US House of Representatives to consider cannabis banking bill
The U.S. House of Representatives will consider a bill to give cannabis-related businesses access to banking and other financial services. What is the SAFE Banking Act?
The Secure and Fair Enforcement (SAFE) Banking Act was passed out of the House Financial Services Committee on March 27 by a vote of 45-15 and is headed to the full House for consideration. The SAFE Banking Act will allow state-sanctioned cannabis businesses to access and use banking services such as checking accounts, credits cards, loans and other banking products. The bill will prevent federal banking regulators from canceling banks’ deposit insurance and penalizing or otherwise discouraging banks from providing financial services to legitimate cannabis-related businesses. Legitimate cannabis-related businesses are businesses legally engaged in any cannabis-related activity permitted under state or local law. The bill also provides protection from anti-money laundering laws for owners or employees of legitimate cannabis-related businesses or ancillary businesses like owners of real estate where legitimate cannabis-related businesses operate or accountants and insurers who provide services to such businesses.
What problem does this bill solve?
Although cannabis is legal in 33 states for medical purposes and more than a dozen for recreational use, cannabis still is illegal under federal law. This conflict, along with many federal laws and regulations aimed at combating drug trafficking and related money laundering activity, has made it very difficult for cannabis-related businesses that are operating legally under state laws to access many banking and financial services. This has resulted in a large cash-only economy emerging from the legitimate cannabis industry, which has created problems with transparency and crime associated with large amounts of cash.
Despite the federal versus state cannabis conflicts, does the banking industry support the bill?
In a joint-letter to the House Financial Services Committee, the American Bankers Association and the Credit Union National Association supported the SAFE Banking Act, arguing that it “provides needed legal protection and clarity for financial institutions to accept deposits, extend credit and provide other financial services to individuals and businesses that derive some portion of their income from legal state cannabis related activity.”
What are next steps for the bill?
Although the bill has 152 co-sponsors in the House, it still faces stiff opposition from those who are concerned the bill is being rushed through without adequate consideration of the health risks of cannabis use or that banking legislation is being inappropriately used to change federal cannabis law. Even if the SAFE Banking Act passes the House, it faces an uncertain reception in the Senate.
Paula Burkes, business writer