Marijuana Companies Say Bill Would Expand Social Equity, Reduce Legal Pot Prices
Marijuana companies are pushing for a new bill now before Congress, the Secure and Fair Enforcement Banking Act, which would prevent federal regulators from penalizing banks that do business with state-sanctioned cannabis companies.
Although weed is sold legally in many states, it's still against federal law. That means most banks won't work with pot firms — or if they do, they charge a premium. Some cannabis companies pay $2,000 to $3,000 a month for a bank account, and traditional financing, like a bank loan, isn't available.
Tom Davis, the chief financial officer of INSA — which has marijuana businesses in Easthampton, Salem and Springfield, Massachusetts — said his company has been able to get private investors, but a lot of people don’t get a fair shake.
“A lot of our peers have not been so fortunate,” Davis said. “This is especially true for minority groups, just smaller business owners just trying to get a license and get off the ground. It takes a lot of capital, and without your traditional bank financing, you have to turn to private capital. And a lot of people don't make it.”
Davis said the lack of traditional lending also makes it hard for established companies, like INSA, to scale up as fast as they would like.
Brandon Pollock, CEO of Theory Wellness, which has cannabis businesses in Chicopee, Great Barrington and Sheffield, said people in the industry “have to find private individuals or borderline predatory investment funds to finance your construction.”
Pollock said if cannabis companies can get bank loans, it could lead to lower prices in pot stores.
“If we can have more conventional access to financing, you could see more entrepreneurs get those loans and build up the supply chain and then prices would go down,” Pollock said.
Reduced legal pot prices might mean the new industry can better compete with the street market. Right now, legal weed can cost twice as much.
So far, U.S. Senate and House versions of the bill have broad bipartisan support. Co-sponsors include Republican Matt Gaetz of Florida, independent Angus King of Maine, and Democrat Elizabeth Warren of Massachusetts.
An earlier version of the bill passed in the House in 2019.
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