Banking Regulations for Marijuana Businesses Move Forward

In April, the U.S. House of Representatives voted 321-101 to approve the Secure and Fair Enforcement (SAFE) Banking Act and send it to the Senate, where Majority Leader Chuck Schumer has expressed some support. The SAFE Banking Act would allow financial institutions to provide services to cannabis companies in states where it is legal without facing the threat of federal penalties and sanctions. It also sets the stage for potential further action to support what might become a nationwide industry; 36 states have legalized medical cannabis while 17 states allow adult recreational use, according to the National Conference of State Legislatures.

Cannabis-related businesses, including growers, retailers, vendors, suppliers and others, comprise an estimated $8.3 billion industry that operates almost entirely in cash, making them prime targets for crimes like robbery and money laundering. Generally, financial institutions have been reluctant to accept businesses that sell marijuana and marijuana-related products as their clients due to discrepancies between state and federal laws, coupled with heightened regulatory scrutiny.

The Act clarifies that funds deposited by legitimate businesses are not illegal, prohibits penalizing a financial institution that banks a legitimate business (include terminating or limiting deposit insurance or discouraging them from offering their services to these businesses), and asks regulators to determine specific supervision requirements and provide guidance for financial institution compliance. Advocates argue the Act would not only reduce crime and keep employees safe, but also support small businesses, create jobs and improve local economies by providing these businesses with access to a full range of financial services.

The American Bankers Association, Independent Community Bankers of America and Credit Union National Association have supported the Act. Industry watchers think it has a good chance of being signed into law this year since Democrats are in charge of both Congress and the White House.

Follow the status of the SAFE Banking Act

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