[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.
____________________