[Congressional Record Volume 167, Number 69 (Wednesday, April 21, 2021)]
[Extensions of Remarks]
[Pages E436-E438]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




            SECURE AND FAIR ENFORCEMENT BANKING ACT OF 2021

                                 ______
                                 

                               speech of

                          HON. WARREN DAVIDSON

                                of ohio

                    in the house of representatives

                         Monday, April 19, 2021

  Mr. DAVIDSON. Mr. Speaker, I include in the Record the following 
letters of endorsement for H.R. 1996, the SAFE Banking Act of 2021.


                             Arizona Dispensaries Association,

                                                    17 March 2021.
     Hon. Ed Perlmutter,
     House of Representatives,
     Washington, DC.
       Dear Representative Perlmutter: The Arizona Dispensaries 
     Association would like to thank you for your leadership as 
     you move forward with the reintroduction of the Secure and 
     Fair Enforcement (SAFE) Banking Act. With an eye to economics 
     and public safety, we consider this legislation to be 
     essential to the businesses we represent.
       Cannabis businesses transact solely in cash, amounting to 
     billions of dollars in cash transactions each year, which 
     poses significant public safety concerns. The Arizona 
     cannabis program alone, which is the fourth top cannabis 
     paradigm within the United States, garnered over $1 billion 
     in sales in 2020. Within the first ten days of recreational 
     cannabis sales, Arizona businesses garnered at least $2.9 
     million. With over $1 billion in sales in 2020, received 
     almost exclusively in cash payments, and an expanding 
     recreational cannabis market, Arizona businesses must then 
     use this cash to pay employees and taxes. Arizona cannabis 
     businesses paid $500,00 in excise taxes from the $2.9 million 
     earned from those first ten days of recreational operations 
     in January. With an influx of cash to cannabis operators, 
     obtained in an extremely short period of time, businesses can 
     face difficulty in transporting taxation payments to local 
     tax offices. This example underscores the immense challenges 
     cannabis operators undergo due to cash only transactions.
       The reliance on cash transactions causes reason for safety 
     concerns of not only industry employees, but also the 
     communities which they serve. As cannabis businesses operate 
     using cash transactions, it is necessary to keep large 
     amounts of cash on the premises. Aware of this fact, criminal 
     actors targeted cannabis businesses for burglaries across the 
     country in the spring of 2020. Members of the Arizona 
     Dispensaries Association were targeted for these break-ins, 
     resulting in significant financial losses not only due to 
     theft, but also as a result of the accompanying property 
     damage. SAFE Banking would enhance the safety of industry 
     employees and the communities in which cannabis businesses 
     operate by allowing businesses to drastically reduce the 
     amount of cash on hand, lessening the chances of cannabis 
     businesses being targeted for this type of criminal activity. 
     Additionally, with the ability to process payments 
     electronically, there is a more detailed and accurate 
     accounting of business activity, increasing the potential for 
     increased tax revenue over the long term.
       Nationwide, the cannabis industry's four-year job growth 
     rate is an astounding 161%. The Arizona cannabis industry 
     alone employs 20,000 individuals, with over 5,000 of those 
     opportunities being created within 2020, which is especially 
     noteworthy considering the far-reaching impacts of the COVID 
     pandemic. As the SAFE Banking Act creates a safe harbor for 
     financial institutions to bank the proceeds of state-legal 
     cannabis businesses, its enactment is critical not only for 
     Arizona's cannabis industry to continue to grow at an 
     exponential rate, but to also contribute to the State of 
     Arizona's economic recovery during the aftershocks of the 
     pandemic.
       SAFE Banking addresses many concerns ranging from economic 
     viability to public safety, not only with bipartisan support, 
     but with a neutral impact on the budget. Arizona Dispensaries 
     association is prepared to work together to advance this 
     legislation into law in the 117th Congress.
           Best regards,

                                                  Sam Richard,

                                               Executive Director,
                                 Arizona Dispensaries Association.
                                  ____
                                  


                                                         ABIR,

                                                   April 19, 2021.
     Hon. Ed Perlmutter,
     U.S. House of Representatives,
     Washington, DC.
       Dear Representative Perlmutter: I am writing on behalf of 
     the Association of Bermuda Insurers and Reinsurers (ABIR), 
     which represents the public policy interests of Bermuda's 
     leading insurers and reinsurers and make up over 35% of the 
     global reinsurance market based on property & casualty net 
     premiums earned. ABIR members employ over 43,000 Americans in 
     the U.S. and protect consumers around the world by providing 
     affordable and accessible insurance protection and peace of 
     mind.
       ABIR writes in support of H.R. 1996, the SAFE Banking Act, 
     and to thank you for your leadership on this issue.
       As you know, the current lack of harmonization between 
     federal and state laws on cannabis banking deeply affects 
     insurers and reinsurers. We support Congress addressing this 
     important issue for all financial services providers and 
     specifically and applaud the inclusion of insurance and other 
     financial products or services insurers in the SAFE Banking 
     Act.
       Similar to other financial services providers, insurers are 
     being forced to restrict providing insurance and other 
     financial products or services to people working in state-
     legal cannabis jobs simply due to the source of their 
     paycheck. The SAFE Banking Act would allow the financial 
     services industry to serve the cannabis industry and will 
     result in greater transparency for the state-legal operators.
       Thank you for your leadership on this narrowly tailored yet 
     profoundly important issue, and we look forward to working 
     with you and your colleagues as legislation moves forward.
           Sincerely,
                                                     John M. Huff,
     President & CEO.
                                  ____

                                                       CANNABIZIL,
     Hon. Ed Perlmutter,
     House of Representatives,
     Washington DC.
       Dear Congressman Perlmutter: The Cannabis Business 
     Association of Illinois (CBAI)

[[Page E437]]

     would like to thank you for your reintroduction of the Secure 
     and Fair Enforcement or SAFE Banking Act. We again are in 
     full support of this measure.
       In June of 2019, Illinois signed into law groundbreaking 
     cannabis social equity standards to ensure the diversity and 
     inclusion of minority operators within the newly legalized 
     adult use cannabis industry. These standards have quickly 
     become the national template for other states seeking to 
     develop social equity programs tied to their cannabis 
     legalization efforts.
       Illinois' social equity applicants have been significantly 
     hindered due to their limited access to private capital and 
     more practically to traditional financial services where they 
     certainly could obtain loans and lines of credit to help 
     offset startup costs and secure real estate. The SAFE Banking 
     Act would not only resolve these financial challenges but 
     also help to bolster the success factor for many of these 
     social equity applicants.
       The SAFE Banking Act would also be a great boon to the 
     existing Illinois cannabis industry; their employees, their 
     communities, their customers and of greater importance their 
     patients. The Illinois cannabis industry garnered over $1 
     billion in cannabis sales in 2020, a sum of money that is 
     difficult to manage without access to traditional banking 
     services This lack of access to normal banking services, 
     available to every other legal operating business in 
     Illinois, is unfair and inequitable. The attack on ATM 
     machines located in every Illinois dispensary during the 
     Chicago August mass looting is a perfect example of the 
     industry's vulnerability because of cash insistent 
     transactions. Several of our association's members were 
     targeted several times and sustained massive physical damage 
     as well as product theft.
       Even Illinois' Treasurer, Michael Frerichs, is a staunch 
     supporter of the SAFE Banking Act's passage. He has gone on 
     record stating the need to provide normal financial banking 
     services to the cannabis industry creating more transparency 
     and accountability within this nascent industry. Allowing 
     electronic payments between businesses promotes a healthier, 
     safer economy. Currently financial institutions prohibit 
     these transactions inhibiting everything from interstate 
     specialty equipment purchases to software maintenance 
     contracts even association dues payments!
       CBAI would like to thank you for your efforts on behalf of 
     the industry. This is a very important piece of legislation 
     and we are grateful for your leadership in putting together a 
     bipartisan advocacy team. If our statewide association can 
     help in moving this legislation forward, please let us know.
           Regards,
                                                Pamela J. Althoff,
     CBAI Executive Director.
                                  ____

                                               California Cannabis


                                         Industry Association,

                                                   March 17, 2021.
     Hon. Ed Perlmutter,
     Washington, DC.
     Hon. Nydia Velazquez,
     Washington, DC.
     Hon. Steve Stivers,
     Washington, DC.
     Hon. Warren Davidson,
     Washington, DC.
       Dear Representatives, Perlmutter, Stivers, Velazquez, and 
     Davidson: It is with great enthusiasm that we support the 
     reintroduction of the Secure and Fair Enforcement Banking Act 
     of 2021 (``SAFE Banking''). The California Cannabis Industry 
     Association (``CCIA'') is the largest and most influential 
     trade association in the state of California representing the 
     diverse interests of the cannabis industry: retail, 
     cultivation, manufacturing, delivery, distribution, testing, 
     insurance, packaging, and various ancillary services. Our 
     unified voice includes 500 businesses and represents nearly 
     15,000 employees across the state. SAFE Banking is not only 
     critical to the economic success in our industry, but it is 
     also imperative in improving public safety and making the 
     cannabis industry more equitable.


       I. SAFE Banking Creates Opportunity for BIPOC Individuals

       While cannabis is one of the fastest growing sectors in the 
     United States, BIPOC individuals (Black, Indigenous, People 
     of Color) have struggled to participate due to systematic 
     economic racism and lack of access to capital. While some 
     cities such as Oakland, San Francisco and Los Angeles have 
     developed social equity programs with varying degrees of 
     success, without access to capital, licenses obtained under 
     these frameworks continue to be associated with high costs. 
     Unfortunately, even in states like California that have 
     equity programs written into their cannabis statutes, BIPOC 
     owners fall prey to predatory business arrangements where a 
     larger cannabis company will be effectively running the 
     businesses through a management services agreement while the 
     minority owner becomes a figurehead.
       SAFE Banking would allow more banks, including community 
     banks, to participate with the cannabis industry providing 
     more opportunities for potential business owners. 
     Additionally, SAFE Banking would make traditional financial 
     instruments--like lines of credit--available to small 
     operators. That capital is often the difference between 
     success or failure for a small business. Currently, most 
     cannabis businesses are funded through private generational 
     wealth or investment, areas in which BIPOC individuals lag 
     when compared to their white peers. Every year women of color 
     get less than 1% of total venture capital funding. Further, 
     data from 2019 indicates that only 200 Latino and Black 
     individuals nationwide, in all industries, were able to raise 
     over $1 million in venture capital, making cannabis ownership 
     all but unobtainable when start-up, operations costs, and 
     licensing fees are considered.
       While SAFE Banking would not resolve the issues of 
     systematic economic racism, the opportunity for BIPOC 
     individuals to establish relationships with traditional 
     lenders is a critical step in mitigating the damage done by 
     the War on Drugs.


                II. SAFE Banking Improves Public Safety

       During the summer of 2020, over three dozen cannabis 
     businesses in California were the target of robberies and 
     break-ins, adding to a long string of targeted criminal 
     activity in the state. Cannabis businesses known to have cash 
     on hand become easy targets for petty and organized 
     criminals. In most cases from last summer, professional 
     burglars were caught on security footage stealing cash 
     registers, safes, and ATMs. The looting and robberies were so 
     problematic that California's Bureau of Cannabis Control, the 
     state's top regulator for cannabis activity, removed all 
     cannabis business addresses from their website.
       Without question, an act of vandalism is distressing to any 
     business, but cannabis businesses are faced with unique 
     challenges due to lack of access to traditional financial 
     services. Due to closures of local offices of the California 
     Department of Tax and Fee Administration (CDTFA) because of 
     CO VI D-19, many cannabis businesses who regularly visited 
     these offices to pay their excise taxes in cash, were sitting 
     on excise tax payments, waiting until the local branches to 
     reopen. These excise tax payments were looted along with 
     other cash and inventory.
       The reduction of cash on site at cannabis businesses will 
     help reduce the chances of robberies but could also improve 
     public health. Like many other states, over the course of the 
     last year California designated cannabis businesses as 
     essential and our operations saw many come into our 
     businesses to buy medicinal and adult use cannabis. However, 
     all cash transactions require significantly more face-to-face 
     interaction than other types of payment systems and ran 
     contrary to a Centers for Disease Control recommendation to 
     limit cash sales.


                   III. SAFE Banking is a Job Creator

       California has the largest cannabis economy not only in the 
     United States, but also in the world. The state legal 
     industry employed a massive 57,970 individuals in 2020 and 
     generated over $3.4 billion dollars in sales. Of the nearly 
     60,000 individuals employed by the cannabis industry, over 
     23,000 of those jobs were added during the COVID-19 pandemic.
       SAFE Banking could increase economic growth by ensuring 
     that cannabis business could conduct regular payroll and 
     deposit money into banks that could turn those deposits into 
     outward facing loans. Access to traditional financial 
     services would allow these businesses to hire more workers 
     and open more facilities.


                             IV. Conclusion

       For the safety of our employees and our communities we urge 
     quick action on this critical piece of legislation. Removing 
     federal law barriers to banking services for state-legal 
     cannabis businesses, would catalyze economic growth in our 
     state and around the country. Banking reform is essential to 
     the diversity and growth of the cannabis industry. CCIA is 
     proud to support this bipartisan bill and looks forward to 
     supporting the efforts to passage.
           Sincerely,

                                             Lindsay Robinson,

                                               Executive Director,
     California Cannabis Industry Association.
                                  ____



                                 COLORADO BANKERS ASSOCIATION.

       Representative Perlmutter: The Colorado Bankers Association 
     is proud to again endorse the SAFE Banking Act to allow 
     state-legal cannabis businesses access to banking services. 
     We have supported this in previous years. CBA represents over 
     95% of the banking industry in Colorado and we support the 
     bill to get cash off the streets and make our communities 
     safer.
       Banking operations are greatly complicated by the conflict 
     of state and federal law on cannabis. That creates 
     substantial problems for handling cannabis deposits which 
     range from cash handling and security to major compliance 
     issues with FinCEN requirements for Suspicious Activity 
     Reports required by the Bank Secrecy Act/Anti Money 
     Laundering laws. For local banks that usually results in a 
     bank not knowingly handling cannabis related accounts. For 
     regional and nationwide banks that almost always results in 
     not banking cannabis accounts. Lending issues are more 
     complicated.
       Due to widespread legalization of some form of recreational 
     or medical marijuana, including CBD oil, today 97.7% of the 
     population in the U.S. lives in cannabis friendly 
     jurisdictions. We very much believe it is up to each state 
     and its voters to decide how to proceed with marijuana laws, 
     but there is a clear need to align federal and state laws 
     addressing the related banking problems.
       The state/federal conflict of laws creates restrictions on 
     banks for accepting cannabis related deposits. This poses a 
     serious public

[[Page E438]]

     safety risk and is our primary reason for advocating the SAFE 
     Banking Act. Additionally, financial institutions that 
     provide banking services to state-legal marijuana businesses 
     are currently subject to criminal prosecution for ``aiding 
     and abetting'' a federal crime and money laundering 
     allegations due to the Controlled Substances Act. Banking 
     services such as accepting credit card payments, depositing 
     revenues, and writing checks to pay employees, vendors and 
     taxes are needed by licensed and regulated cannabis 
     businesses that are now cut off from such banking services.
       The SAFE Banking Act creates the ability to access the 
     banking system and make our communities safer. The bill 
     removes violations of money laundering laws for any proceeds 
     derived from state-legal marijuana businesses. The result is 
     to get cash off the streets and into the financial system 
     which is built to identify and block or report fraud and 
     illicit activity. This bill also contains needed protections 
     for hemp and hemp-derived CBD related businesses, which still 
     struggle in accessing financial services despite the 
     legalization of hemp in the 2018 Farm Bill.
       The Colorado Bankers Association is pleased to support this 
     needed change in federal law. Please contact us with any 
     questions.

                                             Don A. Childears,

                                          Chief Executive Officer,
     Colorado Bankers Association.
                                  ____



                                                         CUNA,

                                                   March 18, 2021.
     Hon. Ed Perlmutter,
     House of Representatives,
     Washington, DC.
     Hon. Steve Stivers,
     House of Representatives,
     Washington, DC.
     Hon. Nydia Velazquez,
     House of Representatives,
     Washington, DC.
     Hon. Warren Davidson,
     House of Representatives,
     Washington, DC.
       Dear Representatives Perlmutter, Stivers, Velazquez, and 
     Davidson: On behalf of America's credit unions, I am writing 
     in support of the Secure and Fair Enforcement (SAFE) Banking 
     Act of 2021, which would permit credit unions in states where 
     marijuana is legal to safely serve their members' related 
     needs. The Credit Union National Association (CUNA) 
     represents America's credit unions and their more than 120 
     million members.
       Credit unions exist to serve the financial services needs 
     of their members, but the disparate treatment of production, 
     distribution, sale and use of cannabis under federal law and 
     some state laws has discouraged them from providing services 
     to businesses throughout the supply chain in states where 
     cannabis is legal. In recent years, as various states have 
     legalized cannabis for medicinal and recreational use, 
     participants in the market have sought out credit unions to 
     provide safe and affordable financial services. In recent 
     years, 36 states, the District of Columbia, Guam, Puerto Rico 
     and the U.S. Virgin Islands have approved medical marijuana 
     and cannabis programs.
       CUNA takes no position on legalizing or decriminalizing 
     medicinal or recreational cannabis at either the state or 
     federal level. However, credit unions operating in states 
     where it is legal have members and member businesses involved 
     in the cannabis market who need access to traditional 
     depository and lending services, the absence of which creates 
     a significant public safety issue. A 2015 analysis found 
     that, in the absence of being banked, one in every two 
     cannabis dispensaries were robbed or burglarized--with the 
     average thief walking away with anywhere from $20,000 to 
     $50,000 in a single theft.
       Additionally, even financial institutions that choose not 
     to bank the cannabis industry still risk unknowingly serving 
     those businesses in states where cannabis is legal. Indirect 
     connections are often difficult to identify and avoid because 
     like any other industry, those offering cannabis-related 
     services work with vendors and suppliers. These are Main 
     Street businesses like the printing company that makes a 
     business card, the landlord that rents office space, and even 
     the utility company that provides water or electricity. Under 
     the existing status quo, a credit union that does business 
     with any one of these indirectly affiliated entities could 
     unknowingly risk violating federal law.
       The SAFE Banking Act of 2021 would offer narrowly targeted 
     federal protections for credit unions and other financial 
     institutions accepting deposits, extending credit, or 
     providing payment services to an individual or business 
     engaged in cannabis related commerce in states where such 
     activity is legal with a safe harbor, so long as they are 
     compliant with all other applicable laws and regulations. 
     Furthermore, the SAFE Banking Act provides safe harbor to 
     credit unions and their employees who are not aware if their 
     members or customers are involved in this business.
       Many credit unions operate in states where their voters or 
     legislatures have made cannabis legal in one form or another. 
     Therefore, CUNA believes that financial institutions should 
     be permitted to lawfully serve businesses that engage in 
     activities authorized under their state laws, even when such 
     activity may be inconsistent with federal law.
       For that reason, CUNA has long supported the SAFE Banking 
     Act and we look forward to working with you to advance this 
     legislation into law. On behalf of America's credit unions, 
     thank you for your leadership on this important issue.
           Sincerely,
                                                       Jim Nussle,
     President & CEO.

                          ____________________