By citizen initiative a decade ago, the people of Washington legalized a regulated market for recreational cannabis. As a leading state to end this prohibition, Washington has seen the rise of a $1.4 billion-a-year industry now generating well over a half-billion dollars in annual state revenue.
The growth of our state’s cannabis industry is remarkable since outdated federal drug and banking laws prohibit the agricultural, processing and retail cannabis industries from using financial institutions, forcing business owners to conduct business almost entirely in cash.
Despite U.S. Treasury policy that essentially consents to state-authorized cannabis sales, nearly all financial institutions are still federally banned from the cannabis market. This is far more than just an accounting burden. The effects are felt throughout the cannabis industry ecosystem. This ban on banking denies access to small business loans, blocks equitable access to capital and complicates life for industry workers whose income is based on cannabis sales. Also, critically, it means stores cannot use credit cards and must transact almost exclusively in cash.
Being a cash-based industry is more than an antiquated logistical problem in a world of digital commerce; it creates a 21st century Wild West in which armed hold ups and storefront heists are a daily industry reality. Violent crime in the cannabis sector has risen more than 675% in the first few months of 2022, compared to all of 2017, according to Uncle Ike’s i502 Robbery Tracker. Recent reported robberies in Bellevue, Covington and Tacoma, which turned deadly, have brought this issue to the forefront.
These robberies are horrific; they are also not unique to Washington and are preventable. The common-sense solution is for Congress finally to legalize cannabis banking and get the industry away from cash. This change will reduce the incentive for quick cash heists, resulting in greater public safety by allowing cannabis retailers to operate like all other small businesses.
The SAFE Banking Act of 2021 (H.R.1996), sponsored by Rep. Ed Perlmutter (D-Colorado), has already passed through the U.S. House of Representatives on a vote of 321-101 and is the bipartisan solution that would allow financial institutions to provide banking services to state-licensed cannabis businesses.
Earlier this month, I traveled to our nation’s capital to unite fellow state treasurers on this critical issue and to meet with members of Congress to strategize and find a legislative path forward in the U.S. Senate.
The U.S. House of Representatives has now passed the SAFE Banking Act six times, due in large part to past advocacy from industry leaders and then-Rep. (now Lt. Gov.) Denny Heck. The legislation has repeatedly stalled in the Senate Banking Committee. With the current slim Senate Democratic majority — and Washington’s influential representation in D.C. — I have hope this year.
All 10 members of the House from Washington have now voted for the SAFE Banking Act, including Republican House leaders, who can facilitate bipartisan reconciliation between chambers after Senate passage. The path for Senate passage would to be to include the SAFE Banking Act into the Senate version of the America COMPETES Act, also known as USICA (S.1260). Moving this legislation forward will involve strong leadership. Sen. Maria Cantwell chairs the Senate Commerce Committee, which will help negotiate the final version of USICA. Sen. Patty Murray, who co-sponsors the SAFE Banking Act, serves in Senate leadership.
Passing the SAFE Banking Act will take every member of our congressional delegation prioritizing it. Washington state led the nation with cannabis legalization. Now is the chance for our state to lead the way with cannabis banking reform. Passing the SAFE Banking Act is the solution to stop these horrific robberies and to mitigate inequities in the cannabis industry.