SAFER Banking Act: Kevin Hart on Cannabis Industry’s Financial Evolution

The Senate Banking Committee recently advanced the Secure and Fair Enforcement Regulation Banking Act (SAFER), having  voted 14-9 in favor to advance the measure to the chamber’s floor. This groundbreaking development has sparked newfound optimism within the industry. Kevin Hart, founder and CEO of Green Check Verified, a leading fintech connector in the cannabis market, shares insights on the bill's progress, its potential impact, and the challenges financial institutions face in serving the cannabis industry. Kevin's perspective sheds light on how the SAFER Banking Act could pave the way for a brighter financial future for the cannabis industry.

MyCannabis: You mentioned that this is the first time you've been optimistic about the passage of the SAFER Act. What specific factors or developments in the current Senate hearing have led to this newfound optimism, especially considering the bill's previous unsuccessful attempts in the Senate?”

Kevin: This bill making it out of committee and onto the floor of the Senate is an amazing leap forward in progress. Traditionally, SAFE and now SAFER, have seen positive movement in the House while being stalled in the Senate. For either of these bills to make it beyond this stage is outstanding. It means there is real momentum behind the movement after 10 years of waiting. Does this mean we should start assuming it will become law in the near-term future? Absolutely not. However, this does mean that companies across the existing industry, and those who might be taking a look at entering it, have enough information to start planning and getting engaged.

MyCannabis: In your statement, you mentioned that while the proposed language in the legislation is not perfect, it would represent real progress if adopted. Could you elaborate on what aspects of the bill you believe are positive for the cannabis industry, as well as any areas where you think improvements could be made?”

Kevin:  I think the easiest way to say this is simple. SAFER is what many people believed SAFE was. The original inception of this bill as SAFE was little more than codifying a way for financial institutions to feel comfortable banking legal cannabis businesses. A much needed service 10 years ago, but one that companies like Green Check, have been solving while the bill sat idle in congress.

The things I see as real progress with SAFER as opposed to SAFE are: Social equity provisions and protections, clearer directives on how a financial institution can or cannot choose to service the industry, and access to capital markets. Each of these steps impacts a different layer of interested parties, but collectively they create what is essentially a level of legitimacy and access to traditional banking and financial services the cannabis community has struggled without since its inception. 

MyCannabis: You mentioned that the bill, if approved, could serve as a catalyst for more banks and credit unions to serve the legal cannabis industry. Can you outline some of the key challenges that financial institutions have faced in providing services to the cannabis industry thus far, and how the SAFER Banking Act might address or alleviate some of these challenges?

Kevin: The primary issue banks and credit unions have faced to date have largely been around staying compliant. Filing the right paperwork, in the right order, and at the right time is time consuming and difficult. Of course, fintech solutions like Green Check have helped alleviate this burden, but SAFE or SAFER both bolster our ability to do this. It lessens some of the regulatory burdens in a way that makes servicing the industry economically viable for the institutions. 

Secondary to this shift is the potential for credit cards to enter the space officially. No gimmicks. No loopholes. No work-arounds. SAFE was an opt-in option for banks and credit unions to begin openly servicing legal cannabis operations but there was no pressure put on Visa and Mastercard, or others to get into the game.  The past SAFE ACT put in concept and writing what is essentially being done in practice today, but SAFER moves this into an opt-out scenario that would make this critical access point for operators and consumers a reality.

Lastly, SAFER doesn’t have carve outs to prevent the largest financial institutions from playing. Meaning, the centralized big banks would have the ability to begin servicing the industry with their full capabilities which could lead to more access to lending and funding, as well as potentially driving down costs for operators.   I still don’t think the large banks will jump in until after all the new rules and regulations are fully implemented.

As the SAFER Banking Act gains momentum in the Senate, Kevin Hart's optimism regarding its passage shines a hopeful light on the cannabis industry's financial landscape. With its potential to provide legal protection to financial institutions, create social equity provisions, and expand access to capital markets, the bill may well be a catalyst for significant change. While challenges persist, this development represents a vital step towards legitimizing and enhancing financial services for the burgeoning cannabis sector.