In letters sent to leadership in both the House and Senate, the Conference of State Banking Supervisors (CSBS) Acting President and CEO James Cooper urged members of Congress to provide cannabis businesses with access to financial services by passing the Secure and Fair Enforcement (SAFE) Banking Act as part of the final version of the economic package referred to as the America COMPETES Act.
The SAFE Banking Act grants a safe harbor to financial institutions that offer financial services to cannabis businesses operating legally and in compliance with relevant state laws without fear of federal reprisal. The law would prohibit federal banking regulators from threatening or limiting a bank’s deposit insurance, downgrading loans, prohibiting or discouraging the provision of banking services, or taking any other prejudicial action on banks solely for serving state-compliance cannabis businesses.
“By granting a safe harbor for financial institutions, Congress can bring regulatory clarity to the financial services industry, address public safety concerns and ensure access to financial services for state-compliant marijuana and marijuana-related businesses,” Cooper wrote. “Safe harbor should be extended to all financial services, including money transmission, as the adverse impact of the current inconsistency in state and federal law is not limited to depository institutions.”
The Independent Community Bankers of America (ICBA) also sent a letter to Congress expressing support for the SAFE Banking Act.
“The conflict between state and federal law has created legal uncertainty for community banks, inhibited access to the banking system for cannabis-related businesses, and created serious public safety concerns,” ICBA President and CEO Rebeca Romero Rainey said. “After the House has voted six times to pass this much-needed policy, ICBA, state community banking associations, and the nation’s community bankers urge Congress to retain it in the America COMPETES Act conference report.”
Although marijuana is legal in 37 states and the District of Columbia for medical usage, and in 18 states and Washington, D.C. for personal consumption by adults over 21 years old, it is still illegal at the federal level. This illegality also makes it illegal for any federally insured depository institution to permit a cannabis business to use their banking or other financial services.
Because this multi-billion-dollar industry is unable to bank or use most types of credit or debit card transactions, these businesses operate almost exclusively as all-cash operations. This large amount of unsecured cash flow has led to increases in theft and other violent crimes which could be prevented if these businesses could rely on electronic transactions and the ability to safely deposit cash into a bank.
The law has already passed in the House of Representatives but is unlikely to see a vote in the Senate where repeated attempts to pass the SAFE Banking Act have all failed.
Recently, a bipartisan group of 24 Senators led by Sens. Jacklyn Rosen (D-Nev.) and Jeff Merkley (D-Ore.) sent a leader to leadership in both chambers of Congress urging them to keep the SAFE Banking Act in the America COMPETES Act bill.