By passing the bipartisan SAFE Banking Act as part of the Omnibus Appropriations Bill, the U.S. Senate can take immediate and significant action to help businesses in one of the fastest-growing sectors of the American economy along with the hundreds of thousands of citizens who are employed in the sector. In the process, it can lend a hand to, law enforcement, too. .
Tens of thousands of legal cannabis businesses in 39 states and the District of Columbia operate with huge amounts of cash – a target for criminals – because federal law prevents them and the millions of American workers and businesses that support them from using the banking system. I have witnessed firsthand how voters and states have approved this economic expansion – only to experience problems that result from the dysfunctional financial system in which they are forced to live and operate. Now I am worried that New York, the state I grew up in, will unnecessarily have to experience the same problems we’ve seen in Florida, Arkansas, Washington, Montana, and Nevada because the U.S. Senate might not act.
Media reports have spotlighted the violence facing frontline dispensary workers and customers. Piles of cash held in cannabis businesses entice criminal behavior. The shops are targets for robbery – and in some instances, shootings and murders - because they are forced to do business with cash only.
To help remedy this danger, Congress must pass the SAFE Banking Act to give them access to financial services that all other businesses and industries operate under in our country. That would help thousands of small businesses – many of which are struggling because of current restrictions – that employ more than 300,000 people and pay more taxes than the alcohol industry. Annual legal U.S. cannabis sales are projected to exceed $57 billion by 2030.
SAFE is not about legalizing marijuana – that’s been decided in states where more than 70 percent of the U.S. population resides. SAFE is a banking bill that creates fairness. It will ensure that cash-heavy legal cannabis businesses and workers and ancillary businesses, like plumbers and electricians, can get mortgages and have regulated bank accounts. Depository institutions, insurers and other businesses would be protected from civil and criminal sanctions for providing services to licensed cannabis-related firms.
A bipartisan group of U.S. senators including Steve Daines (R-MT) and Sherrod Brown (D-OH) pointed out that divergent federal and state cannabis laws undermine commerce and regulatory consistency. Law enforcement understands its importance as have all 50 state bankers’ and credit union associations. Their recent letter to U.S. Senate leaders says, “The SAFE Banking Act is a narrowly tailored solution designed to bring this growing industry into the regulated banking system and provide much-needed visibility into its financial activity.”
My company, ScottsMiracle-Gro, is not subject to the restrictions because we don’t have direct contact with the cannabis plant. But commercial cannabis growers do use our products, from LED lights to fertilizers. They are industrious, entrepreneurial and employ state-of-the art cultivation methods with significant societal benefits beyond the cannabis sector. They are not cartels. Rather, they are hardworking Americans who the federal government should not neglect.
Small cannabis start-ups aspiring to compete with more established firms have no access to reasonably priced capital to expand. To stay afloat, they often are forced to sell equity stakes, pay unreasonable interest rates and fall victim to predatory lenders. SAFE Banking will help fix that.
Some critics have said that the SAFE Banking Act shouldn’t pass because it is too small a step in the broader cannabis debate. On the contrary, it’s an important step. While it won’t solve every issue, but it is the best opportunity to level the financial playing field for legitimate and regulated business.
The U.S. House has passed the SAFE Act seven times. It’s now the Senate’s turn.
Jim Hagedorn is chairman and CEO of The Scotts Miracle-Gro Company, whose subsidiary Hawthorne Gardening Company is a leading supplier to the cannabis and indoor growing industries with lighting, plant nutrients, fertilizers, and related products.