PORTLAND, Ore. (KOIN) — New cannabis banking legislation led by Oregon Senator Jeff Merkley is heading to the Senate floor for consideration — marking a step in the right direction for the industry, lawmakers and business owners say.
The bipartisan Secure and Fair Enforcement Regulation (SAFER) Banking Act would ensure cannabis businesses have access to banking and financial services — including bank accounts and small business loans.
The legislation comes as some cannabis businesses lack access to banking services — with some businesses operating on a cash-only basis amid concerns for public safety, according to Sen. Merkley.
“Forcing legal businesses to operate in all-cash is dangerous for our communities; it’s an open invitation to robberies, muggings, money laundering, and organized crime—and the only people benefiting from the current system are criminals,” Sen. Merkley said in a press release. “Passing the SAFER Banking Act through committee is an historic moment in this body. I am committed to building bipartisan momentum to finally get a bill signed into law that ends the cannabis cash economy and improves public safety across the nation.”
The bill heads to the floor for the first time after clearing the Senate Committee on Banking, Housing, and Urban Affairs on Wednesday.
The junior senator — who also led the SAFE Banking Act — thanked his Republican and Independent colleagues for their support of the legislation.
Joining a coalition of 22 attorneys general, Oregon Attorney General Ellen Rosenblum issued a statement urging Congress to pass the SAFER Banking Act.
“It is a dereliction of duty for Congress to continue putting legitimate cannabis businesses in jeopardy by denying them full access to banking services,” Rosenblum said. “Forcing cannabis businesses to operate in cash and denying them access to credit is putting Oregonians who are working hard to grow a legitimate Oregon industry at risk.”
Citing data from the Oregon Liquor and Cannabis Commission, Rosenblum noted that Oregon cannabis sales have totaled nearly $6 billion since the fall of 2016.
Washington Senator Patty Murray — who chairs the Senate Appropriations Committee — lauded the bill’s progress.
“It’s ridiculous that legal cannabis businesses in Washington state are forced to operate entirely in cash—and it puts the safety of their employees and our neighborhoods at risk,” Sen. Murray said in a statement.
She added, “that’s why I’ve been working for years on SAFE Banking legislation, and I’m thrilled to see bipartisan momentum behind this bill, which has now advanced further than ever in the U.S. Senate. The SAFER Banking Act is an important first step in doing the right thing for small business owners and the communities they operate in—and I’m going to keep pushing to get it across the finish line. We can’t stop there, though—we need to work towards broader cannabis policy reforms that address the long history of racial injustice and criminalization that have harmed so many communities across the country.”
“Duffel bag full of cash”
Oregon Cannabis Association President Hunter Neubauer previously told KOIN 6 News that banks failing to recognize cannabis businesses is a public safety issue.
“There’s a lot of break-ins, there’s a lot of theft, and we’re a target. We’ve got a big target on our back because we end up having to go pay our state sales tax in Salem in a duffel bag full of cash. The unfortunate part is it goes into that machine and into a U.S. bank bag — or whatever bank bag the state decides to use — and so we’re at a significant disadvantage from just traditional banking resources, but also, being able to raise money. We have to deal with private individuals or small family offices where our rate to borrow or invest money is far above what the standard is,” Neubauer said.
Alibi Cannabis CEO and Founder Marianne Cursetjee says the SAFER Banking Act is a step in the right direction for cannabis businesses.
“Passing the SAFER Banking bill is a great step forward. Having federal legislation that removes some of the barriers for cannabis business is necessary. This bill, however, is a very tiny step in the right direction,” Cursetjee told KOIN 6 News.
“Most cannabis businesses already have access to banks. Here in Oregon, we are fortunate to have a number of credit unions that accept our business. One huge improvement is that this
bill will require income from cannabis work to be treated as all other for the purposes of mortgages. This is a necessary change so that employees working in state regulated businesses would be able to purchase homes,” Cursetjee added.
According to Cursetjee, de-scheduling cannabis and small business protections would make a bigger impact in the industry.
“Currently, businesses are not allowed to write off any overhead expenses for federal taxes and this creates an unfair and punitive tax environment. Treating licensed cannabis businesses like any other business would be an enormous boon for the industry. De-scheduling would also allow scientific research to expand exponentially and we can finally find the true power of the plant using science,” Cursetjee explained.
“There is a risk of large, multinational, publicly traded businesses completely flooding the market and driving small, family farms out of business. Oregon has a strong appreciation for craft products (whether it’s spirits, beer, cheese, wine or cannabis) and finding ways to protect those businesses and provide support so we can all thrive should be a key tenet of effective legislation,” Cursetjee said.
“This is a landmark development in the cannabis space,” Beau Whitney, Chief Economist at Whitney Economics, said of the bill.
According to Whitney, legal cannabis sales in the United States garnered $26.1 billion in 2022 and is on track to generate $29.4 billion in sales in 2023.
Whitney says banks have been hesitant to provide financial services to legal cannabis businesses because of the federal illegality and documentation required to monitor the business’ bank accounts. Under current standards, these services can drive up costs and make it more difficult for banks to make money.
In addition to SAFER Banking addressing public safety, Whitney says the bill can provide more transparency and create a less risky environment for business loans.
“It will provide transparency where the money is going,” Whitney said. “Transparency is one of the reasons that banking services aren’t offered because they’re saying it supports cartels.” He added, “Because there’s safe harbor for these financial institutions, it’s not as risky and because you have traceability and transparency there is less risk — inherently less risk — in lending and providing financial services.”
According to Whitney, the bill could lower loan interest rates and the cost of borrowing because there’s less risk involved in a more transparent market.
In Oregon, Whitney noted, “a lot of cannabis operators are behind or they’re losing money but if they’re losing money and can’t pay their taxes, due to a new rule by the OLCC (the Oregon Liquor and Cannabis Commission) you’re not allowed to get your license renewed.”
He says the SAFER Banking Act “could provide tools, such as bridge loans, to cannabis operators so that they can pay their taxes and then pay that loan off over time but at least it will keep them compliant, keep them in business.”
“Safe banking not only helps Oregon, it helps the United States but also it has international ramifications,” Whitney said.
According to Whitney, the bill will have “international ramifications” and if SAFER Banking passes, other countries could be more confident banking in the U.S.