State-legal cannabis businesses would have an easier time complying with their tax obligations under banking legislation included in the latest coronavirus relief bill passed by the House.
The Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act (H.R. 6800), approved by the House May 15, includes the provisions of the Secure and Fair Enforcement (SAFE) Banking Act of 2020, which would allow access to banking services for cannabis businesses operating in states where marijuana sales are legal by exempting financial institutions from federal investigation or prosecution for providing those services.
The SAFE Banking Act didn’t get much attention during floor debate for the HEROES Act, although several Republicans complained that “cannabis” was mentioned more in the bill than the word “jobs.”
But Rep. Ed Perlmutter, D-Colo., the SAFE Banking Act’s sponsor, tied the bill to job creation, writing on Twitter that the provisions “will provide some financial relief to businesses and their workers during this time and support good-paying jobs in communities across the country.”
Supporters of the SAFE Banking Act say that increased access to banks will lead cannabis businesses to rely less on cash, improving public safety and increasing tax compliance. Because the majority of cannabis businesses are unbanked, most operate on a cash-only basis and pay federal and state taxes in cash and only at designated offices where the tax authorities can accept it — roadblocks that most other legal businesses don’t face.
In a May 8 letter to House Speaker Nancy Pelosi, D-Calif., and House Minority Leader Kevin McCarthy, R-Calif., a group of 10 cannabis industry advocacy organizations had requested that the House include the SAFE Banking Act in the next round of coronavirus relief legislation, linking bank access to public health safety.
Citing reports that viruses can live on cash for up to 17 days, the letter says that the public safety concerns of operating in a cash-only environment have compounded during the pandemic. “The lack of access to financial institutions places industry workers, government employees, and the public at-large at risk as banknotes circulate from consumers and patients to businesses to government,” wrote the group, which included the National Cannabis Industry Association, the Marijuana Policy Project, and the Safe and Responsible Banking Alliance.
The letter also states that revenue across the cannabis industry has dropped during the pandemic, leading to consequences including lost state tax revenue.
The SAFE Banking Act previously passed the House with bipartisan support in 2019 as H.R. 1595, but the Senate never took up the bill. The Senate is also not expected to pass the HEROES Act in its current form, so proponents of the SAFE Banking Act will likely have longer to wait to see the bill enacted.
In a statement following House passage of the HEROES Act, the Marijuana Policy Project called on the Senate Banking Committee to take up the SAFE Banking Act. “In light of the public health and public safety benefits of this specific change in policy, the Senate has good reason to pass this language into law,” said Don Murphy, director of federal policies at the Marijuana Policy Project.