Marijuana legalization took a hit with the Safe Banking Act getting removed from the NDAA.
They say “one step forward, two steps back” is the motto in the marijuana industry, and it appears to be true as after the House of Representatives added the Safe Banking Act to the National Defense Authorization Act, the Senate removed it. At this point there is little hope for passage of the Safe Banking Act in early 2022, but Rep. Ed Perimutter of Colorado plans to file a last-ditch amendment to the NDAA at the Rule Committee in an attempt to add the Safe Banking Act back into the NDAA.
While the NDAA removed safe banking access for the marijuana industry and its employees, it did keep in language and funding for UFOs and Unidentified Areial Phenomenon. As the Wolf of Weed Street pointed out, let’s hope the aliens are able to use credit cards and pay their taxes with access to bank accounts, because who knows how much tax revenue we are losing to those aliens “dining and dashing” on planet earth.
What does it mean to the cannabis industry now?
Estimates online showed that almost 95% of Wall Street expected the Safe Banking Act to pass in some form or another in this bill, at least according to “buy-side” analysts of cannabis stocks.
This is a huge win for MSOs and large cannabis companies that have bigger cash flows and access to debt at a reasonable rates, say 8% to 11% borrowing ranges. Small marijuana businesses and startups that don’t have strong cash flows and access to cheap debt rates are going to be most impacted by not getting access to bank accounts, loans, and easy investment money. Score a win for Big Marijuana, and a loss for Small Marijuana. Look for consolidation to continue as the bigger fish with access to cash and easy debt can now increase their leverage on smaller market deals and get them done.
This will not help competition in the cannabis industry and brand building will now be tougher for small companies with small cash reserves. The brands that have the budget to market long term will be in-house dispensary brands, so look for your “reserves, fusions, and small batch grow” mottos to keep building momentum marketing channels.
Another part of the Safe Banking Act was cannabis arrest record expungement and social equity rules to help those most impacted by the War on Drugs. Those features are no longer in play with the Safe Banking Act removed from the NDAA, so the House will have to figure out a way to get expungement language into the Act another way or through the Rules Committee.
Overall, a largely disappointing morning for the cannabis industry, while full legalization was seen as a fight and Federal reform still had many kinks to work out, Safe Banking was seen as a layup by the industry and didn't cross the line on peoples’ beliefs on whether marijuana should be legalized at the Federal level or not. This Act was just about allowing state-legal marijuana companies to have bank accounts, credit card machines, the ability to pay taxes with checks and deposits, and to protect the safety of marijuana industry employees around the country. Right now, criminals know that dispensaries have huge cash holdings on site, as well as millions of dollars of cannabis in their stores. This creates easy targets for thieves and puts employees at risk each day.
Hundreds of cannabis bills have been created in the more liberal House and have gone on to a slow death in the Senate. In the end, in order to get legalization and Safe Banking passed, Mitch McConnell and the power brokers in the Senate will have to be voted out or be forced by the American people to change their stance on marijuana reform in America.
READ MORE ON SAFE BANKING AND MARIJUANA COMPANIES...
HOW CAN MARIJUANA COMPANIES HAVE BANK ACCOUNTS RIGHT NOW? READ HERE!
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