Stop Limiting NJ’s Growth – Pass the SAFE Banking Law
New Jersey has overcome countless hurdles in the race to launch medical and adult cannabis. There is, however, a hurdle that we cannot overcome without the intervention of the federal government. It is time, finally, to immediately pass the Secure and Fair Enforcement Banking Act, or SAFE. This will create a more business-friendly environment in the cannabis industry, allow bank insurers to enter the market, and alleviate some of the difficulties minority entrepreneurs face in raising capital.
Starting a business from scratch is already risky business. But one of the most unpredictable industries for a startup is the cannabis industry. Despite the cannabis industry’s national embrace, cumbersome – some might say ridiculous – hurdles abound. In New Jersey, we have tried to overcome many of these challenges, with bumps along the way. But the bank problem remains huge for any company looking to succeed in the cannabis industry.
Banks are unwilling and prohibited from offering essential banking services to legal cannabis businesses, as it remains federally illegal. This means that New Jersey business owners cannot apply for loans or lines of credit, and their employees are denied mortgages solely because of their profession. Without these essential banking tools, these businesses struggle to get started and must operate on cash only.
New Jersey’s legal cannabis industry is in its teenage phase. Yet after opening stores five months ago, it has already managed to generate nearly $80 million in revenue in 10 weeks. More and more entrepreneurs see this as an opportunity and apply for retail licenses, trying to break into the rapidly growing industry. And many of those who have applied to open businesses in the legal cannabis sphere in New Jersey are minority groups, which would ensure a fair industry.
These businesses, however, cannot succeed by operating exclusively in cash and without any form of financial assistance, as this limits their potential for economic growth. Additionally, 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 statute further compounds this problem. Additionally, it goes without saying that carrying large amounts of cash is a reckless and dangerous practice.
SAFE is federally sponsored legislation that would help fix all of this. It would federally prohibit financial institutions from denying banking services to cannabis businesses and their workers, instead providing them with the opportunity to invest and grow their businesses and livelihoods. It would also protect banks — and their insurers — that provide services to cannabis businesses, from federal lawsuits.
SAFE has been discussed and even passed countless times, but has never been passed by both the House of Representatives and the Senate. It’s time for this to end. There are, no doubt, other issues that negatively impact the cannabis industry, including the legacy market. But the lack of access and services provided by banks paralyzes everyone. It has to stop.
As the state’s Cannabis Chamber of Commerce, representing New Jersey’s cannabis businesses, whether large or small and minority-owned, we urge the federal government to pass the SAFE Banking Act. Lawmakers must end the ban on banking services against the cannabis industry so that our state and our businesses can thrive without criminal or economic limitations. It is now. The opportunity is right in front of us. Washington must achieve this.
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.