The approval of the Secure and Fair Enforcement Regulation Banking Act (SAFER) by the Senate Committee on Banking, Housing and Urban Affairs on Sept. 27 marks a significant milestone in the ongoing debate over marijuana legalization and regulation in the United States.
This bill, if passed into law, has the potential to bring substantial changes to the regulation of marijuana-related transactions.
Transactions made at marijuana dispensaries are currently classified as “proceeds from an unlawful activity” under federal law due to the ban on marijuana, despite its legalization in many states. Banks have the authority to close any account if they believe a business is performing illegal transactions.
Consequently, dispensaries are forced to operate on a cash-only basis. This can be problematic because cash-only businesses are at a higher risk of robberies. This not only endangers the safety of employees, but also poses risks to customers and neighboring businesses.
Employees are often mugged because criminals believe they may be carrying large amounts of cash when they leave work. The lack of financial documentation can also foster tax evasion, money laundering and other illegal activities.
SAFER aims to resolve these issues by allowing marijuana dispensaries access to traditional banking services. Federal regulators would be required to “develop uniform guidance and examination procedures – including legacy cannabis-related deposits” and “update guidance related to hemp-related businesses and service providers.”
This would result in reduced physical cash flow within businesses, leading to a projected significant drop in crime rates.
Additionally, the occurrence of illegal activities such as money laundering and tax evasion would decrease as regulatory authorities could conduct more rigorous oversight of dispensary finances.
Banks could experience increased income, which would improve the economy and boost tax revenues for both state and federal governments. Enhanced financial transparency would boost the process of tax collection from marijuana-related enterprises, potentially paving the way for a more efficient and effective taxation procedure.
However, lawmakers intend to revise the bill further when it eventually reaches the Senate floor. Even after amendments, parts of the bill could still enable politically motivated discrimination from banks.
