Meet the CLIMB Act, a new bipartisan cannabis banking bill
Move over, SAFE, there’s a new cannabis banking bill in town.
On June 23, US Representatives Troy A. Carter, Sr. (D-LA) and Guy Reschenthaler (R-PA) introduced the Capital Lending and Investment for Marijuana Businesses (CLIMB) Act.
If signed into law, the bill would enable cannabis businesses to access a wide array of banking services, from lending to credit card services and money transfers. Taking a different approach than SAFE, it would also allow the New York Stock Exchange, Nasdaq and other national securities exchanges to list cannabis businesses, providing them with a new avenue to generate capital and grow.
The bill’s sponsors intend to provide targeted financial relief to small businesses, and businesses run by veterans and members of disenfranchised communities, although the bill language provides few details on this front.
“The CLIMB Act is critical because it provides state legal American businesses with traditional funding and support mechanisms for this emerging industry, which other domestic industries currently enjoy,” said Saphira Galoob, Executive Director of the National Cannabis Roundtable, in a recent press release.
“The more financing sources available to cannabis businesses the better, particularly for entrepreneurs, small and minority-owned businesses that may have otherwise faced challenges in obtaining access to capital,” Galoob added.
What’s in the CLIMB Act?
The CLIMB Act would primarily allow the cannabis industry to access a multitude of “business assistance” opportunities from banking institutions. The term encompasses a wide range of activities: Not just credit card services, but money transfers, accounting services, and lending, to name a few.
“American cannabis companies are currently restricted from receiving traditional lending and financing, making it difficult to compete with larger, global competitors,” said Rep. Reschenthaler via the same press release.
“The CLIMB Act will eliminate these barriers to entry, and provide state legal American cannabis companies, including small, minority, and veteran-owned businesses, with access to the financial tools necessary for success. This bipartisan legislation will boost the economy, create jobs, and level the playing field for American businesses,” he added.
Yet the bill language itself offers few specifics. The veteran cannabis advocate and lobbyist Justin Strekal, who now runs the BOWL PAC, argues that the bill wouldn’t provide sufficient aid to small businesses.
“When we think about the role of the federal government in supporting small businesses, their primary tool is the Small Business Administration. This bill does not explicitly acknowledge the existence of the SBA or [require] the SBA to engage,” Strekal told Leafly.
“It’s incredibly important that we get this right from the start. The CLIMB act should not be that starting point,” he added.
At press time, neither Representative could be reached for comment.
The bill would additionally allow government agencies to offer grants and other sources of government funding to cannabis businesses.
Lastly, the CLIMB Act would amend the Securities Exchange Act of 1934 to create a “safe harbor” for national securities exchanges like NYSE and Nasdaq to list cannabis businesses and permit stocks of these businesses to be traded on the market.
Currently, cannabis businesses can only be found on the Canadian Securities Exchange and traded via over-the-counter (OTC) markets, which do not provide the security of a third-party broker, like a conventional exchange. Since a third party doesn’t set a value for a specific stock in an OTC market, the prices of OTC stocks are determined solely by buyer and seller.
Business Insider reports that OTC markets are prone to scams and criminal activity.
For the time being, the future of the CLIMB Act is as clear as month-old bong water. What the bill’s passage would mean for businesses big and small, how it would operate in concurrence with the SAFE Banking Act, and whether it can garner enough support to pass Congress in the first place, all remain to be seen.
Stay tuned for more updates on the CLIMB Act, the SAFE Banking Act, and other federal cannabis reform legislation on Leafly.