2020 has been a challenging year for the global economy as COVID-19 has forced businesses to shut down in order to slow down the spread of the virus.
One of the most interesting developments that is associated with COVID-19 is the classification of businesses as essential or non-essential. The cannabis industry has benefited from being granted the essential business classification and we consider this to be a major step forward for the industry.
Once we have developed a treatment or vaccine for COVID-19, countries will need to find new avenues to generate tax revenue. In response to the outbreak of the virus, the United States has printed trillions-of-dollars to support businesses as well as people who have been furloughed or fired.
Last week, the US House of Representatives passed a $3-trillion relief bill to further support those who are being negatively impacted by the economic pressures that are associated with the coronavirus pandemic.
One of the reasons we are excited about the legislation is due the impact it can have on the cannabis sector. The legislation included a rider that is known as the SAFE Banking Act and the passing of bill would be a massive catalyst for the cannabis sector. The SAFE Banking Act would allow cannabis businesses to work freely with banks and it would remove a major headwind for the sector.
The inclusion of the SAFE Banking Act language in the legislation came after a coalition of 10 cannabis and banking organizations sent a letter to House Speaker Nancy Pelosi (democrat) and House Minority Leader Kevin McCarthy (republican). The letter urged them to include provisions that would allow cannabis businesses to access traditional banking products and services.
Representative Earl Blumenauer (democrat) supported the letter that was sent to Pelosi and McCarthy and we are favorable on the bi-partisan support that it has. Representative Blumenauer believes that it is wrong to prohibit cannabis businesses from accessing banking solutions and forcing cash-only transactions while we are in the middle of a global health crisis.
Although the US Senate has never passed cannabis legislation, the US has never faced a situation as dire as COVID-19. States desperately need to find ways to generate additional tax revenue and cannabis could be the answer. Last year, Colorado exceeded the $1 billion mark for total tax revenue that has been generated by the cannabis industry.
From a population standpoint, Colorado is a much smaller market than New York and Florida. If recreational cannabis was legal in these markets, they would generate a substantial amount of tax revenue and it is only a matter of time until regulation that is in support of the industry is ratified.
We believe that the cannabis sector is at an inflection point and we are favorable on the way the industry has advanced. Cannabis banking legislation is one of the few topics that have bipartisan support and our readers need to be aware of how significant the passing of the legislation would be.