It’s no secret the cannabis industry needs a legitimate banking solution. The Secure and Fair Enforcement (SAFE) Banking Act of 2019 has the potential to solve many of those problems and simultaneously invigorate the development of innovative banking and financial technologies.
When many people think about issues regarding cannabis and the banking industry, they often only think about cannabis companies being prohibited from making deposits and withdrawals, and understandably so.
If a cannabis company cannot obtain a banking account for their business and/or personal use, they are prevented from performing the most basic transactions such as making deposits and withdrawals.
However, those simple transactions are just scratching the surface of what cannabis companies and entrepreneurs need out of the financial system, and what they are being deprived of.
SAFE Banking Means Access to Capital
Cannabis companies need access to capital via business loans. They need to be able to conduct their banking over the internet and via apps, like every other business.
Many people tend to forget what life was like without the banking options and services that exist today. Imagine being required to conduct all of your business in cash. That affects more than just cash deposits into an account.
Something as easy as printing off a bank statement at the end of the month, so one doesn’t have to hand-write a ledger or manually enter data into a spreadsheet, is not an option.
It’s a very primitive way of life considering how significantly technology has revolutionized the banking industry and the consumer banking experience in the last few decades.
The days of having to balance checkbooks the old-fashioned way are long gone, that is, unless you operate a cannabis company.
Licensed and regulated cannabis businesses and the ancillary companies that serve them should be able to access the United States’ financial system like any other legal business.
A growing number of financial institutions are working with the cannabis industry on a limited basis, however, they are the exception versus the rule. That has a ripple effect throughout the banking industry, including the technology sector.
Technology companies with products and services geared towards supporting the banking industry are just as leery of modifying their business models to accommodate cannabis clients as the financial institutions they work with, due to fears of prosecution.
In order for the cannabis industry to reach its full potential, banking-focused companies need to be able to work within a sensible legal framework rather than having to try to figure out ways to work around current policies.
When that happens it will be revolutionary for cannabis banking, with innovators and inventors using technology to help tackle the most complex banking problems facing the cannabis industry. It’s going to be exciting and ripe with opportunities.
The cannabis industry is heavily regulated, with seed-to-sale tracking policies being the standard. Taxes are more complicated for cannabis companies, many of which have a need for payment processing services. Everything will eventually have to interact and interface with banking products and services.
The SAFE Banking Act is the best chance the cannabis and banking industries have to move things forward.
The federal legislation, which was already approved by the House, would transform the cannabis industry from being based on a cash- and safe-storage model to one that is more modern and harnesses current technologies, while also encouraging innovation in the financial sector.