Financial institutions looking to work with cannabis companies have a lot to look forward to this summer. On June 11, 2019, the House Appropriations Committee passed spending legislation which provides new protection to financial institutions that provide banking services to marijuana businesses.
The banking provision of the 2020 Financial Services and General Government Funding Bill states that no funds distributed through the legislation “may be used to penalize a financial institution solely because the institution provides financial services to an entity that is a manufacturer, a producer, or a person that participates in any business or organized activity that involves handling marijuana, marijuana products, or marijuana proceeds” in jurisdictions where marijuana is legal under state law.
The bill also removed the longstanding policy rider that had previously prevented the District of Columbia from using local funds to legalize marijuana within the district.
While this new appropriations measure is encouraging for banks looking to work with cannabis companies, it does not provide the broad protection that would be offered if the Secure and Fair Enforcement (SAFE) Banking Act is enacted. The SAFE Act passed the House Financial Services Committee in March by a bipartisan vote of 45 to 15, and is expected to go to a full House vote this summer before the August recess. The Act is expected to pass the House, as it already has 191 co-sponsors. There also is a parallel banking bill currently pending in the Senate that has 30 co-sponsors. The Senate Banking Committee, however, has not provided any guidance on when or whether that bill will be considered for a hearing.
As the summer goes on, financial institutions should monitor these legislative activities and consider how these various votes may impact their business and client base.