Legislation that would pave the way for financial institutions to transact with cannabis-related businesses operating in states that have legalized marijuana (herein “cannabis-related legitimate businesses”) is quickly working its way through the House of Representatives.

The SAFE Banking Act of 2019 was introduced in the House by Rep. Ed Perlmutter (D-CO) on March 7, 2019. The bill is co-sponsored by 158 representatives—15 Republicans and 143 Democrats, representing over a third of the House. On March 28, 2019, the bill advanced, with bipartisan support, through the House Financial Services Committee by a vote of 45-15. The bill now heads to the House Judiciary Committee and is poised for a floor vote as early as May. If passed in the House, the bill still faces an uphill battle to make it through the Republican-controlled Senate.

As discussed in a previous post in this series, many financial institutions have been hesitant to transact with cannabis-related legitimate businesses given the ambiguity created by divergent state and federal cannabis laws and uncertain federal guidance. The bill seeks to remove many of these obstacles at the federal level, thereby opening the doors of financial institutions to cannabis-related legitimate businesses. While not an exhaustive list, some of the key aspects of the bill include:

  • Prohibiting federal regulators from terminating or limiting depository insurance solely because a financial institution provides services to a cannabis-related legitimate business.
  • Prohibiting federal regulators from taking adverse actions against, or otherwise discouraging, financial institutions for providing services to cannabis-related legitimate businesses.
  • Protecting depository institutions from civil, criminal, or administrative forfeiture for providing financial services to cannabis-related legitimate businesses.
  • Amending the suspicious activity reporting guidelines for cannabis-related legitimate businesses.
  • Directing the Financial Crimes Enforcement Network to issue guidance and exam procedures for financial institutions transacting with cannabis-related legitimate businesses.

Proponents of the bill argue that it will add legitimacy and transparency to the state-legal cannabis industry by placing it under the umbrella of federal banking laws, reduce violent crime, remove large amounts of unregulated and unprotected cash from the streets, and make communities safer. The bill has received strong support from both the American Bankers Association and the Credit Union National Association.

While it is still just a bill on Capitol Hill with a long, long journey ahead, the SAFE Banking Act of 2019 represents a significant step toward cannabis-related legitimate businesses having access to financial institutions. Financial institutions would be wise to keep abreast of this rapidly evolving space and be prepared to update their compliance programs accordingly.