Cash a vector for novel coronavirus, cannabis industry urges Congress to grant access to banking services

Curbside cannabis sales at The Dispensary in Reno, Nevada on May 8, 2020 - photo: Brian Bahouth/The Ally

Cannabis companies in Nevada employ some 13,000 people and collected nearly $100 million dollars in state tax in 2018/2019 but operate entirely in cash. Due to a federal prohibition on marijuana, growers, processors, and retailers are denied access to banking services and can accept only currency from their customers. As Nevada moves to reopen its dispensaries under strict social distancing guidelines, industry advocates are concerned that cash and the proximity required to fulfill transactions are potential vectors for the novel coronavirus.

Deemed an essential business, Nevada cannabis dispensaries have been operating by delivery and more recently curbside service since March 20. Beginning this Saturday, dispensaries will be eligible to accommodate customers in their retail outlets pending approval of an operational plan from the state.

Yesterday, the National Cannabis Industry Association and a number of other industry and advocacy groups sent a letter to all of Congress and leadership in both chambers that urges them to either approve the Safe Banking Act or to include substantially similar language in the next novel coronavirus response relief package.

Representative Ted Perlmutter and a bipartisan coalition in the House of Representatives sponsored the Safe Banking Act. The measure was approved by a 321 to 103 margin in the House of Representatives on September 25 of 2019. The bill passage was significant as the first time a standalone cannabis bill has either been called for a floor vote or passed in either chamber of Congress.

The proposed legislation seeks to provide legal certainty for banks who wish to serve not only marijuana companies, but also the ancillary service providers, which would mean that banks can accept cash from state-sanctioned cannabis companies and related businesses. This level of certainty would mean banks could accept cash without the fear of adverse actions being taken against them by federal financial regulators.

Companion legislation to the Safe Banking Act has been stalled in the Senate and is waiting for a markup in the Senate Banking Committee.

Senate Banking Committee chair Mike Crapo is a Republican from Idaho who voiced concerns about the bill in a committee meeting last December.

“I remain firmly opposed to efforts to legalize marijuana on the federal level, and I am opposed to legalization in the State of Idaho,” said Crapo. “I also do not support the SAFE Banking Act that passed in the House of Representatives.  Significant concerns remain that the SAFE Banking Act does not address the high level potency of marijuana, marketing tactics to children, lack of research on marijuana’s effects, and the need to prevent bad actors and cartels from using the banks to disguise ill-gotten cash to launder money into the financial system.  I welcome input from all interested parties on how to thoughtfully address these concerns.”

Morgan Fox, director of media relations for the National Cannabis Industry Association, says Senator Crapo has made a narrow banking bill a referendum on legalization, which is beyond the scope of the Senate Banking Committee.

“He (Sen. Crapo) has basically made a list of concerns that, for the most part, are unrelated to banking and include some things that are nonstarters, including suggesting a 2 percent THC cap to be able to have access to banking.”

Tetrahydrocannabinol or THC is the primary psychoactive component in cannabis. Typical THC concentrations in commercial cannabis in Nevada run from 15 to 25 percent.

“Not only does that not reflect the realities of modern cannabis markets, but it also puts the onus on banks,” Fox said of Senator Crapo’s concerns with the Safe Banking Act. “So most banks are not going to take on clients where it’s just too much of a headache for them.

“So we’ve been working with his (Sen Crapo’s) office and the rest of the Senate Banking Committee to try to find a way forward, and we’re getting increasingly confident that we will be able to do something like that in the future. Whether or not we’ll be able to do that for the next coronavirus relief package I think is a difficult question to answer at this point. But our lobbying team is working day and night to try to make that happen,” Fox said.

For marijuana companies, the many problems of doing business in cash go well beyond the spread of disease through currency. Business functions like payroll become complicated. The risk for employees transferring large sums of cash is distinct.

“Whether it comes to paying taxes or paying service providers or paying utilities, even paying rent, all of these things are made much more difficult in a cash only environment,” Fox said. “Another really big problem is that it makes it very difficult to get any sort of traditional lending. So it basically limits cannabis businesses to being able to get money from angel investors and other deep financial networks.”

Nevada is one of 33 states to have legalized the use of cannabis for medical purposes. Nevada is also one of 11 states to have legalized marijuana possession and sales for adult use.

According to the National Cannabis Industry Association nearly a quarter million Americans work in the cannabis industry with some 13,000 of them in Nevada. Morgan Fox says if the federal government finally recognizes the cannabis industry and its economic contribution with access to Small Business Administration emergency relief loans, companies will need bank accounts.

“Looking ahead, if cannabis businesses are able to get access to SBA loans in the near future, hopefully within the next relief package, but at any point down the line, you need a bank account in order to be able to get those loans and access those funds. So without banking, most businesses even if they are all of a sudden eligible for them, will not be able to actually get those funds.”


Brian Bahouth has been a public media journalist since 1994 and has lived in Reno since 2000. He first came to northern Nevada to be news director at KUNR, Reno Public Radio and has subsequently filed scores of reports for National Public Radio, Nevada Public Radio, Capital Public Radio and KVMR in Nevada City, California. He is co-founder of KNVC community radio in Carson City. Support his work.