In September, there was a lot of excitement surrounding the SAFE Banking Act, as it was finally up for a vote in the House. The bill, which passed in a decisive vote is a great step forward for the cannabis industry as it makes significant reforms at the federal level that would allow marijuana companies to access the banking system. However, before investors get too excited, let's not forget that the House vote was the easy part.
There's been a lot of support for marijuana reform from Democratic candidates vying for the 2020 presidential nomination, and so it shouldn't come as a big surprise that the Democrat-controlled House was able to pass the SAFE Banking Act. The true test will come in the Senate.
Why there could be big roadblocks ahead
Back in July, there was a hearing on banking and cannabis, and Republicans didn't even bother showing up to it.
In addition to apathy, one of the challenges the bill faces is that there could be an opportunity for Republicans who oppose the bill to open it up to a much larger debate. Republican Congressman Patrick McHenry, of North Carolina, provided some insights into what types of discussions might occur, as he is among those opposing the bill: "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."
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While dealing with the much larger issue of whether marijuana should be a Schedule 1 substance is a very valid discussion to have, it is a debate that could last months and that could prevent the SAFE Banking Act from getting passed. One of the reasons marijuana advocates were hopeful about the SAFE banking bill was that it doesn't try to make any significant changes -- it simply tries to help cannabis companies have access to bank accounts, things that other businesses rarely even have to worry about and likely take for granted.
The problem is that for those opposed to the legislation, there's ample opportunity not only to vote against it but to try to open up to a much larger debate that could doom the bill right from the start.
Cannabis companies remain optimistic
Curaleaf Holdings (CURLF -2.56%) released a statement on the bill in which its CEO Joseph Lusardi said, "If ratified, the bill will increase the safety of our operations for our patients, customers and employees by reducing the reliance on cash and promoting transparency."
It would certainly be a big step for a company like Curaleaf to be able to grow its operations more safely. With the company having operations in 12 states and 49 dispensaries throughout the country, coordinating and managing all those pieces gets even more complicated when you have to rely on using cash.
Moving cash around is a whole lot more challenging without the banking system, and efficiency becomes a problem as well. Because of Curaleaf's size, it's going to be paramount for it to be able to easily handle money and facilitate transactions across its different locations.
With sales of more than $49 million in its most recent quarter, and sales growth of over 230%, Curaleaf has been one of the fastest-growing cannabis companies in the world, but the lack of access to the banking system could pose big hurdles ahead.
