Will Cannabis Businesses Finally Gain Access to the Federal Banking System?

On May 15th the House of Representatives approved the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act (H.R. 6800). This bill included the Secure and Fair Enforcement (SAFE) Banking Act of 2020 which would exempt financial institutions from Federal prosecution for providing services to cannabis-related businesses legally operating under their respective states’ laws.

If passed, the bill would promote access to financial services by prohibiting Federal banking regulators from penalizing or taking any adverse action against financial

institutions that provide banking services to cannabis businesses. This protection from penalization for regulators extends to actions against employees, owners, and operators of cannabis businesses. Additionally, it covers businesses ancillary to cannabis businesses.

The bill also removes liability under Federal law and regulations for financial institutions and calls for Federal banking regulators to issue an annual report to Congress outlining the availability of access to financial services for women-owned and minority-owned cannabis businesses.

There were several reasons supporters of the bill chose to link it with coronavirus relief legislation. On May 8th a letter to House Speaker Nancy Pelosi and House Minority Leader Kevin McCarthy drafted by ten cannabis industry advocacy organizations, noted that many cannabis businesses are “unbanked”, operating mainly on a cash-only basis. They added that this is particularly alarming given that coronavirus reports have shown that viruses can live on cash for up to 17 days compounding the concern for public safety.

A stand-alone version of the bill (H.R. 1595) was introduced by Colorado Democratic Representative Ed Perlmutter last year, but currently remains in the Senate and was referred to the Committee on Banking, Housing and Urban Affairs. The Representative is quoted as stating that he believes this new bill as a part of the HEROES Act has a 50-50 chance of passing through the Senate.

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