Because cannabis is illegal at the federal level in the U.S., pot companies aren’t able to access American financial institutions and store their money in bank accounts. And while a federal marijuana banking bill quietly moves forward in the House, it may be months away before reform takes place on this issue. Meanwhile, Nevada passed a law last week that will allow a pilot program to test out a limited marijuana banking system.
Nevada is looking at an alternative approach to the marijuana banking issue: using digital currency. The voluntary pilot program will operate from Oct. 1 this year until June 30, 2023 and allow multiple payment solutions to be tested. Currently, U.S. cannabis companies have the burden of operating only in cash.
The ultimate goal is to be able to allow funds to move between cannabis businesses, vendors and customers, and the proposed system is compared to how gift cards and digital wallets are used today. Nevada Governor Steve Sisolak signed the bill into law last week, which was backed by State Treasurer Zach Conine, who gave full support for the measure:
“I applaud Governor Sisolak and Assemblywoman Monroe Moreno for their efforts to establish an innovative solution to the cannabis banking crisis in Nevada. The Treasurer’s Office is excited to get to work on this pilot program right away, so we can find ways to keep hard working Nevadans safe, while also working to increase accountability and overall tax collections for cannabis businesses in the State.”
But because the program is voluntary, it will be depend on cannabis companies to decide to take part. However, the state will make efforts to recruit marijuana businesses into the program as Nevada lawmakers know it ultimately will impact its overall success.
Why marijuana business could benefit from Nevada law
Due to the current banking laws, cannabis companies spend a large amount on security services because of their need to safeguard monetary assets. And by having a safer way to send and receive payments, these security costs could be cut creating higher profitability for a company like Planet 13 Holdings Inc.(CSE:PLTH) which operates in Nevada. And the new marijuana banking experiment could give the cannabis retailer an advantage over producers in other states.
Not only will profits go up, but it will also free up cash that could be used to grow the business. The banking issue has already created problems for the industry, and it could get even bigger as companies continue growing with more cash flowing through their operations.
Federal solution best way to fix industry’s banking problems
While Nevada’s program testing marijuana banking could benefit some companies, it doesn’t offer a holistic solution as most large U.S. banks will continue to avoid doing business with the industry. Ultimately, that’s why many industry players believe the real solution will come from the federal government.
– David Goldwater, Dispensary Owner and Secretary of the Nevada Dispensary Association
Almost half of House members have signed onto the SAFE bill as cosponsors (206 representatives). And last week the House Financial Services Committee issued a formal report on the legislation while incorporating amendments that were made while considerations took place in March.
But it is unclear when the bill will be voted on with no schedule in place in the House and the bill has not been listed as active legislation before the chamber’s Rules Committee, which is a routine action before a bill makes it to the floor.
Even if its still months out, the SAFE Banking Act would transform the marijuana industry in the U.S. and advocates celebrated the latest advancements.
“With over 200 sponsors, it is a near certainty that we can expect this key piece of legislation to pass the full U.S. House in the near future, and we hope the U.S. Senate takes note of the strong bipartisan support and advances the bill as well.”
— Neal Levine, CEO of Cannabis Trade Federation, told Marijuana Moment