The bipartisan SAFE Banking Act provides a safe harbor for banks that provide banking services to legitimate cannabis-related and ancillary businesses.
The House of Representatives has passed H.R. 1595, the Secure and Fair Enforcement (SAFE) Banking Act of 2019, which allows marijuana-related businesses in states with some form of legalized marijuana and strict regulatory structures to access the banking system. The bipartisan measure, passed by a vote of 321-103, was authored by Reps. Ed Perlmutter (D-Colo) and Denny Heck (D-Wash) and cosponsored by Reps. Steve Stivers (R-Ohio) and Warren Davidson (R-Ohio). Their joint press release noted that 47 states, four U.S. territories, and the District of Columbia, representing 97.7 percent of the U.S. population, have legalized some form of recreational or medical marijuana, including CBD oil.
Perlmutter said, "Thousands of employees, businesses and communities across this country have been forced to deal in piles of cash because of the conflict between state and federal law. After six years of working on this bill, the SAFE Banking Act will go a long way in getting cash off our streets and providing certainty so financial institutions can work with cannabis businesses and employees."
The SAFE Banking Act prompted the first-ever congressional hearing on the issue of cannabis banking in February. On March 27, 2019, the Financial Services Committee approved the bill by a vote of 45-15. Following the markup, several improvements were made to the bill, including: strengthening the safe harbor for insurance coverage provided to cannabis-related businesses; prohibiting bank regulators from directing a bank to close an account for reputational reasons; extending the safe harbor to legitimate hemp-related businesses; and requiring guidance from the federal banking regulators for financial institutions that choose to serve hemp businesses. In addition, the SAFE Banking Act requires a Government Accountability Office study and annual regulator reports to Congress to monitor that there is equal access to credit and to reduce barriers to marketplace entry for potential and existing minority-owned and women-owned cannabis-related legitimate businesses.
The measure seeks to harmonize federal and state law by prohibiting federal regulators from taking punitive measures against depository institutions that provide banking services to legitimate cannabis-related businesses and ancillary businesses (e.g. electricians, plumbers, landlords, etc.) that serve them. The bill establishes a safe harbor for any depository institution that chooses to provide banking services to a cannabis-related legitimate business that holds and maintains a license from a state or local government to engage in manufacturing, growing, or producing, as well as any business that handles, sells, transports, displays, or distributes cannabis or cannabis products.
In April, the Senate companion bill (S. 1200) was introduced by Sens. Cory Gardner (R-Colo) and Jeff Merkley (D-Ore). The Senate Banking Committee held a hearing on the issue in July, and Banking Committee Chairman Mike Crapo (R-Idaho) recently announced plans to take up cannabis banking legislation this fall.
Legislators’ statements. A number of legislators released statements in support of the SAFE Banking Act. In a floor statement prior to the vote, Congresswoman Maxine Waters (D-Calif), Chair of the House Financial Services Committee, said, "Cannabis-related businesses are locked out of the banking system, and cannot maintain checking accounts, process payroll obligations or pay taxes. The Financial Services Committee heard testimony in February that these cash-only businesses and their employees have become targets for violent criminals. The SAFE Banking Act addresses this serious problem by providing a safe harbor to financial institutions that choose to serve state-regulated cannabis businesses."
Also, in a statement prior to the vote, House Majority Leader Steny H. Hoyer (D-Md) expressed his support for the measure but said, "I believe it does not go far enough. This must be a first step toward the decriminalization and de-scheduling of marijuana, which has led to the prosecution and incarceration of far too many of our fellow Americans for possession. I look forward to continuing to work with my colleagues to make progress on this issue and reform federal marijuana laws, including de-scheduling marijuana and providing relief to individuals and communities disproportionally affected by racial biases in the way federal marijuana laws have been enforced."
In a press release following the vote, Rep. Blaine Luetkemeyer (R-Mo) noted that the bill includes a provision "that ends Operation Choke Point," which "ensures the government can never again weaponize financial institutions against legal businesses whose policies do not align with the politics of those in power." Luetkemeyer’s legislation to end Operation Choke Point passed the House in the 115th Congress by a vote of 395-2.
Industry response. The American Bankers Association and Independent Community Bankers of America also released statements applauding House passage of the measure. Rob Nichols, President and CEO of the ABA said, "By helping to provide clarity for the financial sector in those states where cannabis is legal, this bill will help banks meet the needs of their communities while reducing cash-motivated crimes, increasing the efficiency of tax collections and improving the cannabis industry’s financial accountability."
According to ICBA President and CEO Rebeca Romero Rainey, "The conflict between state and federal law on cannabis-related businesses has created significant legal and compliance concerns for financial institutions that could provide needed banking services to these companies. This uncertainty has forced cannabis-related businesses to operate mostly in cash, which presents a significant public safety risk. The bipartisan SAFE Banking Act would help eliminate this risk in states where cannabis is already legal."
Companies: American Bankers Association; Independent Community Bankers of America
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