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Mar 25, 2021
SAFE Banking Act Reintroduced In Congress

U.S. Senator Jeff Merkley (D-OR) and U.S. Senator Steve Daines (R-MT) introduced the bipartisan Secure and Fair Enforcement (SAFE) Banking Act, which would ensure that legal cannabis businesses have access to critical banking services, in the Senate on March 23.

The Secure and Fair Enforcement (SAFE) Banking Act first passed the House in 2019, but had stalled in the GOP-controlled Senate without ever getting a vote.

Most state legal medicinal or recreational cannabis businesses are denied access to the banking system because banks fear they may be prosecuted under federal law given the ongoing federal restrictions on cannabis. The lack of access to bank accounts, credit cards, and checks have forced state legal cannabis businesses to operate in cash, opening the door to tax evasion and to a dangerous pattern of robberies, including one that resulted in the murder of a store clerk in Portland.

“Giving state legal cannabis businesses access to banking services would not only improve community safety, but also make it easier for Americans of color — who have long been disproportionately impacted by America’s racist ‘War on Drugs’ policies and generations of asset-stripping policies and practices — to access the capital necessary to participate in the merging cannabis industry,” a statement from Sen. Merkley read.

Sen. Daines co-sponsored the bill.

“Montana businesses shouldn’t have to operate in all cash, they should have a safe way to conduct business,” Daines said in a statement. “My bipartisan bill will provide needed certainty for Montana businesses and give them the ability to freely use banks, credit unions and other financial institutions without the fear of punishment. This in turn will help increase public safety, reduce crime, support Montana small businesses, create jobs and boost local economies. A win-win for all.”

To address the safety concerns resulting from these state legal businesses being shut out of banking services, the SAFE Banking Act would prevent federal banking regulators from:

  • Prohibiting, penalizing or discouraging a bank from providing financial services to a legitimate state-sanctioned and regulated cannabis business, or an associated business (such as an lawyer or landlord providing services to a legal cannabis business);
  • Terminating or limiting a bank’s federal deposit insurance solely because the bank is providing services to a state-sanctioned cannabis business or associated business;
  • Recommending or incentivizing a bank to halt or downgrade providing any kind of banking services to these businesses; or
  • Taking any action on a loan to an owner or operator of a cannabis-related business.

The bill also creates a safe harbor from criminal prosecution and liability and asset forfeiture for banks and their officers and employees who provide financial services to legitimate, state-sanctioned cannabis businesses, while maintaining banks’ right to choose not to offer those services. The bill also provides protections for hemp and hemp-derived CBD related businesses.

The bill would require banks to comply with current Financial Crimes Enforcement Network (FinCEN) guidance, while at the same time allowing FinCEN guidance to be streamlined over time as states and the federal government adapt to legalized medicinal and recreational cannabis policies.

Full text of the legislation is available here.

U.S. Rep Ed Perlmutter (D-CO) introduced the same legislation in the House of Representatives on March 18. U.S. Rep. The bipartisan H.R. 1996, the Secure and Fair Enforcement (SAFE) Banking Act of 2021 would allow marijuana-related businesses in states with some form of legalized marijuana and strict regulatory structures to access the banking system.

“The genie is out of the bottle and has been for many years. Thousands of employees and businesses across this country have been forced to deal in piles of cash for far too long, and it is the responsibility of Congress to step up and take action to align federal and state laws for the safety of our constituents and communities,” said Congressman Perlmutter. “The public safety need is urgent, and a public health and economic need has also emerged with the pandemic further exacerbating the cash-only problem for the industry.

“In many states, the industry was deemed essential yet forced to continue to operate in all cash, adding a significant public health risk for businesses and their workers. As we begin our economic recovery, allowing cannabis businesses to access the banking system would also mean an influx of cash into the economy and the opportunity to create good-paying jobs.”

The legislation would need to pass both houses of Congress and be signed into law by President Biden to be enacted.

Industry reactions

The National Cannabis Industry Association urged its members to contact their Senators and ask that they sign on as co-sponsors of the SAFE Banking Act:
“This important legislation would provide state-legal cannabis businesses with the broad access to traditional banking and financial services afforded to all other legal businesses in the country — and we need your help to pass it!

“NCIA has been building support for banking access for our industry in Congress since the first version of the SAFE Banking Act was introduced in 2013, when it was considered a fringe issue by most members of Congress. The latest version of the SAFE Banking Act was approved by the House three times in the last Congress and had garnered 35 cosponsors in the Senate by the end of 2020. That progress was only possible with the hard work our team in D.C. takes on every day, thanks to the support of our members.”

In a letter to Congress, the American Bankers Association shares its support for the SAFE Banking Act of 2021:

“ABA does not take a position on the legalization of cannabis. Nevertheless, our member banks find themselves in a difficult situation due to the conflict between state and federal law, with local communities encouraging them to bank cannabis businesses and federal law prohibiting it. Congress must act to resolve this conflict between state and federal law.

“The bipartisan SAFE Banking Act would be an important step toward enabling financial services for cannabis-related businesses. The bill specifies that proceeds from a legitimate cannabis business would not be considered unlawful under federal money laundering statutes or any other federal law, which is necessary to allow the provision of financial services to cannabis-related legitimate businesses as well as any ancillary businesses that derive some portion of their income from those businesses. The bill would also direct FinCEN, and the federal banking regulators through the Federal Financial Institutions Examination Council, to issue guidance and exam procedures for banks doing business with cannabis-related legitimate businesses. Explicit, consistent direction from federal financial regulators will provide needed clarity for banks and help them better evaluate the risks and supervisory expectations for cannabis-related customers. The SAFE Banking Act is not a cure all for the cannabis banking challenge, but it is a measure that helps clarify many issues for the banking industry and regulators.”

The U.S. Hemp Roundtable shared with its members the benefits the bill would offer hemp growers:

“It’s great for hemp, and it needs your support. The SAFE Banking Act, celebrated for offering banking and financial service access to marijuana-based businesses, was amended in 2019 to specifically assist hemp farmers and CBD companies with banking and merchant services. Later that year, the bill passed the U.S. House by an overwhelming margin, 321 to 103, but unfortunately never was heard by the U.S. Senate.

Prospects for the bill appear brighter this year with the change in control of the Senate. And the bill itself is much improved to explicitly protect financial and credit card transactions for hemp farmers and processors, as well as businesses engaged in the handling, manufacturing and sale of hemp-derived cannabinoid products such as CBD. Meanwhile, the bill makes clear that hemp businesses are not subject to the additional scrutiny required for adult-use cannabis commerce.”

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