Nevada-licensed cannabis establishments mostly rely on cash-only transactions and face a looming threat that banks will shutter their business accounts at any time due to restrictions associated with the drug’s legality at the federal level.
“Without access to these banking services, cannabis businesses are forced to operate as cash-only businesses, keeping large volumes of cash on their premises, frequently making these businesses a target for criminals,” Sen. Jacky Rosen, D-Nev., wrote in a statement.
That could change with the latest U.S. Senate effort to facilitate banking services for such businesses. The bipartisan Safer Banking Act advanced last week out of the senate’s banking committee, the farthest a similar effort has made it.
The bill, which next heads to the senate floor and then to the House of Representatives, has left cannabis advocates cautiously optimistic that banking reform for the industry is imminent.
Clark County Commissioner Tick Segerblom, who led efforts to legalize cannabis in Nevada, described the development as a “big deal.”
Layke Martin, executive director of the Nevada Cannabis Association, lauded the congressional effort to regulate banking, as well as a separate action recently proposed by President Joe Biden’s administration that would in part review the drug’s federal scheduling.
“Safer banking, combined with rescheduling, would be tremendous for economic development,” Martin said.
She said cannabis businesses face financial burdens that other similar industries don’t. The association, which itself is not involved in cannabis sales, has had its bank account closed just by association with the industry, she said.
Nevada Attorney General Aaron Ford is part of coalition of 22 state attorneys general who wrote to Congress last week in support of the legislation.
“Nevada’s cannabis businesses deserve the same security and safety as every other local business that drives our economy,” Ford said in a news release.
‘A different kind of animal’
Some credit unions have agreed to work with the businesses, albeit with higher fees, advocates say.
Aside from the cash-only transactions and hefty bank deposits, banking restrictions make it harder for businesses to get loans. Martin said some cannabis employees have struggled to get mortgages because of the companies that sign their paychecks.
“There are so many Nevada business owners who have opened legal cannabis businesses and created jobs across our state, and they should be able to access the same banking services as all other businesses,” wrote Sen. Catherine Cortez Masto, D-Nev., pledging to work to get the legislation “signed into law as soon as possible.”
The banking and scheduling challenges also trickle down to other industries.
Paul Murad, a real estate professional who has been lobbying officials on behalf of prospective cannabis consumption lounge operators, said that the business owners have struggled to secure leases and construction projects.
As an example, he cited large construction companies weary of associating themselves with the cannabis industry because they’re also involved with federally-funded projects.
“It will greatly impact both the real estate and construction (industries), and make things a lot more straightforward and less complicated,” he said.
Segerblom called future legislative action “a different kind of animal.”
“It’s not over until it’s over,” Martin said. “I think that it’s far from finished.”