On Tuesday, a bipartisan group of lawmakers reintroduced the Secure and Fair Enforcement (SAFE) Banking Act in the U.S. Senate. This legislation, which was introduced by Sens. Jeff Merkley (D-OR) and Steve Daines (R-MT) along with 27 original cosponsors, would protect banks and other financial institutions from federal prosecution simply for providing services to cannabis businesses that are operating in compliance with state laws.
Due to the threat of federal penalties and costly reporting requirements, most financial services companies will not work with state-legal cannabis businesses, forcing the majority of the regulated industry to operate on a cash-only basis. This creates numerous public safety and transparency issues for the industry, law enforcement, government officials, and other service providers, and has led to cannabis businesses being increasingly targeted by criminals with sometimes fatal results.
“No one working in a store or behind a register should have to worry about experiencing a traumatic robbery at any moment,” said Sen. Merkley. “That means we can’t keep forcing legal cannabis businesses to operate entirely in cash – a nonsensical rule that is an open invitation to robbery and money laundering. Let’s make 2021 the year that we get this bill signed into law so we can ensure that all legal cannabis businesses have access to the financial services they need to help keep their employees safe.”
Providing a safe harbor for financial service providers to work with cannabis businesses would also allow for traditional lending, which is currently unavailable to almost all of the industry. This lack of access to capital most adversely affects small businesses and marginalized communities that are trying to break into the industry and thrive in the absence of generational wealth and deep financial networks.
Companion legislation was reintroduced in the House last week. It was first passed in that chamber in a historic floor vote with overwhelming bipartisan support in September 2019, and was included in the language of two subsequent House-approved pandemic relief bills in 2020. The Senate version stalled under the leadership of then-Senate Majority Leader Mitch McConnell (R-KY) despite bipartisan sponsorship prior to the pandemic, which de-prioritized stand-alone cannabis legislation in that chamber.
There are currently 72 senators representing states with comprehensive medical or adult use cannabis laws and whose constituents would directly benefit from passage of the SAFE Banking Act, including 25 Republicans.
“With new Senate leadership now firmly in favor of cannabis policy reform, we are optimistic that this narrowly tailored – but absolutely necessary – legislation will be allowed to progress through the hearing process without delay,” said Aaron Smith, co-founder and chief executive officer of the National Cannabis Industry Association (NCIA). “This bill is a meaningful first step that will have immediate benefits in terms of safety, transparency, fairness, and much-needed economic opportunities while Congress continues working toward more comprehensive solutions to end prohibition and sensibly regulate cannabis.”
Cannabis is legal for adults in 15 states as well as the District of Columbia and the territories of CNMI and Guam, and 36 states as well as several territories have comprehensive medical cannabis laws. The substance is legal in some form in 47 states. Virginia is poised to become the 16th state – and the first in the South – to regulate cannabis for adults after its lawmakers sent legislation to Gov. Ralph Northam for approval last month.