The SAFE Banking Act just passed the House Finance Committee. Once this bill becomes law, it’s going to change everything – and create a fortune in the process.
Bipartisan votes are hard to come by in Washington these days.
But realizing that cannabis legalization is an unstoppable force, the U.S. House Committee on Financial Services overwhelmingly approved H.R. 1595 in a 45-15 vote. Better known as the Secure and Fair Enforcement Banking Act, or SAFE Banking Act for short, this bill has major implications for the entire cannabis industry.
In fact, I knew that banking access would eventually open up to cannabis firms, which is why I wanted to get you ahead of the curve and introduce all of our members to a cannabis banking play before things really take off.
The bill will now head to the House floor, marking the first time in history a piece of federal cannabis reform legislation has reached this level.
And with an astounding 152 cosponsors, the SAFE Banking Act seems likely to move on to the Senate in short order.
To be frank, the passage of this bill would be a complete game changer for the industry, making it easier than ever before for cannabis entrepreneurs to access capital to build and expand their businesses.
And before this bill passes, I want to make sure you are in the best position possible to make a fortune from these massive legislative changes…
Getting Cash Off the Streets
The stated purpose of the SAFE Banking Act is “to increase public safety by expanding financial services to cannabis-related legitimate businesses and service providers and reducing the amount of cash at such businesses.”
This action is overdue. Concerns about the lingering federal prohibition of marijuana have kept most banks and other financial institutions away from any companies in the cannabis sector. While some banks have been brave enough to take on this kind of business, the vast majority have kept their hands clean.
It’s hard to blame them, really. If the money they handle comes from a federally illegal trade, banks run the risk of being accused of money laundering – regardless of whether the state in which the banks and cannabis-related businesses operate has chosen to legalize the substance.
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At worst, this leads to large amounts of cash on hand, making marijuana businesses prime targets for robberies.
Rep. Ed Pelmutter (D-CO) introduced the bill. “Thousands of employees, businesses, and communities across this country… have been put at risk because they have been forced to deal in piles of cash,” he said in a statement. “The SAFE Banking Act is focused solely on taking cash off the streets and making our communities safer.”
Safety may be the sole focus of the act, but if this bill does become law, it will have far grander implications for the entire industry.
Access to Capital
Currently, the vast majority of banks and major financial institutions do not lend money to companies in the cannabis industry.
By removing any fear of federal intervention, the SAFE Banking Act would not only allow cannabis companies to put their cash in banks, but also access cash from those same banks.
As legendary investor Danny Moses, of The Big Short fame, said: “If you were to get debt to come in, the cost of capital would go down dramatically for these companies.” Where the housing market was under-regulated and over-leveraged ahead of the 2008 financial crisis, he said, the cannabis markets today are over-regulated and under-leveraged.
Moses was also quick to point out that while “shorts can only go to zero – longs can go to infinity.” That’s why he called cannabis “The Big Long.”
In other words, the industry is on the verge of an explosion, and the passage of the SAFE Banking Act would light the fuse.
And now, even before the SAFE Banking Act hits the floor, there are rumblings for something even bigger. Earlier this week, Rep. Jim McGovern (D-MA), Chairman of the U.S. House Committee on Rules, said he expects the chamber to vote on an end to federal cannabis prohibition “in a relatively short time, within the next several weeks.”
I’ll be back next week to talk about what that bill could look like, and why it would have a very good chance of strong bipartisan support.
The political landscape is changing at a rapid clip. The National Institute for Cannabis Investors is here to help you navigate it – and to show you how to make a fortune along the way.
Executive Director, National Institute for Cannabis Investors
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10 responses to “SAFE Banking Will Mean Huge Returns”
March 29 2019