Only one House Republican joined 75 Democrats in cosponsoring the H.R. 3617.
While we wait for further developments in federal cannabis reform, Profiles in Legalization continues with its series, “Why do we need cannabis banking?” In the fourth installment, we hear from three cannabis company chief executives about why reform is so necessary.
Profiles in Legalization asked cannabis community leaders for their thoughts on the need for cannabis banking. This article is the fourth in a continuing series based on their responses.
Click here to see all SAFE Banking Act of 2021 coverage.
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Blake Schroeder, Medical Marijuana, Inc.
“If Congress could help make it legal and safe for banks to offer their services to cannabis businesses, it could help bolster the legitimacy and safety of the entire legal cannabis industry.”
Blake Schroeder leads Medical Marijuana, Inc., an international cannabis company that began selling CBD products in the United States in 2012. He sees his own company’s problems with banking as a harbinger for the hemp and cannabis industries. He points to the costs to businesses and entrepreneurs.
“While we have generally resolved the majority of our banking and merchant processing issues,” Schroeder told Profiles in an email, “we have done so at tremendous ongoing legal expenses and efforts.”
Schroeder thinks that financial services would go a long way toward the legitimacy of all cannabis-related businesses. He’s encouraged by the move to attach cannabis banking reform to the defense bill.
“Adding it to the NDAA is a strategic decision,” Schroeder told us. “and we hope that [the amendment] will also receive Senate approval.”
As cannabis legalization continues at the state level, new markets open up for entrepreneurs and workers. Entire industries grow to service consumer and business needs, alike. Too many of those businesses are still cash-only.
Until cannabis banking reform is enacted at the federal level, It’s not only companies dealing with cannabis products that suffer.
Brendon Robinson, Minority Cannabis Academy
“Most banks don’t want to deal with it. The banks who do want to deal with you will do it at a high cost.”
Minority Cannabis Academy chief executive and co-founder, Brendon Robinson, worked in commercial banking for about a decade before becoming a serial cannabis entrepreneur.
Robinson told Profiles, during a recent phone interview, that most banks don’t want to work with cannabis businesses. The ones that do often pass the cost of compliance along to the business. This can be an especially difficult for a new small business.
“You’re trying to get a loan, the interest rates are gonna be enormous.” said Robinson. “The monthly maintenance fee on a checking account is going to be enormous. Where the average person is growing up and in these dilapidated areas just can’t afford it.”
Robinson and business partner, Stanley Okoro, focus on connecting their community with the benefits of cannabis for both health and wealth. They founded 420NJEvents in 2017.
The New Jersey company holds events like an expungement clinic last month that helped 78 clear their criminal records. A cannabis industry job fair and help for social equity applicants to connect with employers is planned for later this month.
Robinson and Okoro also partnered with celebrity activist, Weldon Angelos, bringing a line of cannabis products with a social justice twist to the state.
Asked about how banking reform affects social equity goals, Robinson told us that education is just as important. The financial world gets even more complicated when involving cannabis.
“Until we’re giving education to the black and brown folks, especially the ones in these disenfranchised communities around not only banking,” Robinson said, “but banking in the cannabis industry, we’re gonna see significant issues.”
Mahjabeen Sulemanjee-Bortocek, High Haven Cannabis
“It’s especially needed for those who seek self-employment through operating small scale, specialized cannabis businesses.”
High Haven Cannabis top executive, Mahjabeen Sulemanjee-Bortocek, had plenty to say about how cannabis banking affects social equity. The cannabis company plans to break ground next month on their first dispensary location in Bay City, Michigan.
“Social Equity has become the coded language,” Sulemanjee-Bortocek told us, “for ‘people who are from disadvantaged backgrounds,’ or whose backgrounds lack the benefits of systemic privilege.”
Sulemanjee-Bortocek said, through email, that she runs into the same problem of unreasonable fees from predatory lenders.
“As a result, Social Equity applicants in Michigan are faced with price gouging every time they turn around,” said Sulemanjee-Bortocek. “The bottom line is that banking in cannabis is complicated.”
And it’s not only education that’s needed.
The High Haven CEO said that “complicated” really translates to expensive. The upshot is that entrepreneurs need large investors just to start up. This keeps many small businesses from getting off the ground.
“Banking reform is needed,” Sulemanhee-Bortocek told us, “to standardize processes and provide Social Equity entrepreneurs equitable access to banking products. And it’s especially needed for those who seek self-employment through operating small scale, specialized cannabis businesses.
“For High Haven, banking reform is critical to reducing our operating costs so we can invest in company culture, leadership development, process automation, and restorative justice efforts in the communities we serve. “
Image by Rex Medlen from Pixabay
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