It can be difficult to get any small business off the ground. For those in the cannabis industry, the Controlled Substances Act (CSA) remains a significant roadblock, as it limits access to banks and other funding sources.
Federal lawmakers are currently considering several measures to help small cannabis businesses take advantage of Small Business Administration (SBA) initiatives. The Republican-controlled Senate Banking Committee also recently held a hearing on the SAFE Banking Act, which would help cannabis businesses of all sizes access banking services.
Access to SBA Initiatives
Recently introduced federal legislation would expressly allow cannabis businesses to take advantage of programs provided by the SBA. The Ensuring Safe Capital Access for All Small Businesses Act of 2019 (H.R. 3540) would make direct or indirect cannabis businesses eligible for SBA-backed loans including: the 7(a) loan guaranty program; disaster assistance; the Microloan program; and the 504 loan program.
“As our society continues to move the needle on this issue, we must recognize that legal cannabis businesses are often small businesses that fuel local economies and create new jobs,” said Chairwoman Velázquez. “That is why I am pleased to introduce legislation to extend affordable lending options to small businesses that operate in the cannabis space, while simultaneously recognizing the structural disadvantages facing entrepreneurs from communities of color.”
Another bill, Ensuring Access to Counseling and Training Programs for All Small Business Act of 2019 (H.R. 3543), would prohibit SBA resource partners from declining to provide services to otherwise eligible small businesses solely because the business is a cannabis-related small business or service provider. Such partners include Small Business Development Centers; Women’s Business Centers; SCORE; and Veterans Business Outreach Centers. Both bills also remove cannabis from the CSA, thereby legalizing it under federal law.
SAFE Banking Act
On July 23, 2019, the Senate Banking Committing held a hearing, entitled “Challenges for Cannabis and Banking: Outside Perspectives,” to assess the lack of banking services for cannabis businesses. The hearing included testimony on the SAFE Banking Act.
Under the legislation, a federal banking regulator may not “prohibit, penalize, or otherwise discourage a depository institution from providing financial services to a cannabis-related legitimate business or to a State or political subdivision of a State that exercises jurisdiction over cannabis-related legitimate businesses.”
The bill further provides that a depository institution that provides financial services to a cannabis-related legitimate business in a state where marijuana has been legalized may not be held liable pursuant to any Federal law or regulation solely for providing such financial services pursuant to the state law or regulation; or for further investing any income derived from such financial services.
Neal Levine, CEO of the Cannabis Trade Federal, said in a statement that he hoped the hearing testimony would bolster the “growing momentum behind meaningful and historic cannabis policy reform.” He added:
This hearing is yet another sign that Congress is taking the cannabis banking problem seriously and intends to take action to correct it. Cannabis businesses operating legally under state and local laws should have the same access to banking and financial services as any other type of business.
While it has been slow to move in the Senate, the SAFE Banking Act has received widespread support at the state level, including the endorsements of many state banking associations, the National Association of State Treasurers, a majority of the country’s state attorneys general, the financial regulators of 25 states, and the governors of 20 states.
The House version of the legislation is also widely supported and now has 206 cosponsors. It has cleared the Financial Services Committee, and a full House vote is expected on the bill in the coming months.
If you have any questions, please contact us
If you have any questions or if you would like to discuss the matter further, please contact me, Dan McKillop, at 201-806-3364.
This article is a part of a series pertaining to cannabis legalization in New Jersey and the United States at large. Prior articles in this series are below:
Disclaimer: Possession, use, distribution, and/or sale of cannabis is a Federal crime and is subject to related Federal policy. Legal advice provided by Scarinci Hollenbeck, LLC is designed to counsel clients regarding the validity, scope, meaning, and application of existing and/or proposed cannabis law. Scarinci Hollenbeck, LLC will not provide assistance in circumventing Federal or state cannabis law or policy, and advice provided by our office should not be construed as such.
Corporate Consolidation and Antitrust Issues in Mergers
Corporate consolidation involves two or more businesses merging to become a single larger entity. The result is often a stronger and more competitive company that can better navigate today’s competitive marketplace. What Is Corporate Consolidation? Corporate consolidation closely resembles a basic merger transaction. The primary difference is that a consolidation creates an entirely new business […]
Business law plays a critical role in nearly every aspect of running a successful enterprise, from negotiating a commercial lease to drafting employee policies to fulfilling corporate disclosure obligations. Understanding what is business law and your legal obligations can help your business run smoothly and build productive relationships with clients, business partners, regulators, and others. […]
Corporate Transactions: Best Practices for Successful Deals
Corporate transactions can have significant implications for a corporation and its stakeholders. For deals to be successful, companies must act strategically to maximize value and minimize risk. It is also important to fully understand the legal and financial ramifications of corporate transactions, both in the near and long term. Understanding Corporate Transactions The term “corporate […]
How to Conduct a Fair and Legal Employee Termination in 2025
Ongoing economic uncertainty is forcing many companies to make tough decisions, which includes lowering staff levels. The legal landscape on both the state and federal level also continues to evolve, especially with significant changes to the priorities of the Equal Employment Opportunity Commission (“EEOC”) under the Trump Administration. Terminating an employee is one of the […]
Admin Dissolution for Annual Report: What You Need to Know
While filing annual reports may seem like a nuisance, failing to do so can have significant ramifications. These include fines, reputational harm, and interruption of your business operations. In basic terms, “admin dissolution for annual report” means that a company is dissolved by the government. This happens because it failed to submit its annual report […]
Antitrust laws are designed to ensure that businesses compete fairly. There are three federal antitrust laws that businesses must navigate. These include the Sherman Act, the Federal Trade Commission Act, and the Clayton Act. States also have their own antitrust regimes. These may vary from federal regulations. Understanding antitrust litigation helps businesses navigate these complex […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
