Nevada Cannabis operators finally see hope with federal banking changes
LAS VEGAS - Nevada’s Democratic Senators, Catherine Cortez Masto and Jacky Rosen, have both signed onto the federal SAFE Banking Act in an effort to finally overhaul federal banking restrictions on cannabis businesses.
The bill had a hearing in the Senate Banking, Housing, and Urban Affairs Committee on May 11, signaling a potential change in cannabis opinion on the national level. The SAFE Banking Act has bipartisan support with 39 senators now signed on. In previous versions of the bill, it passed out of the House seven times.
“The number one thing I heard from so many of our businesses is if you ask them, most of their overhead is for security, because they have all cash,” said Sen. Cortez Masto in a Tuesday interview.
“There's concern that they have to pay their vendors and their employees in cash. And so the goal here is to open that door for our businesses in the state of Nevada,” she added.
During the committee hearing, Cortez Masto recounted a conversation with a cannabis business owner in Las Vegas who had to make multiple deposits at local banks due to cash deposit limits.
Her car was broken into and now feared the burglars knew she carried large amounts of cash since she had bank deposit slips in her car. According to the senator, the woman now slept with a taser close to her bed to feel safe.
Though Nevada voters legalized cannabis in 2016, it remains a Schedule 1 drug on the federal level, which places it in line with drugs like heroin and LSD. As a result, national banks and financial institutions fear they could be federally prosecuted for dealing with cannabis.
“Historically, we have been a very cash-heavy business. Currently, without the use of credit cards, that kind of exacerbates the issue a little bit,” said Mitch Britten, CEO of Thrive Cannabis Marketplace in Las Vegas. “I think the costs that we have are twice, three times what most people are paying. But for the most part, it is becoming standardized.”
Britten said there are now over 10 Nevada banking institutions that provide services to cannabis institutions. He said the industry has been able to navigate the federal restrictions in the years since legalization, but still welcomes a federal change.
A’Esha Goins is the vice president of the local chapter of the NAACP and founder of the Cannabis Equity and Inclusion Community (CEIC). She said the state banks offer solutions, but still create issues for the industry.
“State banks taking the risk, those dollars that come from those businesses aren't always federally insured,” said Goins. “So because they're taking a risk, they usually will charge an interest on the risk that they're taking.”
In the last fiscal year, cannabis generated nearly $1 Billion in revenue in Nevada. If the SAFE Banking Act were to pass, Goins said she thinks it would expand the industry by allowing some operators to open up shop.
But overall, she thinks the main impact will be something as simple as consumers and businesses utilizing credit card transactions.
Both Goins and Mitch Britten with Thrive Cannabis Marketplace said the bankings issues need to be fixed, but the continued criminalization and tax rates are bigger hurdles to address.
“What we're seeing today is there's a little bit more of an appetite to handle some of these things at the federal level,” said Britten. “And while this solution doesn't necessarily move the needle for a lot of people in the industry currently, I think it's a good indicator that we're starting to get a little bit of traction. And hopefully, some larger reforms will be ahead.”