The long-awaited bill to allow cannabis companies to access banking services in the US has finally passed a major regulatory hurdle.
On Wednesday evening, the US House of Representatives voted overwhelmingly in favour of the Secure And Fair Enforcement (SAFE) Banking Act, which protects financial institutions from federal punishment for doing business with cannabis companies.
The SAFE Banking Act was passed by a 321 to 103 vote majority.
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While the victory in the House of Representatives clears a major hurdle for the industry, the bill still has to be passed by the Republican-controlled Senate and then onto the President’s desk.
Still, industry pioneers were cheering on Thursday. “Up to today, no standalone cannabis reform bill has ever even had the opportunity for a congressional floor vote, much less a win by such a stunning margin of victory,” said the National Cannabis Industry Association’s executive director Aaron Smith.
Once the legislation is passed into law, the SAFE Act will allow cannabis companies doing business in jurisdictions where marijuana is legal on a state level to deposit business proceeds in bank accounts and access traditional debt and lending mechanisms.
For smaller cannabis companies who have had to look at more creative ways to finance their burgeoning businesses, the affirmation that a majority of US Representatives respect their right to operate comes as a much-needed vote of confidence.
Cannabis investment company Chemistree Technology Inc (CSE:CHM) (OTCMKTS:CHMJF) president Karl Kottmeier called the Act’s passage a “crucial first step” in the process of securing and simplifying financial transactions in the US.
“It removes not only the physical difficulty but also the security concerns associated with cash transactions and gives us greater flexibility in non-cash transactions,” Kottmeier told Proactive.
Normalizing the industry
Curaleaf Holdings Inc (CSE:CURA), the largest US multistate operator, told investors on Wednesday that the bill is the first step in the normalization of the cannabis industry and opens up opportunities for smaller players to gain a foothold.
CEO Joe Lusardi said in a statement that the bill also provides more access to capital for cannabis businesses of all sizes, which will support social equity in the industry.
Being able to access traditional means of financing adds an additional layer of safety and security to small cannabis businesses, Chris Rebentisch, CEO of 1933 Industries Inc (CSE:TGIF) (OTCMKTS:TGIFF) told Proactive Investors.
“Running a cash-based business where the state publishes your business address, information, and what you are doing is insane,” Rebentisch said. “We have a giant target painted on our backs for all dishonest people to see. This helps to mitigate those risks.”
Financiers and shareholders in cannabis companies with US operations are breathing a little easier at the prospect of eradicating cash transactions. “It also adds investor confidence and mitigates their risk of loss of capital,” Rebentisch said.
Opportunity for growth
Canadian cannabis companies with US operations have seen tremendous business growth over the last few years as the industry continues to prosper in America.
“As a Canadian based company that’s making very large investments throughout the U.S., this bill addresses much-needed issues and ultimately gives not only us, but also struggling cannabis businesses the chance to acquire financing for an opportunity at growth in this billion-dollar industry,” Shay Shnet, CEO of Nabis Holdings Inc (CSE:NAB) (OTCMKTS:NABIF) told Proactive.
Vancouver-based Empower Clinics Inc (CSE:CBDT) (EPWCF) CEO Steven McAuley also joined the chorus of companies calling the passage a positive change for the larger cannabis sector.
McAuley said: “It’s a major advancement that can lead to insurance companies, underwriters and healthcare systems all becoming active participants in the industry. We are excited to have new investment banking doors opened in the weeks and months ahead.”
Meanwhile, social attitudes toward marijuana use are changing in the US, according to Kim Rivers, CEO of Trulieve Cannabis (CSE:TRUL).
“With approximately two thirds of Americans in favor of marijuana, this is a major milestone for the cannabis industry as a first step toward addressing an urgent safety concern for legitimate businesses that currently operate with just cash,” she told Proactive.
“We see a lot of opportunities along the way as companies run out of capital, which provides us with opportunities from an acquisition perspective,” Australis senior vice president Brent Reuter said in a recent interview with Proactive.
“We do see the process taking some time, it has to run through the house and the senate, which is a complex process. Along the way we’ll just look at conducting our business on a normal, opportunistic basis and when it happens, it’s a good thing.”
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