Congress Scraps SAFE Banking Again, But Stock Listing Now On The Table
June 28, 2022The SAFE Banking Act has floundered in the U.S. Senate once again now that it will not be included in the forthcoming COMPETES Act. The research and tech-focused stimulus bill was the latest prospective avenue to pass SAFE Banking, which would open financial services to cannabis companies and offer relief from the federal injunction forbidding banks from working with companies involved with a substance that remains illegal on the federal level. The House of Representatives passed the COMPETES Act with SAFE Banking included, but the reconciliation committee stripped it from the Senate version.
“The Senate continues to ignore the public safety risk of forcing cannabis businesses to deal in all cash,” said Ed Perlmutter, the chief sponsor of SAFE Banking.
However, a new competing proposal was unveiled in recent days called the Capital Lending and Investment for Marijuana Businesses (CLIMB) Act. Sponsored by Congressmen Troy Carter, a Louisiana Democrat, and Guy Reschenthaler, a Pennsylvania Republican, the CLIMB Act would “allow state legal American cannabis companies, including small, minority and veteran-owned businesses the ability to access critical lending and investment opportunities currently available to other domestic and regulated industries,” according to the release announcing the bill. It would provide safe harbor for private financial institutions to offer lending services. Notably, it would provide similar protection for national securities exchanges and market participants that “have listed, list, or intend to list, or permits the trading, or facilitates the offering, listing, or trading on a national securities exchange, of the securities of a cannabis-related legitimate business or a service provider.”
That sort of protection could be a gamechanger for U.S. cannabis companies, which to this point have not been able to list on the major U.S. stock exchanges including NASDAQ and NYSE. It could also allow some of the larger Canadian companies to relist from Canadian exchanges to their counterparts stateside.
The tenor of cannabis negotiations on Capitol Hill has changed in recent weeks, according to reporting from Politico, as realization dawns that control of Congress will probably shift after the midterms in November, likely dooming legislative progress on cannabis issues. Despite repeated promises from Senate Majority Leader Chuck Schumer that he will pass comprehensive cannabis reform, the votes are not there, sending lawmakers scrambling for compromises. It’s unclear how these negotiations will play out, but the next five months will be critical.—Danny Sullivan
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