With the House expected to vote on the SAFE Banking Act as early as next week, the American Bankers Association today joined three financial trade associations in urging lawmakers to pass the bill, which would allow depository institutions to serve the needs of customers in states where cannabis is legal. Introduced by Reps. Ed Perlmutter (D-Colo.), Steve Stivers (R-Ohio), Denny Heck (D-Wash.) and Warren Davidson (R-Ohio), the bipartisan bill is supported by more than 200 cosponsors. “The SAFE Banking Act of 2019 provides a mechanism for the cannabis industry and its service providers to deposit their cash in regulated financial institutions, which allows our members to meet the needs of their communities and helps those communities reduce cash-motivated crimes, increase the efficiency of tax collections and improve the financial transparency of the cannabis industry,” the groups wrote. With cannabis now legal in some form in 33 states, ABA continues to urge its members to contact their lawmakers in support of the SAFE Banking Act.<doc-sep>The U.S. is the largest and fastest-growing cannabis market in the world. The plant is approved for medical use in 33 states and Washington, D.C., and 10 states including the district have fully legalized marijuana. Efforts to legalize weed to some degree are ongoing in a number of other states. Yet cannabis remains a banned substance on a federal level, and despite support for legalization being at an all-time high — 61 percent of Americans approve of legalization, according to the the General Social Survey)— the federal government seems reluctant to move forward. The illegality of cannabis on a federal level creates many issues for cannabis businesses that prevent them from developing and forces them to incur higher operating costs that are then are carried over to consumers through higher prices. The Cannabis Capital Conference is coming back to Toronto! Click here to learn how you can join Tim Seymour, Jon Najarian, Danny Moses, Alan Brochstein and many others. Cannabis And Banking A central issue is the inability of cannabis companies to work with banks. Thousands of businesses are forced to operate with cash only, resulting in many unnecessary difficulties, such as the necessity for enhanced security at dispensaries and hiring specialized businesses to move cash around. It's not just the businesses that are suffering. In 2017, the IRS collected around $4.7 billion in taxes from cannabis businesses that were paid in cash. To process these cash payments, the tax authority awarded a $1.7-million contract to The Mitre Corporation for “large cash payments for processing cannabis federal taxes.” The U.S. government has some guidelines in place for banks to operate with cannabis businesses, and there are several banks that do so. Most banks refuse to get involved due to the high compliance costs and regulatory uncertainty. Some members of Congress have tried to address the issue of cannabis and banks, though the bills that were introduced didn’t even get past the introduction step. This year might be a breakthrough one, as The Secure and Fair Enforcement (SAFE) Banking Act of 2019 was introduced earlier this month following a February hearing in the House Consumer Protection and Financial Institutions Subcommittee, a first for this type of legislation. The SAFE Banking Act Of 2019 The SAFE Banking Act of 2019 was authored by Rep. Ed Perlmutter, a Democrat from Colorado, and Rep. Denny Heck, a Democrat from Washington, and cosponsored by Rep. Warren Davidson and Rep. Steve Stivers, both Republicans from Ohio. The main point of the bill is to create protections for banks that provide financial services to legal cannabis businesses. It also covers ancillary service providers such as real estate owners, accountants, lawyers and others that work with cannabis companies but are not directly involved with the cannabis plant. The bill has 143 co-sponsors, although only 12 are Republicans. On Tuesday, the legislation will receive the full committee markup, where amendments will be proposed and voted on before the bill heads to the House floor. Many Supporters, But Skepticism Remains The SAFE Banking Act bill has received the support of a number of stakeholders, including the National Cannabis Industry Association (NCIA), as well as representatives from the banking industry, law enforcement, and government officials. The NCIA is optimistic the bill will pass given the bipartisan support it currently enjoys and the historic milestones reached over the past two months. Still, there are only 12 Republican co-sponsors of the bill, and the Republican Party seems still far from embracing the notion of cannabis legalization — even though a majority of its electorate is in support of such a measure. To get a better idea about the SAFE Banking Act and its potential fate in Congress, we asked the opinion of a number of U.S. companies that provide point-of-sale, compliance software and payment processing solutions to the cannabis industry about the the legislation. Read on to see what Flowhub, Helix TCS Inc (OTC:HLIX)-owned BioTrackTHC, Zodaka and Green Bits think about the bill, its shortcomings and how it could change the way these companies operate. Unlikely To Pass? Some payment processing solution providers like the bill due to the problem it tries to address. “Right now the act has four stipulations that are meant to protect the financial institutions currently serving the cannabis industry and to protect and encourage new banks to start serving the industry. These changes are needed and would be extremely positive. The SAFE Act would be a tremendous and very necessary milestone for cannabis,” Zodaka CEO Jordan Friedman told Benzinga. The execs Benzinga spoke with still view the bill as unlikely to pass, with one reason being insufficient support from the GOP. “While the SAFE Banking Act has positive intentions to protect cannabis businesses, it's unlikely to pass because it doesn't address federal legality and lacks bipartisan support,” said Flowhub founder and CEO Kyle Sherman. Sherman’s opinion is echoed by Friedman, who also agrees that the bill is unlikely to reach President Donald Trump's desk. “Even though the Republican Party's ideas and feelings on the cannabis industry are evolving, there is still a large portion of their party who feels cannabis should remain an illegal schedule one substance." Drug's Federal Status Left Unaddressed One major shortcoming of the bill is that while it tries to launch a system that would allow banks to work with the cannabis industry, it will keep the plant illegal on a federal level. “Until cannabis is descheduled, the United States will grapple with a legal incongruity of enforcing federal law in a country where 33 states have legalized cannabis for medical or recreational use, with more states on the way,” said Ben Curren, CEO and Founder of Green Bits. BioTrack THC CEO Patrick Vo said this means banks might continue to find it risky to do business with cannabis companies. “ … It would be unreasonable to expect banks to risk their entire portfolio of customers on the hope that their bankers make defensible determinations of cannabis business’ compliance with state and local laws while knowing that that business remains unambiguously illegal at the federal level," Vo said. How Could Legislation Change Landscape For Payment Solutions Providers? Providers of POS, compliance solutions and payment processing services expect that if the SAFE Banking Act passes, it won’t have a negative effect on their business and might even help them improve their operations. On the one hand, offering more businesses the ability to open bank accounts would simplify POS providers’ business. “Moving the cannabis sector away from a cash-driven status would simplify several aspects to running a cannabis retailer, making it even easier for legal cannabis businesses to use point-of-sale and auto-compliance platforms to power their store,” said Green Bits’ Curren. At the same time, businesses would still be required to remain compliant with state and local regulations, and the only way to ensure this compliance is through the use of specialized software, said BioTrack THC's Vo. “One of the most difficult hurdles for banks to overcome in working with cannabis businesses is validating the legitimacy of their financial and historical records," he said. "Ensuring that a given business’ revenue has not come from black market diversion and that black market product has not made its way into the legitimate supply chain is very difficult to do, but is possible with proper seed-to-sale tracking." Related Links: Fed Chair Powell Says Banks In 'Very Difficult Position' With Cannabis National Cannabis Industry Association Comments On Marijuana Banking Hearing In Congress<doc-sep>Federal protection may be on the way for institutions that work with state-authorized marijuana and cannabis-related businesses, bringing hope that the long-standing cash hassle for these businesses and payments, such as quarterly taxes, will be resolved in a satisfactory manner. The Secure and Fair Enforcement Banking Act, or SAFE Act, saw a vote of 45-15 in favour from the House Financial Services Committee on March 28. From there, the SAFE Act will move to the full House voting schedule, and it is expected to see a vote within the next few weeks. Legislators believe the full House will also see a favourable vote, and relief for these banking institutions to allow them to serve cannabis businesses effectively. Cannabis businesses, in addition to having a means to handle large transactions without cash on hand, will also have the opportunity to apply for loans. This has previously been a non-starter due to federal prohibition of marijuana and the banking industry’s hesitancy to serve businesses handling a federally prohibited drug. The bill currently has 152 co-sponsors with both Democrats and Republicans backing the measure. This bill was first introduced six years ago, but it had not received a hearing in front of a committee until the end of March 2019. The bill at that time was co-sponsored by two Democrats and two Republicans, showing bipartisan support at its introduction and still not gaining any traction. The bill stipulates that financial institutions are protected from federal punishment for serving cannabis businesses. Meanwhile, requirements for regulations to handle funds for these businesses would need to be complete within 180 days, and an annual report will be required for submission to Congress on financial service availability to cannabis businesses and the potential means of expanding those services. JoEllen Wankel JoEllen Wankel is a freelance writer who has covered various topics from politics and education to healthcare and alternative energy. Wankel has written for The Bradford Era and Art of Handtools and has been published in a Chicken Soup for the Soul Compilation. See author's posts The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Grizzle hold positions in the company or companies mentioned in the article. 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Proponents say it'll prevent financial fraud while also making communities safer. New NORML Despite cannabis now being decriminalized or even legal in some form or another in the majority of states, many banks and financial institutions are reluctant to do business with state-legal marijuana operations due to the plant’s federal status as a Schedule I controlled substance. On Thursday, a key congressional committee voted to send an act that would ease those worries on to the House of Representatives for a vote — and if it becomes law, the impact of the act could extend far beyond your local dispensary. Playing Catch-Up The Secure And Fair Enforcement (SAFE) Banking Act is designed to assure financial institutions that they won’t face federal charges such as money laundering for working with marijuana–related businesses. After two days of debate and the consideration of multiple amendments, the House Financial Services Committee voted 45 to 15 Thursday morning to advance the act to the House of Representatives for a vote. A date for that vote has not been scheduled, but if the House passes the legislation, it will then move on to the Senate. “Our federal banking laws were designed to prevent illicit activity and help law enforcement do their jobs,” Rep. Ed Perlmutter (D-CO) said in a statement, reported by NORML. “These laws need to be applied to legitimate marijuana businesses and employees in order to improve transparency and accountability and help root out illegal transactions.” Safer Streets Perlmutter and other proponents of the SAFE Banking Act argue that financial institutions’ current reluctance to work with cannabis businesses isn’t just a matter of finances — because it forces many of the businesses to operate as cash-only, it makes both the businesses and their customers a worthwhile target for criminals. “[T]he SAFE Banking Act will get cash off our streets, reducing the risk of violent crime and making our communities safer,” Perlmutter added in his statement. “While Congress has stuck its head in the sand on this issue for many years, this Committee showed leadership today and I want to thank my cosponsors and members of the Committee for their support.” READ MORE: Marijuana Banking Passes Critical Committee [NORML] More on cannabis: New Senate Bill Would Legalize Marijuana Nationwide As a Futurism reader, we invite you join the Singularity Global Community, our parent company’s forum to discuss futuristic science & technology with like-minded people from all over the world. It’s free to join, sign up now!