By Charlene S. Ali (Chief Ali) and Adam Ali
Having a job to afford a house and a car is the American dream. But the American ideal of entrepreneurship is very different for a cannabis business owner. Due to federal laws, the thousands of people who work in the legalized cannabis industry don’t have the same opportunities – they struggle to get a car loan, acquire a mortgage, or even a credit card.
In 2021, New York legalized cannabis while pushing for equity in historically underserved communities. Many entrepreneurs and aspiring small business owners were thrilled to hear that cannabis was finally legalized in the state: we responded to the news by developing plans to invest our blood, sweat and savings to create small businesses. companies selling legalized cannabis. However, the disconnect between federal and state laws is delaying the industry in its infancy. Although it is legal to operate a cannabis dispensary, it seems that across the country our businesses are not treated as such. We are cut off from the traditional American financial system and left to our own devices to find the capital funding we so badly need to grow and get our businesses off the ground. As a minority planning to apply for a cannabis processing license in New York State, I am now hesitant as to whether this is a path I want to take.
Banks and other financial services institutions are reluctant to do business with us due to the fragmentation between state and federal laws. Current law empowers federal banking regulators to penalize banks for providing financial services to a cannabis-related business. This means that we are left to find funding on our own. Small businesses already struggle to secure start-up funds and resources; the added cost of high fees from the few state-chartered banks that accept commercial cannabis accounts only adds to the financial burden. Cannabis operations backed by large corporations afford to pay these bank fees. Small companies will cease to exist if the status quo continues, and large companies will monopolize the legal cannabis market.
The legalization of cannabis was intended to right the wrongs of past cannabis-related inequities. But we are once again left behind. Businesses get their wings clipped before they can thrive. With limited access to the banking system, they are restricted in accepting different forms of payment. Especially in a technologically advanced place like New York, where many are ditching their physical wallets for digital wallets, being a cash-only establishment limits our customer base and costs us and the state much-needed revenue.
And banning access to financial institutions is a small business issue and a public safety issue. Without adequate access to a banking system, these businesses must operate as cash-only establishments. This poses a significant risk to the public safety of our customers and the hundreds of thousands of employees who work in the industry who are now exposed to fraud, theft and violent crime.
A simple solution would allow cannabis businesses in New York and across the country to thrive and stay safe – passage of the SAFE Banking Act. Senator Schumer has long maintained that the goal of cannabis legalization programs is to benefit small businesses and local communities. Senator Schumer can now champion the little guy and bring the Safe Banks Act to a Senate vote. It’s time to remove the barriers preventing federally insured banks from working with legal cannabis companies. The current system is stunting the growth of small businesses while large corporations backed by private capital are gobbling up market share. Pass the SAFE Banking Act and level the playing field for good.
Charlene S. Ali (Chef Ali) and Adam Ali are the owners of HiFive Edible Wonders.
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