Quick Guide: Is SAFER Banking Finally Coming To The Cannabis Industry?

The cannabis industry has undergone massive and rapid change, but federal regulations governing the sale and purchase of cannabis have failed to keep pace with either social change or moves to legalize across the nation, creating a confusing and contradictory clash of state and federal regulations. In Episode 4, Chris Allen and Emily Yu review the history of the SAFER Banking Act and consider whether the latest legislative proposal will realize AGs’ bipartisan ambitions for a regulatory and enforcement regime that generates additional state revenues, deters bad actors, and provides businesses with predictability and legal certainty.

(00:24): Today’s hosts Chris and Emily introduce themselves and the topic of today’s podcast.

(01:21): Emily explains that SAFER Banking stands for Secure and Fair Enforcement Regulation Banking and she sets out the background for the latest iteration of the Act, which has advanced from the Senate committee in which it was introduced, and is now headed to a full Senate floor vote. She presents the arguments state AGs made in this and previous letters of support, including how important this industry has become, with marijuana now legal in 38 states, three territories and D.C., and U.S. sales expected to reach up to $33.5 billion by the end of 2023. Furthermore, she explains, the lack of banking options creates barriers to entry and instability by forcing businesses to operate on a cash only basis, creating opportunities for bad actors and deriving states of tax revenues.

(04:16): Emily revisits previous bipartisan AG letters in support of the SAFE Act, the SAFER Act’s predecessor.

(05:21): Chris notes that despite some policy differences between Ds and Rs, AGs share a desire to create a predictable legal environment, in which businesses know the rules of the road and can operate by them. This is especially important in the case of cannabis, given that cannabis in various forms is still illegal under the Controlled Substances Act, creating a regulatory quagmire.

(06:53): Emily observes that in addition to bipartisan letters in support of banking regulations, AGs have been both creating working groups within their own offices, and working together across offices and with federal agencies to shape the development of cannabis regulation.

(08:39): Chris expands the focus of the podcast beyond cannabis to other areas such as AI and fintech, where the pace of development is outstripping regulatory and legislative change. He argues that AGs’ diverse authority and focus on consumer protection means they are well placed to act and shape the regulatory environment around such issues faster and more effectively than other entities, and in a bipartisan manner. As such, AGs can be key allies for the business community in establishing banking principles and policies.

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To read more about the news story on which this podcast is based, click here.