Cannabis lighting firms take note: As rapidly as the legal marijuana industry is growing, it is held back in the U.S. by a lack of federal action that would allow tens of thousands of firms to access banking services.
That view came across loud and clear in a recent installment of Fluence Unfiltered, an online video series in which David Cohen, CEO of cannabis lighting vendor Fluence, interviews a leading industry figure.
In speaking with lobbyist Saphira Galoob, both individuals agreed that Congress’ failure so far to pass the SAFE Banking Act of 2021 is hindering business across a wide swathe of the industry. According to U.S. News and World Report, recreational cannabis is now legal in 19 states. However, the federal government has not legalized it, which has made it difficult for cannabis companies to obtain banking services.
“Banks are required to only extend services to businesses that are conducting legal activity and because cannabis is not legal, the cannabis industry has very limited access to banking,” said Galoob, CEO of Washington, D.C. cannabis lobbying firm The Liaison Group.
The SAFE Banking Act could rectify the situation. As explained by the Library of Congress, “this bill generally prohibits a federal banking regulator from penalizing a depository institution for providing banking services to a legitimate cannabis-related business.”
Galoob, who is also the executive director of the D.C.-based industry association National Cannabis Roundtable, said that SAFE Banking would ease concerns by financial institutions and make them more likely to work with cannabis companies.
She estimated that about 70% of the country’s 35,000 cannabis-related businesses lack banking.
Not only is that a business hindrance, but it also encourages violent crime, as cannabis outfits conduct business in cash, which induces robberies and worse, as noted by SAFE’s sponsor, Rep. Ed Perlmutter (D-C.O.).
“The Senate continues to ignore the public safety risk of forcing cannabis businesses to deal in all cash,” Perlmutter said on Twitter last month. “In the wake of the Senate’s inaction, people continue to be killed and businesses continue to be robbed.”
Perlmutter tweeted those strong words about two weeks ago, after SAFE Banking was left out of the broader United States Innovation and Competition Act (USICA), a wide-ranging piece of legislation intended to boost funding and competitiveness of various industries including science and technology. USICA has passed the Senate but not the House.
That happened after Cohen interviewed Galoob for the Fluence Unfiltered episode.
The USICA action did not outright kill SAFE, which has passed the House six times, most recently in April 2021, but has never passed the Senate, where it currently sits in the Committee on Banking, Housing, and Urban Affairs.
By dragging its feet on SAFE, the Senate is reinforcing some of the dated, negative connotations still associated with the cannabis trade such as drug abuse and crimes, noted Cohen of Austin, TX–based Fluence, now owned by Signify.
“When you allow a bunch of businesses to open, and you don’t give them a place to put their money, to write checks, that is a self-fulfilling prophesy,” he said in discussion with Galoob.
Cohen and Galoob also considered the prospect of federal legalization and addressed the consequences of federal law misaligning with state legislation. LEDs Magazine will report on these subjects separately.
Fluence Unfiltered typically examines the challenging, rough-and-tumble aspects of the cannabis trade. You can view the SAFE installment on YouTube.
According to Grand View Research, the global legal marijuana market totaled $13.2 billion in 2021 and will have a compound annual growth rate of 25.5% to 2030; the U.S. share in 2021 was $9.2 billion.
MARK HALPER is a contributing editor for LEDs Magazine, and an energy, technology, and business journalist ([email protected]).
*Updated July 11, 2022 2:15 PM.
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