Cannabis industry can't use banks. That hurts a lot more than dispensaries

Arizona is on track for more than $1 billion in cannabis sales this year.

The state collects hundreds of millions of dollars in associated taxes, and thousands of Arizonans are employed in the cannabis industry.

But federal banking laws that treat cannabis companies differently than other businesses are hindering economic growth and creating opportunities for crime.

The U.S. Senate is considering legislation that would correct these issues.

The SAFER Banking Act, which is pending there, would allow marijuana dispensaries and cannabis businesses to use commercial banks, and in that way that reduces crime.

Banks can't loan to cannabis companies

Cannabis has been legalized in many states, including ours.

But thousands of cannabis companies in 39 states must operate with large quantities of cash because federal law bars them — and many thousands of American workers and businesses that support them — from using the banking system.

That’s because banks are licensed federally and they cannot knowingly accept and do business with funds that come from federally illegal means, even if the means — in this case, cannabis — is legal on a state level in most states.

Thus, workers in the industry have difficulty qualifying for mortgages and other loans.

This cash-only situation has made dispensaries a major target for violent crimes.

The threat of violence in these stores has been highlighted in the news for months. Dispensary workers and customers have become targets on the assumption that they hold large amounts of cash. For example, five minutes from where I lived in Tucson, a man robbed a dispensary at gunpoint.

Cash-only hurts businesses, workers, safety

Cannabis stores tend to be small businesses, which need access to capital to survive. But they cannot get loans from banks. They are denied the same funding opportunities available to almost every other business in the country.

If they want to hire more employees, they need to rely on ordinary business cash flow for job creation.

This disproportionately affects the lower and middle class trying to start businesses in the industry; only the wealthy can participate in this scenario given startup costs that run more than $1 million.

Our business, GrowersHouse Ag Supplies, is a horticulture equipment supplier that sells to commercial cultivators including universities, cannabis dispensaries and others.

Prosecutor was right: Legal marijuana was a mistake

We do not grow cannabis or touch the plant in any way. Yet we face hardship due to current banking laws.

We have lost sales because our commercial cannabis cultivation customers are subject to the banking restrictions and therefore struggle more than other businesses with their finances.

SAFER Act would help us use less cash

The legislation would give cannabis businesses access to financial services of many types. It also would help thousands of small businesses that employ more than 300,000 people. By 2030, annual legal U.S. cannabis sales are projected to exceed $57 billion.

The SAFER Banking Act addresses commercial banking only. It wouldn’t legalize cannabis.

Its provisions concentrate on the cash-heavy situation. The bill would give cannabis companies access to banking services available to others, including business accounts, credit cards and improved access to loans.

The measure would protect insurers, depository institutions and other businesses from sanctions for providing financial services to cannabis-related companies. But most importantly, employees and customers of dispensaries would be safer.

No American company should have to haul around bags of cash or worry about credit. The cash also is hard for government authorities to trace.

If police authorities want to crack down on drug cartels and properly collect cannabis tax revenue, passing SAFER would be on big step in that direction.

U.S. Senate must pass this act

SAFER has been criticized because it isn’t a big step forward in cannabis policy. Advocates wish that the national cannabis debate were about legalization.

But that shouldn’t stop the significant progress that approving the legislation would deliver. Approving SAFER would be well worth achieving and a boon to small businesses and employees and families in Arizona and elsewhere.

The U.S. House of Representatives has passed a version of SAFER seven times and no doubt will do so again. The Senate has been the hold up.

The Senate Banking Committee passed the bill convincingly and has restarted the debate. Hope is on the horizon for anyone who cares about fair treatment of businesses and their employees, economic growth and the importance of reducing crime.

Arizonans have a lot to gain from its passage.

Nate Lipton is co-founder and CEO of GrowersHouse.com and CannaCribs.org with locations in Phoenix and Tucson. Reach him at nate@growershouse.com.

This article originally appeared on Arizona Republic: Cannabis industry can't use banks. Here's why that hurts Arizona