Cannabis Banking Failing To Pass Has Led To New Oppurntirtes In 2022
Back in December a cannabis banking measure was removed from a recent defense bill. Which was approved by the House. Those who were in support of the legislation are not happy about the outcome. Advocates were pressing that SAFE would bridge the gap between the mostly white-owned multistate operators. As well as small minority entrepreneurs who can not obtain private equity. They also dispute that it would help stop robberies of small cannabis businesses. Nevertheless, the way the bill is written depicts a different truth.
To which it leans in favor of MSO’s with little proof it will prevent crime. On the positive side, 2022 is just starting. So along with a new year comes a new congressional session that is soon to take place. This is where more people can work together to create a fresh start in Congress. The goal would be to make the bill more equitable and enhance safety. In addition to positioning disadvantaged small businesses to truly benefit from expanded banking services.
Developing access to proper financial assistance like other non-cannabis businesses is essential. Advancing the SAFE Act would give access to commercial lending. As well as offering benefits to up-and-coming black-owned marijuana-related businesses. Currently, there is next to nothing in regards to access to private equity funding. Although MSOs are typically in a better place to obtain capital.
The reason behind that is that equity-designated businesses would acquire access to funding under the SAFE Act. This would help create an even playing field in the cannabis industry. But this shallow examination does not inspect the position banks are most likely to embrace. As well as whether banking rules will truly help disadvantaged businesses to successfully compete alongside MSOs.
What Is Next For The Future Of Cannabis Banking
If the SAFE Act passes cannabis would still be federally illegal. The cannabis baking legislation would not end prohibition. Rather it would create a passage for banks to work with a legal cannabis business. Specifically without the fear of federal penalties. Despite the latter operating in clear violation of the Controlled Substances Act. This difference is significant because of the troops of lawyers employed by commercial lending institutions. 
These lawyers are particular about the amount of risk they are willing to accept. Especially in order to protect the entirety of the lending institution. As long as marijuana stays a schedule 1 narcotic working with a cannabis business violates the CSA. The heads at many banks will remain against loaning money to all but the most well-established, “credit-worthy” marijuana businesses. Basically the Multi-State Operators of the cannabis industry.
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Will The SAFE Act See Another Push In 2022?
A commercial lending professional recently drafted the decision-making process. A process that many financial institutes would use under the SAFE Banking Act. Only cannabis businesses that meet particular requirements would presumably get commercial loans under the cannabis banking bill. Going off the present measures, most diversely-owned businesses are unlikely to meet those requirements. In 2021, the Federal Reserve released a report.
This report showed that Black and Latino-owned non-cannabis businesses are not favored to be approved for a loan. This is in comparison to white-owned businesses that are likely to obtain a loan. Black and Latino business owners with low risk received approvals at the same rate as white business owners. But this came with medium-to-high risk due to credit. It seems that more access to banking services for the cannabis industry will be met short. This pertains to the lack of service that will not lead to the necessary funding. Which is necessary for social equity operators to compete.
Final Thoughts On The SAFE Banking Act In 2022
Having to be forced to contend against MSOs will be a difficult task at hand. More so when the MSO recognizes the benefits that are available under the current iteration of the SAFE Act. Which could have a negative impact on the individual business. As well as the community of entrepreneurs that social equity initiatives are planned to support. In contrast, the MORE Act would be the end of cannabis prohibition in the USA if passed.
The day this does happen it would also mean banks would legally be able to work with MRB. There’s a good chance that if the SAFE Banking Act can be amended to include equitable banking provisions. If so it would lose much of its Republican support. The possibility that Republicans could take over both chambers of Congress next year only emphasizes the need to implement social equity.
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Particularly added to the SAFE Act while there is still political opportunity. Advocates should also point out the viable solutions at the state and local levels. Which is currently addressing the obstacles that SAFE Act is anticipated to fix. This contains using cannabis tax revenue to provide low or no-cost capital. As well as much-needed emergency relief to struggling cannabis businesses. The removal of the SAFE Act from the NDA Act gives us the opportunity to reset the conversation. A conversation that could make this bill truly helpful for those who need access to money the most.