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Why does cannabis banking matter?

Current State of Cannabis Banking:

The SAFE Banking Act, which prohibits a federal banking regulator from penalizing a depository institution for providing banking services to a legitimate cannabis-related business, has been stalled in congress since 2019.

The ability of federal regulators to penalize banks for serving cannabis businesses means that none of the major banks in the United States will take on cannabis businesses as clients. As a result, the entire cannabis industry is served by credit unions and regional banks. These banks have to conduct rigorous due-diligence and compliance work to prove to regulators that they aren't enabling criminal activity. This burden is passed onto cannabis businesses in the form of expensive fees. High costs, extensive application processes, and a lack of banks willing to serve the industry means that a significant proportion of cannabis businesses operate on a cash-only basis.

Why should the federal government encourage cannabis banking?

First, widespread banking would provide a safer and more secure way for cannabis businesses to handle their financial transactions. Currently, many cannabis businesses are forced to operate on a cash-only basis, which can make them targets for theft and other crimes. Allowing banks to serve these businesses would enable them to use electronic payments and other secure financial tools, reducing the risks associated with handling large amounts of cash.

Second, promoting cannabis banking would provide a more stable and transparent financial environment for the cannabis industry. With access to banks and other financial institutions, cannabis businesses would be able to obtain loans and other financial services, enabling them to grow and expand their operations. This, in turn, could help to create jobs and stimulate economic activity in the cannabis industry.

Third, widespread cannabis banking would improve the regulation and oversight of the cannabis industry. By providing a clear financial trail, banks and other financial institutions could help regulators to monitor the cannabis industry and ensure that it is operating in a legal and responsible manner. Oversight would ensure that all cannabis businesses pay their fair share of federal and state taxes.

Overall, promoting cannabis banking would provide benefits for the cannabis industry and the economy as a whole. It would help to create a safer, more transparent, and more stable financial environment for cannabis businesses, enabling them to grow and thrive. This ease of business would be passed onto consumers in the form of lower prices and an increased ability to pay with debit and credit cards.

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