Why Has the SAFE Banking Act Been Delayed?
This fall, investors perked up their ears as the SAFE Banking Act was finally up for a vote in the American House of Representatives.
The SAFE Banking Act is an American bill poised to pass significant reforms that would benefit the cannabis industry’s ability to access the banking system. This bill, which passed in a decisive vote, allows cannabis companies more freedoms than ever—good news sorely needed while cannabis stocks plummeted the last quarter of 2019.
But passing through the Democrat-run House was the easy part. Investors are still waiting for the true test to come in the Republican-ruled Senate. Democrats have been supportive of marijuana reform, making the House reading of the bill a slam dunk, but the Senate may be a little more hesitant.
If we seek to give financial institutions certainty, we should deal with the listing of cannabis as a Schedule 1 substance, not debating a partial solution for financial institutions to what is a much larger problem, and a larger societal issue that we must wrestle with– Patrick McHenry (R-North Carolina)
What’s the delay?
According to Congressman Patrick McHenry (R-North Carolina), the delay isn’t solely just about the fact that marijuana is considered a dangerous drug by some. “If we seek to give financial institutions certainty, we should deal with the listing of cannabis as a Schedule 1 substance, not debating a partial solution for financial institutions to what is a much larger problem, and a larger societal issue that we must wrestle with,” he stated in an article for Fool.com.
This is the main reason the bill is delayed. “Under the current system, it is not recognized as a drug that would have any tangible medical benefits at all. And, researchers seeking to conduct clinical research must jump through several hoops to submit an application to the FDA and get approval from the DEA before starting their work,” say Representatives Earl L. “Buddy” Carter (R-Georgia) and Earl Blumenauer (D-Oregon) for NBC News. “We are two members of Congress from different parts of the country with differing views on whether the recreational use of cannabis should be legalized. However, we’re committed to working together to deliver better treatments for patients across the nation who desperately need them. Changing the schedule of cannabis is an important place to start.”
If the scheduling of the drug is the main issue delaying the SAFE Banking Act, another may be the impending impeachment of President Donald Trump. “I think the impeachment thing is not going to be helpful to getting much done between now and November 2020, which is a shame because we have some serious issues that we need to address,” Rep. David Joyce (R-Ohio) said.
With the House and Senate focused on impeachment and Iran, the bill may be tabled until well into the new year.
I think the impeachment thing is not going to be helpful to getting much done between now and November 2020, which is a shame because we have some serious issues that we need to address.– David Joyce (R-Ohio)
Alan Brochstein told The Dales Report, “It is caught up in politics in my view, with the impeachment process as well as the election in 11 months likely to stall it. It’s an election year and the Senate may not want to hand the Democrats a victory (even if it is small).”
How does this affect investors?
With cannabis companies anxiously waiting for reforms and regulations to pass surrounding legalization in many areas, investors may find themselves worried. The banking industry, too, has tempered the number of cannabis businesses they’re working with, perhaps in anticipation of the bill.
For now, focusing on smaller players may be the way to go.