We write often about one of the oldest sayings in the financial restructuring business: “Cash is King.” Without liquidity, all bets are off as to what viable options may exist for going forward. Yet in the cannabis industry, there is a different cash problem: too much cold hard cash due to banking concerns by depository institutions. The Cannabis Industry continues on its bumpy fiscal ride.
The lobbying to support the multi-billion dollar “cannabis” industry continues. Now through creative logic, it is seemingly tied to the COVID-19 Pandemic. On May 19th 2020, 34 state attorneys general wrote a letter expressing their mutual support to Congressional leadership. Nothing like sneaking something totally unrelated into a COVID bill.
The SAFE Banking Act
The SAFE Banking Act was passed by the House in September 2019, but didn’t progress through the Senate. The Act provides a safe harbor for banks that provide services to covered marijuana businesses in a state that has implemented its own laws governing the marijuana industry. As stated in their letter, the attorneys general note the main reasons that they support federal legislative action. They are also now making some creative arguments to attempt to tie it into COVID.
First, since the cannabis industry is cash-intensive, it is a target for criminal activity, and this has allegedly increased during the pandemic. Second, the large cash transactions place law enforcement, consumers, patients, the public and government officials at increased virus-exposure risk. Third, don’t forget that taxing cannabis/marijuana at the state and local levels could lead to increased tax revenues. Also because apparently all the cash transactions are not being reported.
Always follow the money.
About DelCotto Law Group
DelCotto Law Group is Kentucky’s asset protection law firm known for its commitment to the lifetime success of its clients. With offices located in Lexington, Louisville and Danville, DLG serves Kentuckians with complicated financial matters, especially in the areas of bankruptcy and complex litigation. For more information please call (859) 231-5800, email [email protected] or reach us on our contact page.