On March 28, 2019, the Secure and Fair Enforcement (SAFE) Banking Act easily passed the House Financial Services Committee by a vote of 45-15. The SAFE Banking Act would allow banks to work with cannabis businesses, including dispensaries, growers, and businesses involved in other related products. Currently, banks and financial institutions are prohibited by federal law from working with cannabis companies because marijuana is still on the controlled substances list. As a result, the cannabis companies have been forced to become cash-only businesses. The SAFE Banking Act would ensure that banks who work with cannabis companies have access to deposit insurance and a master account from the Federal Reserve, and prohibits criminal, civil, or administrative penalties against banks who lend money to cannabis companies.
A key driver in the congressional review of the SAFE Banking Act is the public safety concerns that have arisen about the large volumes of cash that these companies have been forced to handle and manage without the resources of traditional banking. Supporters also cite that tax collection from the industry will become more efficient and transparent if the SAFE Banking Act lifts the current banking ban.Currently, 34 states and the District of Columbia have legalized medical marijuana, and many states, such as New Jersey, are considering legalizing recreational marijuana.
Despite its federal illegality, the banking ban has not prevented all banks from working with cannabis customers. According to the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN), 375 banks and 111 credit unions filed Suspicious Activity Reports as of September 2018, which indicates that they have beenactively working with cannabis-related companies even if they have to report on them. These banks appear to be small community banks; the large, national banks are not yet accepting these customers, even if they have interest in working with them. The American Bankers Association also supports the passage of the SAFE Banking Act. President and CEO Rob Nichols called the House Financial Services Committee vote “an important step forward in providing regulatory and legal clarity for financial institutions caught in the conflict between state and federal cannabis laws.”
The SAFE Banking Act is expected to go to a floor vote in the House of Representative in the next few months, and possibly even in upcoming weeks. The bill is expected to pass the House but may face an uphill battle in the Senate.