Big Step for Cannabis Industry as Congress Ponders Banking Legislation
Cannabis businesses in the United States may have a big reason to celebrate soon as Congress considers a vote that would allow companies in the cannabis sector to open accounts at federally regulated banks.
Kevin Murphy, the founder and CEO of the Acreage Holdings, during his company’s earnings call Wednesday said both houses of Congress have conducted hearings for the Safe Banking Act in 2019, according to Barron’s.
“Safe banking is what we believe to be the first bill that will be passed,” Murphy said.
He added that even some Republican senators now realize that oversight of the cannabis industry and public safety would increase if companies had a place to deposit their mountains of cash.
“Conservative Republicans are all about safety and they’re all about taking cash out of the system,” Murphy said.
Because marijuana is still illegal at the federal level, banks do not like doing business with companies involved in the industry because they can be prosecuted for money laundering — even if the companies are only selling product in legal states. Acreage workers have even lost federal pensions, according to Barron’s.
But safe banking is only the first step, and the bill being considered doesn’t provide any means for companies like Acreage Holdings to access U.S. capital markets. A lot of cannabis companies have turned to the Canadian Securities Exchange to provide shares to investors. Murphy argues that conservative lawmakers don’t want to open capital markets under the Safe Banking Act because it will provide funds to fuel growth of the cannabis industry.
Knowing that, Murphy and Acreage have a deal to be bought by Canadian cannabis leader Canopy Growth — whose stocks have taken a beating the past couple of months — for $3.4 billion once cannabis becomes federally legal in the U.S. But Murphy believes there won’t be a federal law to even consider for at least 18 to 24 months, according to Barron’s.
Congress is considering the States Act, which would be the first step towards federal legalization. If passed, the bill would eliminate federal prohibitions in states that have already legalized cannabis.
Murphy believes New York is likely to add recreational cannabis to its budget bill in 2020. The state Senate passed a law in June decriminalizing possession of small amounts of marijuana while also providing a way to expunge previous convictions for possession, but the state couldn’t come to an agreement to fully legalize recreational use at that time.