Banking in the Cannabis Industry in 2021

Banking in the Cannabis Industry in 2021

As of October of 2019, the social and political landscape of cannabis has soared to unbelievable heights. Not only have ultra-conservative states such as Indiana began dismissing minor cannabis possession, cannabis companies are catching a break as the SAFE Banking Act passes.  Over the last three years, cannabis has taken Wall Street by surprise. Some of the largest names in the cannabis industry are getting higher than they ever were a few years ago. Moreover, the expectation that legal cannabis sales will grow yields a massive amount between five and a whopping twenty times the current $11 billion global sales record within the next decade. With growth of this magnitude, the funds associated with cannabis must be legally protected. Under the SAFE Banking Act act, cannabis companies and the funds associated with them have gained some breathing room thanks to bipartisan cannabis legislation. Here’s what you need to know about banking in the cannabis industry in 2021.

Examining the SAFE Banking Act

Cannabis companies based in the United States currently have minimal-to-no dedicated access to essential banking services. The SAFE Banking Act includes loans, credit lines, and even requiring simple checking accounts. Due to financial institutions requiring to report to the Federal Deposit Insurance Corporation, or FDIC, and the FDIC is a federally-created agency, credit unions and banks fear the potential criminal and financial consequences of aiding cannabis companies. This wall has made cannabis an industry ruled strictly by cash, which is an obvious security concern and a massive roadblock to expanding a business. As the SAFE Banking Act Passes, this will open new doors, accounts, and a realm of possibility for cannabis companies today and tomorrow.

The SAFE Banking Act in 2021

With the SAFE Banking Act successfully passing within Congress’s lower house, the SAFE Banking Act will move on to the Republican-dominated Senate. Some will instantly recognize the issue as the GOP has a lengthy track record of having a negative view of cannabis consumption, regulation, and financing than the Democratic or even Independent party members. Under the Senate’s current makeup, the SAFE Banking Act will have no problem passing (if it hasn’t passed already.

Moreover, it’s been hinted that although Republicans in the Senate are open to discussion as well as a vote on the SAFE Banking Act, this may end a compromise that may not mirror the original bill just passed by the House. To convince the Senate Republicans to hear the issue and vote in favor of the banking reform, particular modifications may be made. This could be modifications such as including protections for CBD and hemp companies and possible prerequisites that federal agencies won’t be allowed to target specific industries without an upstanding cause. Even Senate Democrats may push back on the SAFE Banking Act. Similar to the pushback led by the minority of the House, a few Senate Democrats believe that it’s not sensible to consider reforming current cannabis banking laws before grander cannabis reform issues such as legalization and decriminalization are tackled at the federal level.

Additional information on banking with cannabis in 2021

Under the current state of cannabis, companies in the industry and their potential financiers fear the legal repercussions associated with ‘drug money.” If the SAFE Banking Act passes in the bipartisan cannabis legislation, cannabis companies can successfully secure their finances and their future arm of expansion. For companies and investors, they will be able to breathe a sigh of relief. Moreover, cannabis consumers will be directly impacted by the passing of the SAFE banking act as it can yield lower pricing and more financial security for cannabis purchases.

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