Last month, the House Financial Services Committee advanced a federal marijuana banking bill to the full House on a bi-partisan 45 to 15 vote. The “Secure and Fair Enforcement Banking Act” or “SAFE Banking Act” would prevent federal banking regulators from taking adverse actions against financial institutions solely due to an institution’s provision of financial services to state-legal cannabis businesses. The bill would also provide protections for financial institutions that do business with cannabis-industry service providers by declaring that proceeds from such providers do not constitute “proceeds from an unlawful activity.” And, the bill would instruct federal banking regulators to issue guidance for depository institutions on providing financial services to cannabis businesses.
As the SAFE Banking Act and its Senate companion continue to progress through the legislative machinations, several key stakeholders have communicated their support for federal marijuana banking legislation to Congress. At a recent House appropriations subcommittee hearing, Treasury Secretary Steve Mnuchin explained that there is no “regulator solution” to resolving the federal and state legal issues surrounding cannabis business banking access. “If this is something that Congress wants to look at on a bipartisan basis, I’d encourage you to do this,” he continued. On the state side, banking regulators in 24 states and Washington D.C. recently sent a letter to Republican and Democratic leadership to “urge Congress to consider legislation that creates a safe harbor for financial institutions to serve a state-compliant business or entrusts sovereign states with the full oversight and jurisdiction of marijuana-related activity.” On the banking industry side, the American Bankers Association offered support for the SAFE Banking Act in a letter describing the Act as taking “an important step toward enabling financial services for cannabis-related businesses.”
Passage of the SAFE Banking Act would be welcome news to an industry facing significant challenges in securing financial services from depository institutions. While some credit unions and select banks have begun accepting deposits, many cannabis businesses are forced to operate in cash. Indeed, as House Financial Services Committee Chairwoman Maxime Waters explained, the SAFE Banking Act “addresses an urgent public safety concern for legitimate businesses that currently have no recourse but to operate with just cash.”
Foley Hoag’s robust cannabis practice includes advising cannabis businesses and financial service providers on the legal issues surrounding banking and finance in the cannabis industry. For more information, click here.