The House of Representatives passed the Secure And Fair Enforcement Banking Act on Sept. 25, to protect and facilitate relationships for banking organizations looking to work with legitimate cannabis businesses. After struggling with maintaining relationships with banks for years, Ann Arbor cannabis dispensaries believe the bill could drastically benefit business and destigmatize the cannabis industry as a whole.

The main purpose of the bill is to prevent federal banking regulators from “penalizing a depository institution for providing banking services” to cannabis companies for the sole reason that these businesses handle cannabis. Specifically, these regulators are prohibited from taking adverse action on a loan made to these businesses, discriminating banks and credit unions for collecting or processing payments for these businesses and ending or limiting the dispensary’s insurance, among other restrictions. 

The bill must now be passed by the Senate and signed by the President of the United States in order to be enacted into law. 

Though marijuana has been legalized in one form or another in 47 states and Washington D.C., it is not legal at the federal level. Thus, many depository institutions have been reluctant to engage in business with the cannabis industry for fear of getting penalized by the federal government. This has prevented many marijuana businesses, including those in Ann Arbor, from having strong relationships with banks.

For instance, Om of Medicine, a cannabis provisioning center in Ann Arbor, has gone through 10 bank accounts in its 10 years of operation, according to Lisa Conine, Om Community Outreach Coordinator. 

“As you can imagine, that’s pretty stressful for business,” Conine said. “Essentially, it’s on the banks for how they want to handle cannabis businesses, and as of right now, because they don’t have any federal protection, they don’t really want to deal with cannabis businesses because it puts them at risk.”

Conine said a lot of the banks have a system that is triggered if something they deem out of the ordinary occurs, such as a large cash deposit. Based on their own discretion, these banks can then decide to freeze the account of a marijuana business and then eventually close the account altogether. 

“A lot of times, we don’t really even know the bank’s process until it’s already happened, and every bank might have a different thing that triggers it, so it’s really like a guessing game,” Conine said. “So, it’s super inconvenient and obviously a huge issue when that just randomly happens, and then things like rent and electricity that any business has to pay, we struggle to do if, all of a sudden, our account shuts down and all those automatic payments are trying to be taken out.”

Conine said if the SAFE Banking Act were to pass through Congress, Om would feel much more financially secure when conducting business.

“So, for us, the most instant benefit of the bill would be if we had a bank account that we didn’t have to worry about shutting down, and we could process everything through and act like any other business and not have to worry,” Conine said.

Another obstacle Om has faced due to its adverse relations with banks is difficulty in trying to provide donations. Om supports local Ann Arbor nonprofits, and several times after donating checks to these organizations, a bank has shut down Om’s account without the business’s knowledge and before the nonprofit could process the donation. Om then has to explain the situation to the nonprofits and create a new way to transfer the money, making the process unnecessarily complicated, according to Conine.

The difficulties these businesses experience with depository institutions also result in a lack of ability for the companies to take credit cards, debit cards and checks from patients. Thus, patients and customers must pay with cash when going to most cannabis businesses.

Nationwide, the knowledge of marijuana businesses solely using cash has resulted in a fear and increased likelihood of theft and robbery. For instance, TotaLeaf Inc, a cannabis manufacturing company in Sacramento, California, had $80,000 worth of product and cash stolen from its warehouse this past year. In addition, on Aug. 28, there was an armed robbery at a marijuana social club in Genesee Township, Michigan.

State Rep. Debbie Dingell, D-Ann Arbor, expressed in a tweet the security issues of these marijuana dispensaries handling business in cash and the importance of shifting to other payment methods.

“It is not safe to walk around with duffel bags full of cash – but that’s what’s happening right now,” Dingell wrote. “Marijuana is already legal in many states. Now let’s make it safe for legitimate marijuana businesses to use banks like other legitimate businesses.”

Another difficult aspect of only being able to conduct business in cash is the negative stigma that often results from it. According to Conine, solely using cash makes many people feel like they are operating in the illicit market. Many patients already come into the dispensary with a negative perception associated with cannabis, and having them carry and pay large sums of money adds to this mindset. 

“So really being able to normalize it and make it just like any other purchase that they make anywhere else is something subtle but can have a big impact on the subconscious in the way that people can start to dismantle that stigma and the shame that might be associated with cannabis use,” she said. “Especially when they’re trying to heal an illness, you don’t want to be using something and feel like you’re a criminal doing it; that’s not helpful when you’re trying to get better.”

If the bill were to pass and these cannabis businesses are able to build stronger relationships with depository institutions, patients would not only benefit, but the industry would as well, Conine said. At the moment, according to Conine, the system makes it difficult for small marijuana businesses looking to enter the market. 

“It’s an issue for small businesses because, if they’re not able to work with banks in a traditional way, then they can’t access normal business loans,” Conine said. “So, the access to capital is really important for people to succeed in the industry, so a lot of people, if they don’t have access to investors, they’re kind of counted out already.”

According to Eric TerBush, LSA senior and product manager and staff reporter at Benzinga Cannabis, the growth of the cannabis industry has been curtailed by the lack of protections currently present for depository institutions.

“I think the ability for the industry to mature is stifled by the inability to bank,” TerBush said. “An important clause within the SAFE Banking Act includes insurance protections as well as banking protections which can be interpreted as opening the doors to institutional investment, which is very much needed in an industry that’s incredibly cash-strapped and in constant demand for (external) financing.”

Conine described the value passing the bill would have on the industry as a whole and how it could increase the likelihood of other cannabis-related legislation getting passed as well.

“This is so important,” Conine said. “The whole movement is really looking at this banking issue as the first domino that needs to fall. If we can get this passed through Congress, then there’s so much more of a chance for other bills to pass because the conversation will be fresh, it’ll be live in everybody’s minds on the Hill and it’s a low hanging fruit. It’s not controversial at all, we’re just asking for these already existing businesses to be able to use a bank account.”

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