At the time of writing, it is election day 2024. I write this article as the polls are starting to open on the east coast. Separate from the presidential election, certain industries are keeping an eye on vote numbers in the Senate and House. Take the banking industry. They want to see the SAFER Banking Act pass this year. They believe that the results of today’s vote will play heavily into whether that happens.
SAFER is a piece of legislation aimed to remove any in all barriers banks now face in relation to doing business with the cannabis industry. As things currently stand, banks are reluctant to get involved because cannabis is still a Schedule I controlled substance. Providing services to cannabis companies could get banks in trouble. SAFER significantly reduces any such risks.
Billions in Revenue
For banks, the passage of SAFER is rooted more in financial interests than political. If you’re not sure that’s true, consider a recent report from CTrust, Whitney Economics and Green Check Verified. The report suggests the total marijuana sales by 2035 could reach $87 billion. That is impressive enough, but the report also suggests that the cannabis industry will have to add tens of thousands of new operators to meet demand.
Those operators will require financing to get off the ground. That’s where banks come in. The report suggests operators will need upwards of $130 billion in growth capital over the next decade. Financing cannabis operations could net banks more than $2 billion in interest payments alone.
Banks know that passage of the SAFER Act will likely translate into a boon for them. Why would they not want it to pass? Billions of dollars in revenue are too attractive to turn down. My guess is that banks are chomping at the bit to start working with the cannabis industry. They just need reassurances from Washington that it is okay to do so. SAFER provides those assurances.
A Cash Only Business
As things currently stand, cannabis is essentially a cash only business. A lack of access to traditional banking services not only prevents cannabis companies from borrowing, but also from accepting credit and debit card payments. Even online sales are hindered somewhat because the best customers can do is place their orders online. They still need to pay for those orders with cash.
It is not a good situation, according to the operators of St. George, Utah’s Zion Medicinal. As a medical cannabis pharmacy, it’s just more difficult for them to do business in the modern era based exclusively on cash. Zion Medicinal and its Utah competitors say having access to traditional bank services would streamline their operations from a payments perspective.
They are not alone. Dealing on a cash-only basis is inconvenient all across the country. It’s especially problematic in states that allow cannabis delivery. Asking drivers to be responsible for large amounts of cash just isn’t a good deal.
Congress Has the Power
We should know by the end of the day how the congressional vote has played out. We should know which parties will control the Senate and House. That matters too SAFER because Congress ultimately has the power to pass the bill. There isn’t enough support in the Senate right now. Will that change by the end of the day? We will see.
I’m guessing bank executives are looking on the bright side. They are hoping that the election leads to enough support for SAFER. Banks have every reason to want to see it pass. In fact, they have more than 2 billion reasons to root for its success.
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