The SAFE Banking Act: What To Expect

As our readers saw in last week’s blog, this month has been a milestone for cannabis banking reform.

Earlier this month, the Subcommittee on Consumer Protection and Financial Institutions held its first ever hearing on marijuana and financial services, entitled: Challenges and Solutions: Access to Banking Services for Cannabis-Related Businesses. Up for discussion was a new draft of the Secure and Fair Enforcement (SAFE) Banking Act, which is expected to be introduced any day. The bill is being sponsored by Reps. Ed Perlmutter (D-CO) and Denny Heck (D-WA) in the House, and by Sen. Jeff Merkley (D-OR) in the Senate. All of them have been longtime champions of this cause.

Watch this video for an update on the February 13 hearing:

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Because cannabis remains illegal under the federal Controlled Substances Act, individuals who grow, possess, use, sell, transport, or distribute cannabis remain subject to federal criminal prosecution. Under current law, financial institutions providing banking services to legitimate and licensed cannabis businesses under state laws are subject to criminal prosecution under several federal statutes such as “aiding and abetting” and money laundering.

Regardless of whether they’re state or federally chartered, all banks are federally regulated (by FDIC, OCC or the Fed), and thus subject to these rules.

The SAFE Banking Act seeks to harmonize federal and state law by prohibiting federal banking regulators from:

• Threatening or limiting a depository institutions’ access to the Deposit Insurance Fund
• Discouraging, prohibiting, or penalizing depository institutions for servicing cannabis related businesses
• Taking any action against a loan made to a covered business
• Forcing a depository institution to halt providing any kind of banking services to state-legal cannabis related businesses

The bill has a few changes from last Congress, including:

• Protections for ancillary businesses from money laundering and other laws
• Changes the language addressing businesses in Indian Country.
• Adds requirement that Financial Institution Examination Council develop guidance to help credit unions and banks understand how to lawfully serve cannabis businesses.
• Adjusts the definition of “Cannabis-related legitimate business” to match up with the definition used in last session’s Senate language

Once the SAFE Banking Act is introduced, NCIA will begin gathering cosponsors from both sides of the aisle for the legislation, and will be working with the House Financial Services Committee and its members to advocate for a mark-up of the bill.

While NCIA is making change and advancing our issues every day, there’s still much work to do! Make sure to mark your calendars for our 9th Annual Cannabis Industry Lobby Days in Washington, D.C. on May 21-23 so that you can tell congressional offices your personal story. There’s strength in numbers, and we can’t do it without you!