The SAFE Banking Act has just been reintroduced into the Defense Act as an amendment, but could it be passed on its own?

The majority of cannabis advocates and advocates in the United States were disappointed by the Senate’s decision last month to remove SAFE ACT from the Defense Bill. Now that the shock of the deportation has worn off, these groups are banding together to look for the next way forward. Legislators have begun work on introducing a single bill that will encompass the benefits SAFE ACT could bring to the country.

As the religious people say, the move probably happened for a reason, because new and better opportunities have arisen in the weeks that have followed that disappointment.

One step back

From day one, when the SAFE Act bill entered the legislature a few years ago, passage of the bill has always been a rollercoaster ride. The result over the years has been a return to basics. Proponents and lawmakers have been hoping that last year could be the year of federal cannabis reform, only for the Senate to pull the measure at the last minute.

Many believe this bill will bridge the gap between tiered operators and some small cannabis entrepreneurs who have been unable to raise private equity. They also think small cannabis companies should make more profits if the playground were leveled with the SAFE ACT bill. However, the majority of Senate lawmakers have refused to see the light or accept the benefits vividly written in the bill, claiming the language shows a different result.

The reason the Senate gave for removing the measure from the Defense Act is that the measure does little to curb crime and tends in favor of MSOs. For a bill that the House of Representatives had previously passed, the Senate’s reasoning seems a bit odd. Anyway, it’s the new year. With a new year comes new opportunities and new sessions of Congress. Proponents band together and work together to make a fresh start in Congress. The goal for 2022 is to create a fairer bill that not only caters to MSOs, but also improves the safety of communities across the country.

Access to commercial credit

Nationwide cannabis reforms have been a long time coming. Its absence has weighed on legal cannabis markets and prevented small businesses from benefiting from an excellent financial assistance program. Unlike the cannabis industry, non-cannabis sectors have access to commercial credit and equity funds. The SAFE Act would address these issues. The cannabis business will be serviced by traditional financial institutions.

From the looks of it, many black-owned marijuana businesses in disadvantaged communities face the brunt of not having access to funds. The Safe Act provides these emerging companies with access to private equity funding. However, several service providers will be among the first to be considered.

The future of cannabis banking

Adoption of the SAFE Act does not imply that cannabis has been decriminalized. The drug would still be banned nationwide. The reform can speed up the process of decriminalization in other non-law states. Once cannabis banking reform is passed, banks will be able to partner with legal cannabis companies without fear of federal backlash.

Currently, the illegal status of cannabis puts financial institutions in conflict with the Controlled Substances Act. Critics argue that the SAFE Act bill may not take the same view as banks on helping disadvantaged companies compete with large corporations. Banks are first and foremost capitalists, and it is not far-fetched to assume that they would side with the better. This means that access to financing under the SAFE Act does not mean that the banks would necessarily provide the financing. The bank and its attorneys will take special care to only support established and creditworthy cannabis companies.

What to expect this year?

The SAFE Act will definitely get another boost in the coming months. Additional cannabis reform bills are expected to be submitted to Congress and the House of Representatives later this year. Recently, a commercial credit broker drafted a proposed guideline for financial institutions to follow during the decision-making process under the SAFE Banking Act. The companies are selected based on a catalog of criteria. It does not appear to be suitable for mixed ownership companies as they would not be able to meet most of the measures listed.

According to a 2021 Federal Reserve report, Black and Latino-owned businesses are the least favored for commercial loans, as opposed to white-owned businesses. Many financial institutions consider Black and Latino businesses to be high risk. Loan approvals are only given to those who have been screened for low risk. This suggests that SAFE Banking Act expectations may be falling short, not through a lack of service, but through insufficient funding. Without adequate funding, social justice operators will continue to be unable to compete with MSOs.

About the SAFE Banking Act

The Secure and Fair Enforcement (SAFE) Act is a bill that would bridge the gap between cannabis companies and financial services. Cannabis companies are gaining access to regular and digital banking services from traditional financial institutions across the country. It would also open up the cannabis industry to outside investors by bringing in national and regional banks. The SAFE Act will make an immense contribution to the growth of the sector by helping generate billions and millions of dollars.

final remark

Despite being defeated in this round, the cannabis industry remains steadfast in its fight for federal reform. The removal of the SAFE Act from the Defense Act is not the end of the road, but another indication of the steep rise to federal cannabis law.

Cannabis advocates and entrepreneurs need to take this opportunity to restart the conversation and seek a balanced bill that ensures the capital is available to those who need it most. Now that there is still a political benefit, proponents can point to other solutions that could be added to the bill to give the cannabis industry access to state and local funds.

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