SAFE Banking Act Needs More Equity Protections, According to Former Marijuana Regulators

With the current Congress coming to a conclusion, efforts to find marijuana reform compromises are escalating. Lawmakers, supporters, and stakeholders are more eager than ever to put aside their policy disagreements in order to pass legislation before January 2023.

The Bipartisan Secure and Fair Enforcement Banking (SAFE) Banking Act is typically seen as representing the former side of the legislative spectrum as an achievable but not particularly transformative change. The internal debate among reform supporters has long revolved around the idea of incremental versus comprehensive change.

While the request for equity protections is not new, a recent example of how the reform debate has developed is a new paper from the Cannabis Regulators of Color Coalition (CRCC), which lays out a number of suggested improvements to the banking law in the hopes of bridging legislative gaps.

A Different Kind Of Equity

CRCC has proposed a valid list of amendments in their paper, but for the sake of brevity, we’ll focus on two. The non-discrimination laws already enacted at financial institutions and for the inclusion of Minority Depository Institutions (MDIs) and Community Development Financial Institutions (CDFIs) in the general language of protection.

While non-discrimination laws are already in place, the CRCC states they could be improved upon by being “strengthened and reinforced by limiting banking protections [under SAFE] to institutions that provide access to financial services for minority-owned businesses under terms commensurate with the terms they offer everyone else.” This would help level the playing field for minority business owners, especially those operating small businesses.

For the second amendment, the regulators are pleading with lawmakers to change the marijuana banking measure so Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs) are specifically mentioned in the protective wording. This would then make it clear merely providing services to a legitimate business or service provider involved in the cannabis industry should not be regarded as an unsafe or unsound practice, and it would help increase the evidentiary requirements and restrict the penalties for enforcement against MDIs and CDFIs.

Enforcement Banking (SAFE) Banking Act

SAFE Bet Not A Sure Thing

The SAFE Banking Act passed the House of Representatives on Thursday, July 14th, 2022. It’s designed to give legal marijuana businesses access to banks and other financial institutions. Still, advocates are worried the Senate version won’t be as friendly or effective for cannabis entrepreneurs who struggle to get loans and other services due to federal prohibition laws.

One of the most audacious suggestions from CRCC is to change the marijuana banking bill so a portion of the federal taxes the sector pays go to a fund rather than the federal treasury. The CRCC went so far as suggesting a fund to “provide forgivable loans for businesses owned by people who have been unfairly targeted by the War on Drugs.”

While this would go a long way to repairing the damage done by the federal government’s War on Drugs, it’s not very likely to come to pass. The main problem here is conservative legislators would probably object to the idea of providing federal tax money directly to marijuana firms to support their expansion.

SAFE legal marijuana businesses access

It’s encouraging to see Congress taking marijuana reform seriously and debating it this week. But we can’t forget there are still many steps left before any of these bills reach the president’s desk. It’s important advocates keep pushing the limits of the SAFE Banking Act, but they also need to make sure their representatives are supporting all of these bills at once so they don’t get lost in translation during negotiations on the Senate floor.

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