The House’s Appropriations Committee just recently passed the 2020 Financial Services and General Government bill. The bill which won by significant margins of 30-21 means that the government has now approved a discretionary funding of $24.55 billion.
This new figure is $1.4 billion more than the 2019 bill. It’s also $355.5 million higher than the President’s estimated budget estimations.
This bill is a huge one with no less than 808 sections. While these various sections appeal to different industries, agencies and sectors in the country, the one that concerns the cannabis sector is Section 633.
This section has a new provision that bans the use of the funds provided for that section in penalizing financial institutions that decide to do business with legal dispensaries and cannabis companies the country.
This means that financial watchdogs and agencies would not be able to go after banks or financial institutions that provide their services to the marijuana sector. It effectively cripples those agencies.
This is good news for the cannabis industry because they would be able to do business with banks in year 2020. Of course, the bill is only valid for the year 2020, upon which it can be renewed or withdrawn in the next year.
The hope is that it will be renewed in 2021 and every year afterwards, thanks to the legalization of weed and cannabis in some states in the US.
Whatever the case, this will provide some sorely needed lifeline for cannabis companies that have been hampered by unfriendly policies and legislation.
While this is the first stage, it implies a possibly bright future for the cannabis industry. It still has to go through the Senate though. This is good because there’s still room for amendments that could further improve the ease of doing business in the US for cannabis firms.
The industry though, still has to wait in anticipation to see if it’ll be passed by the upper chamber, upon which it becomes legal and the industry can thrive.
Currently, U.S. laws and legislation have essentially prohibited banks from cannabis ventures. While the official tone is criminal ventures, the reality is that cannabis and its products are still associated with criminal activities.
As such, banks and other financial institutions are wary of doing business with cannabis companies. Cannabis and its products are illegal at the federal level, only legally approved for medical purposes in 33 states in the country and approved for recreational purposes in 10 other states.
As a result of the split stance of the law, it’s difficult for financial entities to interact with marijuana companies. While the US Attorney General detests the legal disparity, the judicial system hasn’t done much for making weed legal.
This is why the cannabis industry is at sea about what to do with the proceeds from the sale of their products. This is why cannabis dispensaries and farms in the country run a cash based business. It’s also the reason states cannot tax them because of the legal purgatory they’re in.
The good news is that regulations like the Secure and Fair Enforcement (SAFE) Banking Act, once passed, will help protect financial institutions dealing with cannabis companies. Until it’s fully passed into law, we’ll have to wait and hope for the best.