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Daines, Tester spearhead legislation to ease banking restrictions on cannabis industry

Daily Inter Lake | May 5, 2023 12:00 AM

Montana Sen. Steve Daines helped reintroduce the Secure and Fair Enforcement Banking Act into the Senate this week in an effort to allow legal cannabis businesses to access banks, credit unions and other financial institutions.

The act would open the door to letting banks conduct business with cannabis companies in areas where they operate legally. Despite legalization in various states, including Montana, marijuana remains a Schedule I drug in the eyes of the federal government, which puts it alongside substances like heroin, ecstasy and LSD.

That means financial institutions are left at risk of prosecution and other penalties for doing business with cannabis companies. Many legal cannabis outlets conduct business entirely in cash as a result.

The act, sponsored by Daines and U.S. Sen. Jeff Merkley, D-Oregon, has previously passed the House seven times, but failed to become law.

“This [act] gives the businesses access to banks so they can operate safely and efficiently,” Daines told the Inter Lake on Tuesday.

The bill will first be heard — and hopefully in the next couple of weeks, Daines said — in the Senate Banking Committee, of which Daines is a member.

The lack of access to bank accounts and lines of credit, according to a press release from Daines’ office, have forced legal cannabis businesses to operate primarily using cash, opening the door to tax evasion and putting them at risk of robberies.

According to Daines, public safety is at the heart of the legislation.

LARGE SUMS of cash create an incentive for potential criminals, said Zach Block, owner of Montana Canna, a dispensary west of Kalispell, but security measures – required by the state – keep dispensaries safe for the most part.

Block said the issue isn’t that dispensaries aren’t safe, but cash-only businesses are always at risk.

And working with just cash creates accounting and money flow challenges, Block said. It is hard to deal with large amounts of cash when you are ordering items, trying to make purchases online and paying employees, he said.

“Working through those challenges without a bank account is almost impossible and it puts operators in the industry in a really dangerous place,” Block said.

He also said that running any business without access to a bank is difficult. Modern businesses need access to modern banking tools, Block said.

Flathead County Sheriff Brian Heino agreed that cash-based businesses take on a lot of risk.

“We have had instances [in the county] where people have attempted to or broken into marijuana shops,” Heino said.

Because people know cannabis businesses have large amounts of cash, they become seemingly easier targets, Heino said.

He likened it to a burglar breaking into cars in a parking lot. They could try every vehicle they come across, but a car with a wad of cash on the front seat is going to become a bigger target, he said.

U.S. SEN. Jon Tester also has thrown his support behind the legislation. According to his office, Tester sponsored a version of the bill in the 116th Congress, which began in 2019 and ran through the end of the Trump administration.

Tester is also introducing the bipartisan Clarifying Law Around Insurance of Marijuana Act this Congress — legislation that ensures legal cannabis companies and related businesses have access to comprehensive and affordable insurance coverage. Daines is also a sponsor of the legislation alongside the SAFE Act.

“Our bipartisan SAFE Banking Act is a commonsense fix that will allow legally-operated Montana small businesses to access the financial services they need to thrive, while also making the Flathead community safer by cutting down on cash-motivated crimes,” Tester said in a press release.

Alongside preventing federal banking regulators from prohibiting or penalizing a bank from providing financial services to a state-sanctioned and regulated cannabis business, it also prevents regulators from terminating a bank’s federal deposit insurance, from incentivizing a bank to downgrade their services, or from taking any action on a loan to an owner of a cannabis-related business.

“Montanans should be able to conduct their small business without fearing for their safety,” Daines said in a press release. “Our bipartisan bill would provide the security and peace of mind that legal Montana cannabis businesses need to freely use banks, credit unions and other financial products without a fear of punishment.”

The bill also prevents criminal prosecution and liability and asset forfeiture for banks who provide their services to cannabis businesses and requires banks to comply with Financial Crimes Enforcement Network guidance.

“This bill will help keep our Montana communities safe, keep crime off the streets, support Montana law enforcement and small businesses and bolster local economies,” Daines said in a statement.

Reporter Kate Heston can be reached at or 758-4459.