Senate should vote on cannabis banking reform
At the NAACP, we know that we can’t achieve racial equity without economic equity. This interdependence is particularly pronounced in the cannabis industry — a sector which many of us are hoping will concentrate its economic benefits on the Black and brown communities that were once harassed and targeted for business activities that today are legal, legitimate, and extremely lucrative in 38 states and Washington, D.C.
But as is often the case with dismantling structural racism, there are laws on the books standing in our way. While we all know that cannabis is still illegal under federal law, many people don’t realize that current federal law also prevents banks from providing medical and adult-use cannabis businesses access to the full range of financial services offered to every other industry, even in states where cannabis is legal.
Accessing capital is hard enough for many Black entrepreneurs. For Black cannabis entrepreneurs, it’s barely an option.
That could all change if the Senate takes action on a bipartisan legislative framework that pairs cannabis banking reform, known as the “SAFE Banking Act,” with restorative justice grants from the Hope Act encouraging states to expunge cannabis-related records.
In addition to our 2021 resolution supporting “greater African American ownership and employment opportunity in the cannabis industry,” the NAACP Board recently elaborated by formally endorsing the SAFE Banking Act. If the bill were to pass, transactions between banks and cannabis-related businesses would be considered lawful activity and no longer expose financial institutions to the risk of prosecution. The current resolution is a continuation of NAACP advocacy to advance equity and restorative justice.
Passing the SAFE Banking Act will move us closer to achieving the resolution’s goals by creating more cannabis industry jobs and ownership opportunities for African-Americans. True, it won’t address the historical challenges Black entrepreneurs have historically faced in launching, operating and growing small businesses compared to their white counterparts. But it does at least open up the possibility of getting access to capital so that members of our community who want to enter the cannabis industry face one less barrier to entry. Lack of capital and access to fair market loans are among the biggest obstacles faced by minority-owned cannabis companies. The SAFE Banking Act would help open doors to the financial resources required to help start-ups succeed and grow.
Without SAFE Banking, the forward-looking state equity programs designed to support Black and brown entrepreneurs are largely futile. They will not achieve their ambitious goals of helping communities most impacted by cannabis prohibition gainfully participate in the burgeoning cannabis industry because they legally can’t even access the financial tools to stay afloat. The SAFE Banking Act could help more cannabis businesses with state-issued social equity and diverse ownership licenses better compete in an increasingly consolidated marketplace.
Let’s be clear: the SAFE Banking Act is not a panacea — it’s one necessary step forward. For too many, the War of Drugs took its toll on our community. Its legacy has been lost freedom, lost hope and lost lives. Cannabis banking reform would be even more effective if it is coupled with federal de-scheduling of cannabis, and the explicit codifying of fair loan terms and rates for Black-owned and social equity-licensed cannabis businesses. NAACP Chair Leon W. Russell has said, “power is recognizing that advancement can be and in most instances is incremental; a step-by-step process.” The same can be said for building generational wealth and economic power in our communities.
The U.S. House of Representatives has already passed the SAFE Banking Act seven times. Senate Majority Leader Chuck Schumer (D-N.Y.) should bring the SAFE Banking Act to a vote during the current session of Congress.
It’s time for America to begin the process of helping our brothers and sisters most harmed by the War on Drugs find and seize the opportunity presented by cannabis legalization.
Karen Boykin-Towns is Vice-Chair of the NAACP National Board of Directors and lives in New York City.