Newly introduced legislation authorizing banks to legally finance state-licensed cannabis businesses represents the latest in a long line of attempts to create such a “safe harbor” for financial institutions over the past seven years.
The Secure and Fair Enforcement (SAFE) Banking Act (H.R. 9471) is bipartisan legislation designed to protect banks and credit unions from the possibility of federal penalties, federal prosecution and asset forfeiture typically associated with the financing of illicit business operations.
The measure was introduced on June 25 by Reps. Warren Davidson (R-Ohio), Lou Correa (D-Calif.), Dave Joyce (R-Ohio), Jim Himes (D-Conn.), Brian Mast (R-Fla.), Guy Reschenthaler (R-Pa.), Dina Titus (D-Nev.) and Nydia Velázquez (D-N.Y.).
“For years, the conflict between state and federal cannabis laws has left many cannabis businesses operating in cash, creating significant public safety risks in states where it's been legalized,” American Bankers Association President and CEO Rob Nichols said in a statement. “The SAFE Banking Act would provide banks with a clear federal safe harbor, allowing them to serve state-legal businesses while increasing transparency for law enforcement and reducing risks to the public.”
Industry advocates have praised previous, substantially similar versions of the legislation, including provisions aimed at clarifying and building upon federal guidance from the Financial Crimes Enforcement Network and existing agency practices at the Office of the Comptroller of the Currency, Federal Deposit Insurance Corp. and Federal Reserve to ensure banks and credit unions are operating in a safe and sound manner, including outlining policies and procedures to identify fraudulent or illegal activity.
H.R. 9471 has been referred to the House Financial Services Committee, the Judiciary Committee and the Veterans’ Affairs Committee for consideration.
Various permutations of the bill passed the House on seven different occasions from its original introduction in 2019 to the version that found its way to the Senate in 2022.
For as much bipartisan support from lawmakers and a myriad of financial services industry support as these bills have seen in the House, their paths to becoming law were consistently cut off in the Senate by majority leaders from both parties.
Sen. Mitch McConnell (R-Ky.) declined to bring the bill to the Senate floor in 2019, during his time as majority leader, and a revised version of the legislation died in the Senate under Sen. Chuck Schumer’s (D-N.Y.) leadership in 2022.
Another revised version of the bill, dubbed the “SAFER” (Secure and Fair Enforcement Regulation) Act, became the first legislation proposing legal safe harbors for banks to service the cannabis industry to receive a vote in the Senate, when it passed, 14-9, out of the Senate Banking, Housing, and Urban Affairs Committee, with members of both major political parties casting “yay” and “nay” votes. However, like its predecessors, the measure never received a floor vote in the Senate.