Cannabis Reformers Can Get SAFE Banking Or Nothing From Congress—Which Is It? (Op-Ed)

“I’m not here saying that SAFE Banking will magically alleviate access to capital problems, but it will help more than the status quo.”

By Kaliko Castille, Minority Cannabis Business Association

SAFE Banking or Nothing?

That is the question.

Over the last few weeks, there was a lot of talk from people who don’t own plant-touching cannabis businesses about how the Secure and Fair Enforcement (SAFE) Banking Act won’t help minority operators.

Here is the rub: our current legislative choice in the 117th Congress is enacting the SAFE Banking Act or passing nothing.

Comprehensive reform could be three years or more away—at best.

The decision to pull SAFE Banking from the National Defense Authorization Act (NDAA) is further proof that even incremental change is hard on Capitol Hill.

The Marijuana Opportunity Resentencing and Expungement Act (MORE) Act, which would end federal cannabis prohibition, and the SAFE Banking Act both received hearings in their respective committees of jurisdiction and a vote on the House floor in the last Congress—but only SAFE Banking has passed the House this Congress where it remains stalled in the Senate, oddly due to resistance from the party of our champions.

The MORE Act was the first comprehensive legislation that would end federal prohibition and expunge cannabis convictions to gain momentum. The bill has again passed the Judiciary Committee this year but so far has not received a commitment to be brought for a floor vote in this Congress.

Whether challenges with the bill itself, including concerns about the efficacy of the expungement, small business and regulatory provisions, or the entry of the new bright shiny thing, the Cannabis Administration and Opportunity Act (CAO) Act, the MORE Act is unlikely to get a vote in the Senate any time soon—even with 100+ cosponsors in the House at present.

I’m not here saying that #SAFEBanking will magically alleviate access to capital problems, but it will help more than the status quo.

However, it’s completely disingenuous for well intentioned people/orgs to act as if comprehensive reform will def pass this Congress or next.

— Kaliko 🌱 (@WizKaliko) December 7, 2021

The CAO Act, the discussion draft put forth by Senators Schumer, Booker and Wyden, was based in large part on the equity provisions of the MORE Act with additional focus on the regulatory framework. While the CAO Act draft provided an opportunity to strengthen and improve the equity provisions of the MORE Act, there is still no timeline on the formal introduction of the bill.

Once introduced, the CAO Act will face the same filibuster hurdle that is currently impeding progress on issues with more bipartisan support than equitable cannabis reform.

Unless Democrats defy electoral history they will lose one or both chambers of Congress in 2022, leaving the GOP in control and unlikely to move any cannabis focused legislation forward. Equitable cannabis reform will be a nonstarter.

Maybe the States Reform Act (SRA), recently introduced by Rep. Nancy Mace (R-SC), will move with Republicans in control, but the chances Democrats will give the issue over to the GOP for a win is slim to none.

If the Republicans take back the House and/or the Senate in the 2022 midterms, we’ll be well into the 2024 presidential election cycle without passing either an incremental bill (SAFE Banking) or a comprehensive bill (MORE, CAO, or SRA). Given the uncertain outcome of the 2024 election, the wait could be even longer.

Waiting would mean leaving 300,000+ cannabis industry employees at risk of losing their personal bank and retirement accounts, unable to apply for housing loans, or pay their bills in a normal manner.

Waiting means that the already too few Black and Brown entrepreneurs trying to operate in the industry will continue to be denied basic business services.

Leaving them with increased compliance costs, making it harder to pay their employees and contractors as well as creating an outsized public safety risk as they are forced to keep hundreds of thousands of dollars in cash on site—or even on their person, as they go to pay their tax bills.

Waiting means that prospective social equity applicants who are already having to start from a disadvantage are left to fend for themselves without access to basic banking services. Even when they get investment/access to capital, where can they safely store it and effectively deploy it?

Is the banking system structurally racist? Absolutely. Will SAFE Banking give safe harbor to large financial institutions? 1,000 percent. Will loans be given out disproportionately to white cannabis operators? Likely. Do all of these things make it mutually exclusive for Black and Brown operators to benefit from SAFE Banking and get loans and/or bank accounts?

Absolutely not.

It’s possible for all of these things to be true.

Even one more Black or Brown entrepreneur getting access to a bank account is an improvement over the status quo. Accomplishing legislative change isn’t a purity test. It’s about keeping a bigger picture in mind while accepting small wins along the way.

Does SAFE Banking get people who deserve to be out of prison back in the community? No. Does SAFE Banking automatically expunge records for cannabis convictions? I wish.

What does it do?

It helps protect current minority biz operators who are forced to operate in all cash environments and unable to insure their businesses.

Just last week, a dozen Oakland dispensaries were robbed for $5 million dollars worth of cash and product (donate to Supernova Women’s relief fund here). Think SAFE Banking is only about big banks and the “MSO Gang”? Tell that to Tucky Blunt, who says he felt safer selling cannabis on the streets of Oakland than being a sitting duck running a legal, all-cash business.

Also, leave no doubt that I care zero about #MSOGang stock prices. #SAFEBanking is simply a no brainer for anyone who has been operating in this industry without a bank account.

— Kaliko 🌱 (@WizKaliko) December 7, 2021

Sometimes I feel like the cannabis movement needs a refresher on the legislative process. The choice isn’t SAFE Banking vs MORE Act—it’s passing something now or passing nothing.

SAFE passed the House five times and is the only piece of industry legislation that is ready for a Senate vote today. This is how the legislative process works.

I’m not here saying that SAFE Banking will magically alleviate access to capital problems, but it will help more than the status quo.

Now that SAFE is no longer in the NDAA, the Minority Cannabis Business Association (MCBA) will continue pushing an amendment that would include protections for Community Financial Depository Institutions (CFDIs) as well as Minority Depository Institutions (MDIs), which have a history of loaning to Black and Brown communities.

Leave no doubt that MCBA’s advocacy doesn’t begin or end with SAFE Banking, but its passage is critical to the survival of the few Black and Brown operators who are actually currently operating.

How do we expect social equity programs (many of which are struggling) to work without basic access to business services like checking accounts?

It’s simply disingenuous for well-intentioned people and organizations to act as if comprehensive reform will definitely pass this Congress or next. The political reality just doesn’t line up with those idealistic hopes for legislative victory.

SAFE Banking is a no brainer for anyone who has been operating in this industry at any point these last ten years without a bank account.

Access to banking is about equity.

End of story.

Kaliko Castille is the president of the Minority Cannabis Business Association and co-founder of ThndrStrm Strategies, a digital strategy firm. Disclosure: He also supports Marijuana Moment’s work via a monthly pledge on Patreon.

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