The SAFE Act and Cannabis Banking

Recently, there has been an uptick in news about banking in cannabis as legislation known as the SAFE act was approved by the U.S. House of Representatives. While the SAFE Banking Act affects many aspects of the cannabis industry, including investment money, it's largest affect for both cannabis business and consumers lies in banking, or more clearly, how we pay for cannabis products as a consumer and how that money is managed by the legal cannabis businesses that we buy from.

For Consumers

Whether you purchase cannabis in a dispensary, or order in advance with services like Hytiva's, that cannabis is a cash only business with some very awkward or spotty exceptions for some ATM or credit union cards at some dispensaries. This is due to the fact that financial transactions with a credit card often cross state lines, which are indeed federal lines. So the same laws that make cannabis illegal federally, and therefore illegal to transport across state lines, also prevent financial transactions for cannabis that might also cross state lines digitally. This is why the industry is limited to cash only purchases. The SAFE legislation intends to remove those limitations by specifically allowing financial transactions for cannabis where it is legal, allowing the dispensaries to accept all the forms of payment you are used to.

For Businesses

If cannabis were any other business, all those cash payments that dispensaries are paid would normally be deposited into a bank account and used to pay for the costs of running the business, employees salaries, etc. A huge convenience when you imagine about what those tasks would be like without it. Well, you don't have to imagine it, because that's how it is for cannabis businesses. Maintaining even a simple bank account is near impossible for any legal cannabis business. Growers, production companies, distributors, dispensaries, and yes, even Hytiva, have to deal with the challenges of accepting cash payments with a limited ability to put that money in banks or make payments to vendors with anything other than cash. It causes a lot of safety and security concerns, not to mention a lot of complication along the way. It's one thing to receive cash for that $50 retail purchase, but a whole different concern paying or receiving payment for pounds of cannabis between a grower and a dispensary. It is one of the biggest issues facing the cannabis industry and differentiates it from any other traditional business.

For Everyone

Given the situation for consumers and cannabis businesses, it isn't hard to see why lifting these restrictions would do some good, but let's consider for a moment the whole picture:

1. Payment Types
   Consumers would have access to all the payment types they are used to. No more making ATM trips or carrying potentially hundreds of dollars for a single purchase, or paying higher ATM fees at the dispensary.
2. Lower Costs for Businesses
   The management costs and all of the additional labor required to secure and transport cash for purchases at all levels of the industry would be reduced, hopefully to the benefit of both businesses and consumers.
3. Safety & Security
   Everyone from consumers carrying cash for purchases, to delivery drivers transporting cannabis and cash, to dispensaries, cultivation facilities, and production facilities would be more secure as there would be less value on hand at any one time.

While this legislation is much more complex and covers far more areas than what we've mentioned here, this summary should serve a basis for understanding where the industry is coming from in regards to the SAFE act and why it is important for us all to support progress in this regard.

For a deeper dive into the details of the SAFE Banking Act and how it affects other areas:

• MJ Biz Daily : After the SAFE vote in US House...
• Congress.gov : The Secure and Fair Enforcement Banking Act of 2019