SAFE Banking Will End Pot's 'Cash-Only' Problem
Like most law enforcement officials in Colorado, I initially opposed legalization of marijuana for recreational use a decade ago. I feared a crime wave, but I was wrong. Legalization freed police to concentrate on dangerous crimes and made the state safer. Taxes from cannabis sales filled state coffers to the benefit of everyone.
But one problem remains. Federal law, which continues to criminalize cannabis, prevents the banking system from accepting marijuana companies as customers. That makes cannabis a cash-only business and dispensaries a constant target for violent criminals. Robberies have become commonplace.
In Oakland, Calif., caravans of armed thieves have targeted cannabis businesses. Shootouts occurred at some of the cannabis dispensaries. Robbers fired more than 175 shots during one the robberies, authorities said.
In Washington State, a SWAT team arrested a 16-year-old for the murder of a Tacoma cannabis-dispensary worker. The teen and others were also charged with a string of cannabis-related robberies in the Seattle area.
These types of attacks must end. Congress needs to approve the SAFE Banking Act, which would give cannabis businesses access to banking services including business accounts and credit cards. The U.S. House of Representatives has passed the legislation six times. It’s the Senate’s turn now. Sen. Patty Murray (D-WA), whose state has endured more than fifty armed robberies of state-licensed cannabis stores in recent months, is leading a bipartisan effort to pass the bill in the Senate. Momentum appears to be growing for its passage.
The SAFE Banking Act wouldn’t legalize marijuana. It would address the cash-heavy predicament that legal businesses face in the 38 states and the District of Columbia that marijuana sales are allowed. The bill would require federal banking regulators to provide uniform guidelines for cannabis-related business accounts. Depository institutions would be protected from civil and criminal sanctions for providing financial services to the nation’s growing number of legitimate, cannabis-related firms.
Thirty-eight states allow marijuana for medicinal purposes. Nineteen states allow recreational sales as well. Legal marijuana is a more than $26 billion a year business that employs nearly 430,000 people and creates an average of 280 new jobs a day.
New Frontier, a data analysis company, projects annual U.S. legal cannabis sales will exceed $57 billion by 2030. If the 12 states that haven’t legalized cannabis do so, this figure could top $72 billion annually.
In the meantime, owners of cannabis-related businesses face major obstacles. They often are forced to sell equity stakes in their enterprises or fall victim to predatory lenders because they can’t borrow from commercial banks. The SAFE Banking Act would help legally operating cannabis firms raise capital, grow their services, and access reasonably priced capital.
Cannabis employees also have problems. Since they are paid in cash, workers have trouble maintaining their credit ratings and often can’t qualify for mortgages. SAFE Banking would correct all of that.
Banking associations from all fifty states have signed a letter to U.S. Senate and House leaders stressing the SAFE Banking Act’s public safety and regulatory benefits. So have 24 U.S. Senators. Their bipartisan letter states: “Allowing cannabis businesses operating legally and in compliance with state law to access financial services without federal reprisal would address public safety and compliance challenges, helping communities reduce cash-motivated crimes.”
Medical students are taught to diagnose patients’ most obvious ailments first. This so-called Sutton’s law was named for bank robber Willie Sutton, who famously said he robbed banks “because that’s where the money is.” Today’s criminals go after cannabis dispensaries for the same reason. It’s obvious they can’t be allowed to continue.
Stanley L. Garnett is a partner at Brownstein Hyatt Farber Schreck in Denver and a former District Attorney for Boulder County.
