Wright State Political Scientist Dr. Lee Hannah on the SAFE Banking Act, Cannabis Banking Reform
Wright State University Political Scientist Dr. Lee Hannah examines the SAFE Banking Act and what it means for cannabis companies in the United States. The bill allows cannabis companies to access financial capital and services while protecting banks that interact with and hold money from the marijuana industry. This marks just the third time a stand-alone piece of cannabis legislation has made it out of committee. While part of a broader blueprint for marijuana reform, the next step for the SAFE Banking Act is a floor vote in the US House of Representatives. While Dr. Hannah believes the bill would pass the House vote, he is unsure whether it would survive a vote in the Republican-controlled Senate without amendments. Dr. Hannah weighs the likelihood of President Trump signing such a bill as well as the possibility of descheduling cannabis federally as part of the 2020 election campaign.
Howard Glassman: Joining me now via Skype is Lee Hannah, Professor of Political Science at Wright State University. Professor, thanks for joining us today, and how are you? Hold on, hold on, Professor. Professor, hang on a second, because apparently everyone – hey, take your shot at the control room, because everyone in there is drunk. Hang on a second, Professor. We’re Canadians. It’s the Blue Jays home opener, and everyone working on the show is just hammered.
They’re like – oh, I can hear you now.
Lee Hannah: Can you hear me now? Okay.
Howard Glassman: Thank you, thank you for joining us on opening day.
Lee Hannah: Sure, thank you.
Howard Glassman: I want to get into the – first of all, let’s talk a bit about what the Marijuana Banking Bill is, what exactly we’re talking about, and then we can talk about how it’s going to affect marijuana going forward.
Lee Hannah: Sure. So this was a Bill that was started in the House financial services, and you know, came out with a pretty strong vote – 45 for and 15 against, so there was some bipartisan support to get this out now to the House floor – and primarily what it is trying to do is protect banks to hold money in the marijuana industry.
Historically, banks have been in violation of US Federal law if they do hold marijuana money, and even when, you know, entrepreneurs, whenever they – the few banks, or the few states that have changed the regulations, even there, when marijuana industry goes through their process, they have to report it as a…every time they bank with them, they have to report it as illegal activity. So it’s just become a real mess, and it’s made the industry here in the States a predominantly cash-only industry.
Credit card services, no. loans for entrepreneurs and a number of other aspects…
Howard Glassman: Well, correct me if I’m wrong, and I know you will, but isn’t part of the deal – I know they have to, the problem is, they have to hold cash, and part of what’s been an impediment to the, you know, not just legalization but companies getting involved, the impediment has been not being able to borrow money, not being able to conduct business the way we do here in Canada. And so this House Committee Bill, is this a step – and then just a small step, I understand that – a step along the way to get these companies to be able to be registered and then to trade eventually, right?
Lee Hannah: Yes, absolutely. Yes. And as you mentioned, the ability to get a loan has been very prohibitive for many entrepreneurs; the latest I’ve seen is, it takes about $250,000 USD to start one of these industries, and you know, that’s not an impossible loan to get, but that’s a lot of cash for any entrepreneur to have. So you’re right: this would clear a huge hurdle. It’s a part of a broader blueprint from one of the main advocates for marijuana reform in the US House, Earl Blumenauer, and it goes along with some other policies.
But I believe I read that this is only the third time that any kind of standalone marijuana reform has even made it out of a committee in the US House, so that’s a pretty big deal.
Howard Glassman: It is interesting, and when you think about there’s, I think it’s 11 states now that have some sort of legalization, and yet federally there doesn’t seem to be the appetite – or hadn’t been until now. I wanted to introduce you to Ed. We were sort of talking, Ed, about a Republican versus a Democratic issue, and Ed’s theory, you said something about Trump would get re-elected, he might make marijuana legal. What do you think of that?
Lee Hannah: Well…
Ed Milewski: Yeah. I mean, I don’t know – a comment was made by one of the top, top financial guys in the country, and he just said, yeah, if Trump makes it legal, he’s going to get back in power.
Howard Glassman: He’s going to get elected. Professor Hannah, what do you think of that?
Lee Hannah: Um, I do think that he could win over some support if he would at least, you know, look towards de-scheduling the drug. And if marijuana were moved from Schedule 1 and moved to a different Schedule where then it would have medical value, that would be just a really smart, incremental step. It would allow for more medical testing, it would allow for the banks to be less fearful, and everything else. And certainly, you know, knowing where opinion is, especially youth vote, it could definitely help him at the margins with some people who maybe otherwise wouldn’t vote, but would be excited about that, at least.
Howard Glassman: Well that’s an interesting point, because, you know, we have – it became universally legal here last October, but it has been in stages of legality for some time, specifically the medical marijuana market. It has been around for several years, and maybe that’s the stepping stone, as you say – getting it de-scheduled. Now, this particular reason that we’re talking to you with the Marijuana Banking Bill, I know this isn’t your thing, but in terms of it being a stock market play sometime in the future, it’s got to have huge ramifications.
Lee Hannah: Sure. I mean, this is a huge burgeoning industry, and it’s one that is, I think there’s increasing demand to really pull it out of the shadows, just from a pure capitalistic perspective, let alone, you know, there’s a lot of momentum if you’ve been watching recent state laws; there’s been quite a bit of criticism that marijuana enforcement in the US has historically really affected communities of colour. And the current way that marijuana is financed favours white entrepreneurs, and so there’s even a push kind of from communities of colour that if you would, you know, open up the banking, open up the financial opportunities for minority investors, that that could be a bigger win kind of across a number of coalitions that are trying to move this policy forward.
Howard Glassman: This fine gentleman with us today is Professor Lee Hannah, political science at Wright State University, and before we let you go, Sir, Dayton, Ohio, I understand, is where you’re at today.
Lee Hannah: That is correct.
Howard Glassman: I want to ask two more things. Are you aware, or are people in your circle, sphere of influence, aware of the fact that Canada has legalized marijuana? Is that something you are aware of? I know some people are.
Lee Hannah: Yes, yeah. I think that there is some awareness and, you know, in American politics research, we talk about the pressures that occur when border states adopt a policy, you know, that other states may sense either that they’re missing out on revenue, or that they’re just kind of dealing with the spillover effects of a policy. So there has been some talk that by Canada, you know, moving forward towards a more liberal legalization policy, that that is going to add pressure in the US, particularly in the states on the border.
Howard Glassman: And it’s funny you say border, because going back and forth, as we do a lot here in Canada, back and forth to the States, I don’t know about you, Ed, but I’ve been back and forth a few times since legalization, and all we do is lie. We just lie. Have you had any contact with marijuana in the last – No! What are you speaking of? What? What?! Marijuana?
Ed Milewski: Moi? Moi?
Howard Glassman: Anyways, how about this: you can give us a little lesson in US politics.
Lee Hannah: Sure.
Howard Glassman: So it’s the House Committee. Now what happens? It gets, does it need approval by Congress and the Senate? Like, how far down the road is legalization from what happened today?
Lee Hannah: That’s a great question. So this will now go to a floor vote in the US House of Representatives, the lower chamber, and it is likely to pass, unless there’s some unforeseen kind of movement. There were a number of legislators that tried to push some amendments forward that kind of got shot down.
This should go to a floor vote. Given that the Democrats have the numbers, it should get approved, and then it goes to the Senate, our upper chamber, which is in Republican control. There is one Republican senator, Corey Gardner, out of Colorado, representing the first state to legalize recreational; he’s been very vocal in support of, you know, we need to get this policy at the Federal level kind of on board, because you know, any – there are a lot of Republican legislators in states with medical or recreational marijuana, and they’re just exhausted of this song and dance with the Federal government.
So there will be at least some Republican support, but you know, as far as broad support yet in the Republican party, I don’t know, you know, what the future holds in the Senate. It will probably get amended to some level, if it does get through, passed back down to the House, and then if all that occurs successfully, it would go to the President’s desk. And I think Trump would probably sign this; that would be my hunch. I don’t think Trump himself is much of a prohibitionist as much as some of his Department of Justice seems to be.
Howard Glassman: Okay, well, you know, in the end – and we’re no different – in the end it all comes down to, who’s going to make money off this? And –
Lee Hannah: Uh huh.
Howard Glassman: Well no, it’s true. At some point in the history of this in the States, it will be, somebody made a deal. There was an opportunity that somebody saw the opportunity for growth, for market growth, and for jobs, and at the end that’s what will get it through.
Lee Hannah: Yeah, I think you’re right. It’s been a long game here, but it does seem the momentum’s really picked up.
Howard Glassman: Well, you know, yesterday we had a 29-year-old CEO of a billion-dollar weed company come on, and Ed and I were like, how old is this kid? And we’re thinking the same thing, now. How are you a Professor? You’re like 20. How old are you?
Lee Hannah: I am 37. [laughter]
Howard Glassman: 37! Ridiculous. Grow up.
Ed Milewski: Good for you.
Howard Glassman: Good for you. [laughter] Hey, Lee Hannah!
Lee Hannah: What’s that?
Howard Glassman: I – it doesn’t matter. We’re all just yelling over each other. Lee, thanks very much. We appreciate it.
Lee Hannah: Thank you so much for having me. I really appreciate it.
Ed Milewski: Thanks, Lee.
Howard Glassman: You’re a good man. That’s Lee Hannah, the Professor, Department of Political Science. He knows what he’s talking about.
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