Advocates of marijuana legalization, and owners of cannabis-oriented companies, received a positive boost this week when Jerome Powell, the Federal Reserve Chair, testified to Congress that providing clarity to banks dealing with the cannabis industry would be desirable:

“I think it would be great to have clarity,” Powell said from Capitol Hill. “It puts financial institutions in a very difficult place and puts the supervisors in a difficult place, too. It would be nice to have clarity on that supervisory relationship.” (CNBC)

Powell’s testimony comes as a new draft of the Secure And Fair Enforcement Banking Act of 2019 (SAFE Act) is circulating. The legislation would expand dispensary and other cannabis company access to formal banking – allowing a shift away from cash-based operation – and protect investors and bankers from the current potential legal consequences of providing financial services to the cannabis industry.

Expanding these legal protections will not only allow banks and investors to participate in a rapidly growing market; it might also increase pressure on the federal government to legalize – or at least de-schedule – marijuana.

Research assistant Erin Partin co-authored this blog post.