Not a SAFE Bet: Equitable Access to Cannabis Banking, An Analysis of the SAFE Banking Act
Ohio State Legal Studies Research Paper No. 721, 2022
Drug Enforcement and Policy Center, August, 2022
21 Pages Posted: 12 Aug 2022
Date Written: August 11, 2022
According to its sponsors and supporters, the Safe and Fair Enforcement ('SAFE') Banking Act would help address the challenges faced by small cannabis businesses that cannot currently access banking services or loans. With cannabis social equity programs ramping up across the nation but their participants lacking capital, a bill to solve that problem would be a well-timed blessing. But unfortunately, SAFE, as written, is unlikely to result in equitable access to financial services.
This paper summarizes the bill, analyzes why it would fall short of its purported goals, and makes recommendations to improve the bill. Here are our ten recommended amendments in short form, recognizing that none are an adequate solution on its own:
Use revenue collected by 280E to create a fund providing capital for businesses owned by people harmed by the War on Drugs. As a condition of safe harbor, require financial institutions to demonstrate compliance with anti-discrimination laws such as the Equal Credit Opportunity Act. Explicitly protect Minority Depository Institutions (MDIs) and Community Development Financial Institutions (CDFIs). Raise evidentiary requirements and limit enforcement penalties for MDIs and CDFIs for servicing legitimate cannabis businesses. Expand required federal guidance and reports to promote equity alongside diversity and inclusion. Require federal banking regulators to identify best practices to achieve racial equity in financial services. Clarify that cannabis criminal records are not an automatic red flag. Identify barriers beyond marketplace entry by including barriers experienced before, during, and after the licensure process. Study and report on diversity, equity, and inclusion in the hemp industry, as well as the cannabis industry. Promote compliance with state and local regulatory requirements regarding business ownership.
Keywords: SAFE Banking, Safe and Fair Enforcement Banking Act, cannabis industry, marijuana reform, cannabis banking, social equity, cannabis regulation
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