PayPal Joins Effort to Legalize Cannabis Banking

[dropcap class=”kp-dropcap”]A[/dropcap]ccording to PayPal Inc.’s Q1 2019 lobbying report, the company added the Secure and Fair Enforcement (SAFE) Banking Act of 2019 to its list of lobbying efforts in Congress. The lobbying effort supports allowing cannabis businesses to have access to banking services and signals a change in the way the tech giant treats businesses in the cannabis industry.

Congressman Ed Perlmutter, who introduced the SAFE Banking Act, shared the news regarding PayPal’s lobbying efforts on his website. “PayPal’s foray into lobbying on the SAFE Banking Act is a signal that mainstream financial services companies are eager to start doing business with the cannabis industry—and are willing to pony up to get the legislation through Congress,” reports Bloomberg Law.

The House’s SAFE Banking Act of 2019, or H.R. 1595, and its accompanying Senate bill S. 1200, would allow banking services to cater to businesses that operate in the cannabis industry. It would protect banks and credit unions from punishments by federal regulators.

The bill predictably gained support from a number of cannabis organizations, but it also attracted lobbying support from major associations such as The American Bankers Association. The American Bankers Association provided $30,000 during its first quarter budget to lobby towards fair access to banking.

In 2015, PayPal Co-Founder Peter Thiel invested in a project with Privateer Holdings  Two years ago, Dave Peck, former Global Head of Social and Digital Media for PayPal, joined a cannabis financial company. But like most tech companies, PayPal is difficult, if not impossible, to use for cannabis companies. Currently, PayPal’s Prohibited Activities policy bans services for transactions that involve narcotics or drug paraphernalia. There are currently only about 40 banking institutions that cater to the cannabis industry, but their services are limited.

As of April 18, the House version of the SAFE Banking Act of 2019 attracted 162 co-sponsors. Passing the legislation in the Senate faces tougher odds—with Banking Committee Chairman Mike Crapo hailing from Idaho, a prohibition state. Treasury Secretary Steven Mnuchin, however, recognized the great need to end the conflict between federal and state law surrounding cannabis banking.