ALBANY — Dozens of “equity entrepreneurs” in New York’s and New Jersey’s emerging marijuana markets are urging U.S. Senate Majority Leader Charles E. Schumer to seek passage of a bill that would allow banks to service licensed cannabis businesses without fear of federal penalty.
The bill’s supporters, organized by the United States Cannabis Council, sent a letter to Schumer Friday arguing that the legislative proposal known as the Secure and Fair Enforcement (SAFE) Banking Act would provide cannabis equity entrepreneurs — which include people of color — access to basic banking services that they have thus far been denied.
“Having no access to basic and essential banking services is blunting the impact of social equity programs. … These businesses are forced to operate on an all-cash basis,” the letter states. Its authors also pointed to the cost of starting a cannabis business and barriers for individuals with past convictions, suggesting the latter should be addressed by complementary legislation.
“As you know Black and brown entrepreneurs have long faced systemic disadvantages when launching and running a business,” the letter adds. “The legal cannabis industry is no different. While many states, including New York and New Jersey, have been deliberate in setting up a system that is equitable and accessible to the communities most banned by the war on drugs. even entrepreneurs with special equity licenses run into obstacles.”
One of the 40 signatories of Friday’s letter is Lerone Jones, who works at multi-state operator Ascend Wellness Holdings but hopes to run his own New Jersey dispensary.
Jones said the SAFE Banking Act would allow him to “legitimately do payroll, legitimately be able to engage with credit and debit merchants (and) open the door for minority operators to have equal access to these institutions and services.”
The bill, which has passed the House multiple times since 2013, has long been supported by national groups such as the National Organization for the Reform of Marijuana Laws and the National Association for the Advancement of Colored People.
Banks servicing licensed cannabis businesses are subject to federal prosecution because the operations, though legal under state laws, are still considered criminal enterprises under federal law as the drug remains a top-level controlled substance. That fear of penalty is believed to create a chilling effect on financing options, creating barriers for accessing basic tools such as credit, checking accounts and payroll services.
Both Schumer and Sen. Corey Booker, D-N.J., who have been spearheading cannabis reform efforts in the U.S. Senate, had long been firm in their position to avoid incremental changes in favor of a comprehensive cannabis legalization bill. In recent months that position seems to have shifted, as the senators publicly discussed a package that could combine SAFE Banking principals with other, justice-focused changes.
The SAFE Banking Act has already been passed repeatedly in the House and is expected to move through the Senate with bipartisan support if brought to the floor by Schumer. But some of the bill’s detractors worry that passing only banking reform without other initiatives would hamper efforts to have equity in the burgeoning industry.
In a legal analysis issued in August, four members of the national Cannabis Regulators of Color Coalition questioned the expected outcomes of the banking bill, writing that despite marijuana’s federal status an estimated 200 to 800 depository institutions already provide some financial services to cannabis-related businesses. With one exception, they said, it “does not appear that federal regulators are penalizing financial institutions for banking the cannabis industry.”
“The bill is unlikely, without more comprehensive reforms, to significantly change existing issues related to access and equity for small cannabis businesses that currently have inadequate access to banking services or loans,” the analysis found, adding that cannabis entrepreneurs who experience “compounded racial inequities” could be worse off if the bill were to be passed as a standalone initiative.
Melissa Moore, a New York-based director at the Drug Policy Alliance, said that if the banking bill is passed in the next couple of months as part of the larger package of equity-focused reforms Schumer is said to be negotiating, there could be “an increase in the access to financial services and to lending for social-equity licensees, and it could come at a particularly important moment as New York is still getting our full program up on its feet.”
But Moore is among those who think the SAFE Banking Act alone would not positively impact the equity of the state’s industry.
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