MJBiz - September/October 2024 - 11

FIVE QUESTIONS
institution, because that will
give them more money on their
bottom line to service debt. It
will qualify a whole lot more
cannabis entities to go and get
debt.
Taking 280E (of the Internal
Revenue Code) away is a great
thing for debt servicing. If they
get to reschedule to Schedule 3,
there's going to be more investor
interest in the industry.
And investor funds are a great
thing to flow through the industry.
It benefits us in the long run,
because we're in the deposit
business.
What are the chances of the
SAFER Banking Act passing,
and how will it impact Safe
Harbor and its businesses?
It won't impact us too much
because we've been doing it
without SAFE Banking for 10
years now.
In our situation, we're pretty
solid in what we do. The
regulators understand what we
do. The companies understand
it might gather more interest in
terms of financial institutions
coming to the market, which
means it would benefit the
companies themselves.
However, it is not the beginning
of easy banking for cannabis,
because (the Bank Secrecy Act) is
what really drives the workload.
Bank Secrecy drives the pricing.
Not too many financial institutions
want to set up a function
that specializes in cannabis and
understands it and makes sure no
illicit activities go on.
And we all know that there
is an illicit market operating in
plain sight, and that really makes
it difficult for the cannabis
industry.
Banking is going to be that one
factor that helps eliminate the
black market and really legitimize
those who are licensed and
doing it the correct way. I don't
think it will change much unless
they revise Bank Secrecy. But in
terms of revising Bank Secrecy, it
gets revised quite regularly, but
it only gets more difficult.
It is the biggest question that
regulators look at when they
come in: Are you protecting the
financial system? Are you making
sure every dollar that you allow
to flow through your financial
institution is good money from
licensed entities?
That's not something that's
going to go away because they
created the SAFER Banking
Act-not just for cannabis but
for any illicit activity.
Bank Secrecy is one of the
regulations financial institutions
fear the most, because you can
get fined hundreds of millions
of dollars. You can get fined for
every report that you don't do
correctly, and that makes it difficult
for financial institutions.
What do you think the
cannabis industry will look
like in 5-10 years, and how
will Safe Harbor adjust?
We're in a present landscape that
is just going to continue to grow.
There's going to still be M&A.
But for me, it's more important
that businesses don't all get
acquired.
I hope that we keep boutiques,
and we keep mom-and-pop
shops. But they need that relief
of rescheduling, because it's
tough to do business in this
market. And if they don't get
some kind of relief, then we'll
see more M&A activity that will
destroy some of the smaller
markets.
What's difficult in this
market is the intoxicating hemp
" We can bank
hemp products,
but we can't bank
intoxicating hemp
products that are
not regulated. "
- Sundie Seefried,
Safe Harbor Financial
products out there. That is
what makes our clients a little
nervous, and I can't blame them.
It makes us a little nervous
because we can bank hemp
products, but we can't bank
intoxicating hemp products that
are not regulated.
Some of our clients who are
in cannabis are saying, " Well,
if others can do it without
being regulated, I should get
into the hemp business and do
intoxicating hemp and have a
whole new market out there. "
If our clients get into the hemp
business, we're really clear with
them: Until we have clarity, like
we got with marijuana, like we're
starting to get with psilocybin,
we can't bank that industry.
We're very transparent with
our clients and saying it can get
us into trouble as your financial
institution. It can harm the
entire program if we're not being
very careful with the regulatory
environment on the financial
end. So, we do not and continue
not to bank delta-8 THC and
those derivatives.
This interview was edited for
content and clarity.
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MJBiz - September/October 2024

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