New Jersey has overcome countless hurdles in the race to kickstart medical and adult-use cannabis. There is one hurdle, however, that we cannot leap over without action from the federal government. It is time, at long last, to immediately pass the Secure and Fair Enforcement Banking Act, or SAFE. Doing so will create a more business-friendly environment in the cannabis industry, allow banking insurers to enter the market and alleviate some of the hardships perspective minority entrepreneurs face in acquiring capital.
Starting a business from the ground up is already a risky venture. But one of the most unpredictable industries for a startup is the cannabis industry. Despite the nationwide embrace of the cannabis industry, cumbersome — some might say ridiculous — obstacles abound. In New Jersey, we’ve attempted to meet many of these challenges, with fits and starts along the way. But the issue of banking remains an enormous one for any business looking to succeed in the cannabis industry.
Banks are unwilling and prohibited from offering essential banking services to legal cannabis businesses, because it is still illegal at the federal level. This means New Jersey business owners cannot apply for a loan or credit lines, and their workers are denied mortgages solely due to their occupation. Without these essential banking tools, these businesses struggle to get off the ground and must operate cash-only.
New Jersey’s legal cannabis industry is in its adolescent phase. Still, having just opened stores five months ago, it has already managed to bring in nearly $80 million in revenue in 10 weeks. More entrepreneurs are seeing this as an opportunity and applying for retail licenses, trying to break into the rapidly growing industry. And many who have applied to open businesses in the legal cannabis sphere in New Jersey are minority groups, which would ensure an equitable industry.
These businesses cannot succeed, however, while operating exclusively in cash and without any form of financial aid, because it limits their economic growth potential. Moreover, as we have learned here in New Jersey, minority communities cannot compete with large, out-of-state operators without access to capital and loans. The current federal status makes that problem far worse. Also, it goes without saying that carrying large amounts of cash is an unwise and unsafe practice.
SAFE is federally sponsored legislation that would help correct all of this. It would federally prohibit financial establishments from refusing banking services to cannabis businesses and their workers, instead providing them the chance to invest and grow their enterprises and livelihoods. It would also protect banks — and their insurers — that offer services to cannabis business, from federal prosecution.
SAFE has been discussed and even passed countless times, but has never made it through both the House of Representatives and the Senate. It is time for that to end. There are, without question, other issues that are negatively impacting the cannabis industry, including the legacy market. But the lack of access and services provided by banks is crippling everyone. It must stop.
As the state’s cannabis chamber of commerce, representing New Jersey’s cannabis businesses, ranging from large to small and minority-owned, we urge the federal government to pass the SAFE Banking Act. Lawmakers need to end the prohibition of banking services against the cannabis industry so our state and our businesses can thrive without criminal or economic limitations. The time is now. The opportunity is right in front of us. Washington needs to make it happen.
Edmund DeVeaux is president of the New Jersey CannaBusiness Association, the state’s cannabis chamber of commerce, which promotes jobs and growth in a sustainable and responsible cannabis industry.