Friends, at times, it seems to me like the SAFE Banking Act is a little bit like Waiting for Godot – everyone’s got a different understanding about what it does, few have actually read the source text (link), and no one really knows if it’ll arrive, but most seem to have faith that it will, someday, maybe.
Longtime readers of these Cannabis Musings will recall that I’ve been predicting for a number of years now that the Senate wouldn’t pass the SAFE Banking Act (most recently here). Senate Majority Leader Chuck Schumer reportedly doesn’t want (link) it for generally the same reason that I’m not a big fan of the Act – if it becomes law, then I think Congress isn’t going to do anything else for the industry for a while. The counterargument to that is that, sure, but won’t SAFE Banking create momentum for further changes in federal law? I suppose that could happen, but so far my skepticism about the Senate’s appetite for doing anything for the industry has unfortunately proven correct.
In that context, given (based on my conversations) both the anticipation of, and confusion about, the Act, I thought that it might be worth reminding what the SAFE Banking Act (at least, in its current form) does, and, more importantly, what it doesn’t do. (Note - this list is grossly and intentionally oversimplified)
What it does:
- It protects “depository institutions” (banks and savings associations), federal and state credit unions, and insurance companies providing certain lines of business with State-compliant cannabis businesses
- It protects ancillary businesses from violating federal money laundering rules
That’s just about it.
What it doesn’t do:
- It doesn’t cover any other types of financial institutions
- It doesn’t cover non-bank lenders
- It doesn’t cover funds or other equity investors
- It doesn’t cover stock exchanges
- It doesn’t cover credit card merchants that aren’t depository institutions
- It doesn’t get rid of 280E
So, if the SAFE Banking Act passes in its current form, the industry will have to reckon with whether this was the Godot it was looking for (with apologies to Beckett and Lucas).