A new report has revealed that legislators may pass federal cannabis banking reform this year as long as it is combined with existing cannabis expungement legislation. Due to federal prohibition, businesses in the cannabis sector have been unable to access banking and loan services, forcing them to operate on a cash-only basis and limiting their growth opportunity.
The lack of cashless payments has been a particularly touchy issue as it makes it difficult for marijuana businesses to track their finances and keep up with their taxes; it also makes them prime targets for burglaries and robberies.
Politico reported that Senate Majority Leader Chuck Schumer recently met with GOP Representative David Joyce and discussed the possibility of combining his Harnessing Opportunities Act by Pursuing Expungement (HOPE) Act with the SAFE Banking Act. While the SAFE Banking Act would finally grant state-legal cannabis businesses access to banking services, the HOPE Act will provide states with the funds needed to expunge prior-cannabis related offenses from people’s records.
Furthermore, U.S. Cannabis Council president and CEO Steve Hawkins stated earlier this year that the HOPE Act may also contain criminal justice provisions that weren’t included in Representative Ed Perlmutter’s SAFE Banking Act but that appealed to Schumer and other progressive Democrats.
According to Cantor Fitzgerald investment analyst Pablo Zuanic, the reported discussions between Schumer and Joyce are a sign that the Senate majority leader could be open to a “reasonable and realistic” compromise on the SAFE Banking Bill.
Although Schumer has been an avid supporter of comprehensive cannabis reform, he hasn’t been a big fan of the SAFE Banking Act, stating that it seems to protect industry interests first and doesn’t align with his goal of comprehensive cannabis reform. In late 2021, he stated that key senators had agreed not to advance the cannabis banking legislation before federal legalization. The reported talks signal a major change in Schumer’s views on the importance of cannabis banking.
On the other hand, Zuanic isn’t 100% certain that the SAFE Banking Bill will make it into the final version of American competitiveness legislation that is currently being discussed by a bipartisan conference committee. He believes that Joyce’s HOPE Act could be a reasonable compromise for Schumer, who is probably starting to feel the pressure from lawmakers and lobbyists to pass cannabis banking legislation.
Schumer is also expected to officially introduce his Cannabis Administration and Opportunity Act later this month after a couple of delays.
If these regulatory changes are made allowing cannabis banking and other reforms, the industry and its leading players, including Flora Growth Corp. (NASDAQ: FLGC), will check off one hurdle that has bogged down the industry for years.
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