The U.S. House Committee on Financial Services in March passed the Secure and Fair Enforcement Banking Act of 2019, also known as the SAFE Banking Act of 2019, to change federal laws regarding marijuana banking. This represents a promising step forward for banks and cannabis companies that want to take sales out of the cash-based market and into the mainstream. Passage of the bill would help put the cannabis industry on firmer financial and legal ground.
Access to bank funds is a giant barrier to progress in the cannabis industry, as most financial institutions – especially those that operate nationwide – won’t accept marijuana money. That’s because marijuana is still considered illegal at the federal level. The SAFE Banking Act is designed to shield banks and credit unions that work with cannabis companies from legal penalties. It would bar federal regulators from terminating a bank’s FDIC deposit insurance, a threat that has so far has prevented most banks from accepting cannabis business. If the bill passes, cannabis business will likely have greater access to banks to open checking accounts and obtain credit cards. Financial institutions could even provide other services, such as payroll, which would create an additional layer of accountability, transparency, and stability within the industry.
In addition to having access to banking and other financial services with the passage of the SAFE Banking Act, the cannabis industry would also have greater options when it comes to insuring their operations. Currently, there are only a limited number of insurance companies offering coverage for cannabis-related businesses because of the potential gray areas that may arise between the federal law that classifies marijuana as a Schedule I drug and the 33 states where medical and/or recreational pot is legal. The passage of the pending SAFE Banking Act would help offer protection to insurers that want to enter the cannabis market in states where marijuana is legal. With more insurers in the marketplace, cannabis businesses will gain greater access to the same selection of policies and the same coverage limits that other non-cannabis-related businesses do, as well as to additional programs developed with cannabis-specific products. With more coverage options and a selection of insurers from which to choose, this could potentially stimulate competition and provide lower premiums for business owners throughout the legal cannabis industry.
Owens Group partners with insurers in the cannabis market to provide businesses with key products including General Liability, Excess Liability, Products Liability, Product Recall, Commercial Property, Equipment Breakdown, Business Interruption, D&O Liability, Professional Liability, Crop insurance, Employment Practices Liability and Workers Compensation. We can put together an insurance program for cannabis-related businesses including start-ups and established operations – from growers to cultivators, laboratories, wholesalers/distributors, storage facilities, transporters/delivery, and dispensaries. For more information about our products, please contact Joseph Ehrlich at 201-408-3512 or Jean Dennehy at 201-408-3506.