Mike Crapo is Republican chair of the Senate Banking Committee. Crapo himself has expressed no public support for reform of (federal) anti-cannabis laws.
For these reasons, a previous Seed Investor article pointed to Crapo as one of three “anti-cannabis Republicans” who were the most serious obstacles to legalizing cannabis in the U.S. at the national level.
Crapo hasn’t shown any indication of changing his position on (federal) cannabis legalization. But he is now signaling that it’s time to normalize banking rules for the benefit of cannabis companies in cannabis-legal states.
A Marijuana Moment article supplies the details.
The Republican chair of the Senate Banking Committee said this week that he’s on board with resolving financial services issues in the marijuana industry—though he suggested it may be accomplished through different vehicles than what advocates have been pushing for.
Sen. Mike Crapo (R-ID) told Wikileaf he agrees the federal government must find a way to enable banks to service cannabis businesses in legal states without being penalized by federal regulators.
Sen. Mike Crapo (R-ID) told Wikileaf he agrees the federal government must find a way to enable banks to service cannabis businesses in legal states without being penalized by federal regulators.
This is big for the U.S. cannabis industry – in two ways.
At the operational level, the lack of access to banking services forces many cannabis companies to conduct business on a cash-only basis. Cumbersome.
It also severely limits the capacity of U.S.-based publicly listed companies in raising capital. Most have Canadian listings and have been able to conduct financings in Canada’s capital markets. But even north of the Border, companies are now finding it not as easy to raise money.
Liberalizing U.S. banking rules would immediately and directly help the U.S. cannabis industry.
Arguably, it would indirectly benefit the Canadian cannabis industry. If more U.S.-based companies started raising capital in the U.S., this would leave more cannabis investment dollars free for Canadian-based companies raising capital in Canada.
Marijuana Moment also sought feedback from two advocates for the legal cannabis industry.
“Senator Crapo’s willingness to hold a hearing recently on the SAFE Banking Act was very encouraging,” Michael Correia, director of government relations for the National Cannabis Industry Association, told Marijuana Moment. “We’re thrilled to learn that he is open to solving this important issue and we are looking forward to working with the senator and finding a policy solution.”
Justin Strekal, political director of NORML, told Marijuana Moment that the chairman’s “acknowledgement of, and now apparent support for, reform in regards to state-legal enterprises could be a watershed moment for this Congress.”
“If [the SAFE Banking Act] passes the Senate, it will become law and disproportionally benefit small businesses who are currently unable to navigate the dysfunctional status-quo without basic financial services,” Strekal said. “This will be good for the nascent cannabis industry and much more importantly, the consumers that they serve.”
Justin Strekal, political director of NORML, told Marijuana Moment that the chairman’s “acknowledgement of, and now apparent support for, reform in regards to state-legal enterprises could be a watershed moment for this Congress.”
“If [the SAFE Banking Act] passes the Senate, it will become law and disproportionally benefit small businesses who are currently unable to navigate the dysfunctional status-quo without basic financial services,” Strekal said. “This will be good for the nascent cannabis industry and much more importantly, the consumers that they serve.”
Everybody wins, but Small Business wins the most. Nothing wrong with that.
Cannabis normalization requires more than just legalizing access to cannabis for consumers at the state level. It also requires an efficient regulatory structure in which the legal cannabis industry can operate.
As The Seed Investor regularly notes, this is the key to enabling the legal cannabis industry to push out the cannabis black market. California is currently waging a new “War on Drugs” – against its own cannabis black market.
Why? Because the legal cannabis industry is not efficient enough to compete on price with the black market. Most cannabis spending by California consumers still flows to the black market.
Much of the problem here is within the state: over-taxation, over-regulation, and local governments continuing to freeze-out the legal industry. But fixing the U.S.’s broken banking laws with respect to legal cannabis is an important step in the right direction.
It’s not a done-deal yet. But with this key Republican senator indicating a desire to reform banking rules, the prospects are good.