Include the SAFE Banking Act In the Next Covid Relief Package
The novel Coronavirus has caused an undeniable crisis in our economy. Despite encouraging rebounds in hiring and wages throughout the summer, the economy is far from a robust recovery. It is critical that Congress and the White House enact another relief package. As part of that package, Congress should include the “Safe and Fair Enforcement (SAFE) Banking Act,” a fiscally prudent, bipartisan measure that would promote businesses and jobs while reducing violent crime.
Last September, the House of Representatives passed the SAFE Banking Act with an overwhelming bipartisan majority. Once signed into law, it would allow cannabis-related businesses in states where cannabis is legal to access critical banking and insurance services, such as bank accounts, loans, electronic payments, and property coverage policies. It does not legalize cannabis in any way, shape, or form.
Because state-legal cannabis businesses cannot access the banking system, they complete all their retail and overhead transactions, including payroll, in cash and constantly search for alternative banking solutions. The result is an unnecessary drag on these businesses’ profitability and wages. Moreover, the approximately 240,000 state-lawful cannabis employees do not have access to benefits that most workers take for granted: health insurance, a 401(k), and access to direct deposit. These are major disadvantages to good actors who obtain costly licenses, pay taxes, and follow their states laws.
Illegal businesses, on the other hand, skirt the numerous regulations with which state-lawful businesses comply, do not pay taxes, and do not concern themselves with offering safe products, but still access our banking system through illegal money laundering schemes. As a result, businesses that are following their states’ rules and paying taxes face unnecessary financial and operational obstacles that their unlawful competitors do not.
As others have noted, the SAFE Banking Act would resolve these problems and disincentives, which in turn would make these businesses more profitable, help them obtain capital, and raise the financial well-being of their workers. It would also prohibit federal banking regulators from penalizing banks for working with politically-disfavored—but completely legal—industries and would make it easier for the nascent American hemp market to access financial services. With more than 10 million net jobs lost since March, policymakers should welcome these pro-business protections.
Enacting the bill would also make the United States safer. The excess cash that cannabis companies are obliged to hold makes them a target for violent criminals. Cannabis business owners and employees have been threatened at gunpoint and even tortured by criminals seeking a fast and easy payday. Over the past few months, cannabis businesses in California have had their businesses systematically burglarized by thieves using protests and social unrest as cover for organized crime, leading the California Bureau of Cannabis Control to remove temporarily its public list of cannabis businesses in a too-little, too-late attempt to protect law-abiding cannabis businesses.
In addition to supporting businesses and promoting public safety, the SAFE Banking Act is fiscally prudent. The fiscal conservatives at Reason argue that the bill is “not a pork-barrel spending bill”; rather, it “would actually save taxpayers money,” and “ultimately lead to more commerce and more revenue for the government.” According to the Congressional Budget Office, the bill would save $3 million in direct spending by the federal government over 5 years, and Reason estimates that more than $100 million in federal tax revenues could have been raised in 2019 if the bill had been enacted. Tens of millions more in revenues could have gone to various states and local governments directly if these companies could access a bank account to facilitate tax payments.
The Federal Reserve and Congress have taken tremendous measures to weather the storm, but given that the average initial weekly unemployment insurance claims still remains above 1 million and the unemployment rate is around 10 percent, it will take some time before the economy returns to pre-pandemic levels. At a time when our economy is in desperate need of stabilization, Congress should move quickly to enact a fiscally prudent, bipartisan bill that reinforces our economic recovery.
Including the SAFE Banking Act in a future COVID-19 relief package is sensible, as the bill would support thousands of businesses and hundreds of thousands employees, strengthen our financial system, increase government receipts, and undermine criminal drug cartels. The SAFE Banking Act is a fiscally prudent compromise in an era of increasing political brinksmanship. We owe it to Americans to pass these kinds of measures wherever possible.