Although the use of cannabis for medical and/or recreational use is legal in several states, it remains illegal under federal law. Accordingly, businesses and employers that are operating in those states, may still be denied access to the banking system because banks are federally regulated and subject to federal prosecution. As a direct response to this issue, U.S. Senator Bob Menendez introduced the Secure and Fair Enforcement Banking Act last month, also known as the SAFE Banking Act, which would “enable legal cannabis businesses to access banking services.”
Without Cannabis Banking Bill, Businesses Face Difficulties
Currently, cannabis business owners operating legally in New Jersey and in other states face difficulties accessing banking services. As Menendez explained in putting the proposed legislation forward, medical marijuana businesses in New Jersey cannot use bank services “to pay employees, take credit cards, write checks, or pay taxes.” And New Jersey is just one of 33 states, in addition to the District of Columbia, in which medical marijuana is currently legal. Furthermore, as of April 2019, 10 states in the U.S. had legalized both medical and recreational marijuana.
Given that these businesses do not have access to banking services, it also means that they are entirely cash-operated businesses. Menendez underscored that having significant amounts of cash on the business premises functions as “an open invitation for robbery and crime,” making it potentially more likely that cannabis businesses will be targeted. He described the SAFE Banking Act as “common sense legislation that simply allows banks and credit unions to service these legitimate, legal enterprises without risk of federal prosecution.”
The Act is designed to protect those banks and credit unions that would provide banking services to cannabis businesses in states where cannabis is legal. In other words, if the proposed legislation passes, banks and credit unions could no longer be penalized for providing services to cannabis businesses. The Act would not, however, require banks or credit unions to provide banking services to cannabis businesses.
Plans for Additional Protections for Cannabis Businesses
The SAFE Banking Act is only the first step in Menendez’s plans to increase access to resources for cannabis business owners. In addition to the SAFE Banking Act, Menendez has indicated that he also plans to introduce legislation that would “allow insurance companies to provide services to legal cannabis businesses.” Currently, legal cannabis businesses across the country cannot obtain property insurance, fire insurance, flood insurance, or liability insurance.
If you have questions about Cannabis Law, contact Jennifer Passannante at email@example.com or call 732-545-4717 today.