The Senate Banking Committee approved a historic marijuana banking bill last week that breaks barriers between financial institutions and cannabis companies.
The Secure and Fair Enforcement Regulation (SAFER) Banking Act, which aims to resolve a longstanding financial deadlock that forced cannabis-related companies to operate using only cash, will now make its way to the Senate floor. Iterations of this bill have been presented in committee since 2015, but this is the first time the bill has received a yes vote and made its way to the Senate at large.
As the marijuana market flourishes across the US, federal legal ambiguity has hindered its full potential, making transactions an all-cash, risky affair.
The legislative road ahead is tough, despite the bipartisan majority in committee, but this bill could redefine the business of marijuana.
Before the Bell spoke with Senator Jeff Merkley, a Democrat from Oregon and a sponsor of the bill, about what comes next.
This interview has been edited for length and clarity.
Before the Bell: You first introduced a version of this bill in 2015; why do you think that it's taken nearly eight years to get it this far?
Senator Jeff Merkley: More and more states have created medicinal cannabis programs or recreational cannabis programs over those eight years. The issue and problems of a pure cash economy have grown across the country, and more senators are aware of the challenges in their home state. That has slowly built the level of concern and attention to a point where we think a significant majority of the Senate will now support changing things. In Oregon we have a robbery at a dispensary about every other day because the dispensaries are full of cash. Employees are mugged when they come out of their offices because people think they're carrying cash. A cannabis business owner drove from Portland to Salem to deliver his taxes, and he had a backpack with $70,000 cash in it. More of the country has seen the problem and has built a coalition, and now we're ready to play.
What do you hear from the banks? Are they on board?
Banks have been in a difficult position because they have had to sever the relationship they have with longstanding clients. If they do business with a company that provides fertilizer to 200 places and one of them is a cannabis company, they have to cancel that bank account. That's an enormous inconvenience. There are some institutions, including some credit unions, that provide services, but their fees are much higher than for any other commercial enterprise.
Could the cannabis industry be big business for banks?
It's a billion dollar business in Oregon. That's a significant opportunity for banks to provide services. Over the last few years folks have questioned whether this bill is all about big banks wanting to enter the marketplace. I have never heard from any of the banks on Wall Street about this. What I've heard is that small businesses are struggling because their ability to use the banking system has been canceled.
Is this a first step to cannabis tax reform or rescheduling the drug?
It is one of three big issues surrounding us. You have the provision of banking services, then you have the fact that cannabis is scheduled as a top level concern whereas meth, which is savaging our communities, is not. And then you have the tax provisions. Currently these businesses pay on their gross revenue and not their net revenue, and that's crazy. If your revenue is a million dollars and your expenses are a million dollars, you have zero profits. But you have to pay taxes as if you had a million dollars in net profits. But I don't see them as dominoes like one affects the other.
Why is part of this bill about reputational risk?
This bill sends a message to regulators that they should never tell a bank to shut down an account because they don't like the type of business that the bank is holding that account for. So that's a second piece of this bill, section 10, is saying to regulators, 'you are not moral police.' If a company is legal and they don't have financial concerns, then it's improper to tell them to shut down the account for that business.
The third part of the bill focuses on restorative justice. This has been very important because the cannabis prosecutions have been absolutely unjust. White Americans and Black and brown Americans use cannabis at about the same rate, but the prosecution of brown and Black Americans has been basically four times that of White Americans — giving them criminal records and disrupting their lives with jail time. This bill includes the start of addressing that. It says that first we will look carefully through a report on equity and diversity in the cannabis industry. Second of all, we will require data collection related to veteran-owned businesses, small businesses and women- and minority-owned businesses. Third, it will say that income related to cannabis is completely appropriate for use in federally backed mortgages, so people can become homeowners who were blocked from becoming homeowners. And then fourth, it says that community development financial institutions and minority depository institutions are fully legal in serving cannabis dispensaries and their subcontractors.
A historic US health care strike could start Wednesday
A coalition of eight unions representing 75,000 employees of Kaiser Permanente said late Saturday that is has not reached an agreement with the company, setting the stage for the largest healthcare strike in US history.
The Coalition of Kaiser Permanente Unions, which has workers at hundreds of hospitals and medical offices in California, Oregon, Colorado, Virginia, Washington and Washington, D.C., said in a statement that it remains far apart with the company on important issues but still has had "good discussions with Kaiser." The healthcare workers are seeking across-the-board pay raises and improvements to their pension plans, as well as protections against outsourcing.
The coalition's contract with Kaiser officially expired after 11:59 pm PT on Saturday night, reports my colleague Eva Rothenberg.
While doctors, hospital managers, and registered nurses will not be taking part in the strike, the workers involved in the potential strike this week represent a wide array of Kaiser Permanente medical staff, including nursing assistants, optometrists, pharmacists, X-ray and laboratory technicians, genetic counselors, and many others who support hospital operations.
Netflix shutters its DVD rental business
Netflix sent out its last red envelope on Friday, marking an end to 25 years of mailing DVDs to members, reports my colleague Samantha Murphy Kelly.
The company announced earlier this year it is shutting down its DVD-by-mail service, 16 years after it gradually shifted its focus to streaming content online. Netflix will continue to accept returns of customers' remaining DVDs until October 27.
Introduced in 1998 when Netflix first launched, the DVD service promised an easier rental experience than having to drive to the nearest Blockbuster or Hollywood Video. The red envelopes, which have long been synonymous with Netflix itself, littered homes and dorm rooms across the country.
For Netflix, however, the offering has made less sense in recent years. "Our goal has always been to provide the best service for our members, but as the DVD business continues to shrink, that's going to become increasingly difficult," co-CEO Ted Sarandos wrote in a blog post in April.
Shutting down its DVD business could help Netflix better focus resources as it expands into new markets such as gaming as well as live and interactive content. Its DVD business has also declined significantly in recent years. In 2021, Netflix's non-streaming revenue — mostly attributable to DVDs — amounted to 0.6% of its revenue, or just over $182 million.
