Thanks to federal laws, financial institutions are leery of working with marijuana companies. Lawmakers have introduced a bill that could ease the minds of banks and credit unions looking to work with the cannabis industry, but some advocates say that solving the problem will only make it easier to put off legalization.

Cannabis Banking Problems

Marijuana is big business, raking in billions of dollars every year in the U.S. But since the dawn of medical cannabis, pot businesses have been struggling with what to do with all that cash. Federal law prohibits financial institutions from knowingly doing business with criminal operations. Since cannabis is still federally illegal, that technically includes marijuana companies, whether the drug is legal in their jurisdiction or not.

Federal guidance to prosecutors from the Department of Justice has been to keep their hands off of legally operating cannabis businesses, and there are a few banks and credit unions that have decided to offer up their services to the industry with the understanding that these instructions will protect them from prosecution. However, the policy has yet to be codified and can evaporate at any time.

The Secure and Fair Enforcement (SAFE) Banking Act, introduced by U.S. Rep. Ed Perlmutter (D-CO), aims to fix the problem by allowing financial institutions to work with cannabis businesses without fearing federal reprisal. This would allow cannabis companies to use point-of-sale services to accept credit card payments—cutting down on safety problems created by being cash-only enterprises—and would allow them to make deposits in federally-protected banks.

If passed the bill would solve a number of problems for cannabis businesses overnight. They would no longer need to transport large amounts of cash and endanger employees, and they would be able to give out paychecks instead of paying their workers in cash. Bank would also greatly benefit from the deal, since—as we said above—marijuana is big business.

Language from the bill has been included in an amendment to the National Defense Authorization Act (NDAA) that recently cleared the House.

Pushback on SAFE Banking

But not everyone is behind the proposed bill. In July Sen. Cory Booker (D-NJ) said he would do anything in his power to stop the SAFE Banking Act. “I will lay myself down to do everything I can to stop an easy banking bill that’s going to allow all these corporations to make a lot more money off of this instead of focusing on restorative justice aspects,” he said.

This may come as a surprise to some since Booker is a well-known passionate cannabis advocate who is a co-sponsor of the Cannabis Administration and Opportunity (CAO) Act—which would deschedule cannabis at the federal level, give states control over their own marijuana policies, expunge the records of cannabis prisoners and exercise a number of other major reforms. But Booker says he believes that giving banks the freedom to capitalize off of the cannabis industry without implementing broader reforms would make those reforms seem less imperative.

During an interview on the Psychoactive podcast, Senate Majority Leader Chuck Schumer (D-NY)—author of the CAO—said that he and his colleagues have agreed to not take up the SAFE Banking Act or any other cannabis banking legislation unless the CAO advances. “If we let this bill out, it will make it much harder and take longer to pass comprehensive reform,” said Schumer. “We certainly want the provisions similar to the SAFE Banking Act in our bill. But to get more moderate people—to get some Republicans, to get the financial services industry behind a comprehensive bill—is the way to go. It’s the right thing to do.”

Pushback on Pushback

A group of Black small-business owners have said that Booker’s assessment is flawed when he points to large corporations as the only groups who would benefit from the passage of the SAFE Banking Act.

During an event titled “UNSAFE Banking & Cannabis: The Real-Life Impact on Public Safety and Social Equity,” hosted last month by lobbying group U.S. Cannabis Council (USCC), a number of Black cannabis entrepreneurs expressed concerns that the banking bill would not pass. They were all small business owners—not CEOs of major corporations—and they said the industry needs financial protections immediately.

“It has posed a great barrier to entry for minority entrepreneurs, who are faced with the inability to access basic financial services and the opportunity to grow their businesses that would come through basic bank loans,” said USCC CEO Steven Hawkins. “As a result of not having financial services available, we are creating a redlining effect, where larger companies—because they have the capacity to access, more generally, financial services at a higher cost but able to get some capital—are able to flourish.”

Perlmutter told reporters that the banking problem is too pressing to be used as a negotiation tool. “Bottom line: The SAFE Banking Act is the best opportunity to enact some type of federal cannabis reform this term. By including the SAFE Banking Act in the final NDAA, we can safeguard our financial system, reduce the public safety risk in our communities and help support veteran and minority-owned businesses now.”

Last week the governors of 21 states, including Gov. Michelle Lujan Grisham, signed a letter to members of Congress asking that cannabis banking protections be included in the Senate’s version of the NDAA. The mayor of Washington, D.C. and the governors of Guam and the U.S. Virgin Islands also signed the letter.

Schumer has said that he’d be open to advancing banking reforms if social equity provisions like cannabis conviction expungement is included in the NDAA. “If people in the Senate can add some things on, that would make it more of a palliative,” he said during his podcast interview.