Financing the cannabis industry could soon become much less
risky thanks to a revamped version of legislation proposing to provide
safeguards for banks against negative legal implications for doing so.
The aptly-named “SAFER Banking Act,” also known as the
Secure and Fair Enforcement Regulation (SAFER) Banking Act (S. 2860), is essentially
a revision of the SAFE Banking Act, which passed the House in 2019 only to languish
in the lame duck session of the 117th Congress, despite significant bipartisan
support.
The updated measure includes added provisions to offer improved
clarity and legal certainty at the federal level for financial institutions interested
in servicing marijuana-related businesses (MRBs). These include proper processes
and procedures to help banks operate within the cannabis industry in a safe and
sound manner.
The Senate Banking Committee recently passed the bipartisan bill
by a vote of 14-9. This passage is significant given a major reason the
original version of the measure failed was a lack of adequate Senate support.
“Cannabis banking is just one part of the necessary
conversation about marijuana policy,” Senate Banking Committee Chairman Sherrod
Brown (D-Ohio) said in a statement. “There is still much work to be done to
acknowledge and mend the damage done by the war on drugs, work to make sure
everyone – including our veterans – has access to the medicine they need and allow
medical and scientific research on cannabis. Cannabis policies look different
in different states, but legal cannabis small businesses and their employees
are running into many of the same issues. One of these issues is access to
financial services.
“Regardless of how you feel about states’ efforts to
legalize marijuana, this bipartisan bill is necessary – it will make it safer
for legal cannabis businesses and service providers to operate in their
communities and protect their workers,” Brown added.
The SAFER Banking Act was introduced by Sen. Jeff Merkley (D-Ore.),
with numerous co-sponsors, including Sens. Steve Daine (R-Mont.), Chuck Schumer
(D-N.Y.), Kyrsten Sinema (I-Ariz.), Cynthia Lummis (R-Wyo.), Kevin Cramer (R-N.D.),
Cory Booker (D-N.J.), Dan Sullivan (R-Alaska) and Robert Menendez (D-N.J.).
The financial industry has consistently voiced support for
measures to allow institutions to service MRBs with confidence.
“The conflict between state and federal law has created
legal uncertainty for community banks, inhibited access to the banking system
for legal cannabis-related businesses, and created serious public safety
concerns,” Independent Community Bankers of America (ICBA) President and CEO
Rebeca Romero Rainey said in a statement. “As the first national banking trade
group to support cannabis-banking legislation and to testify before Congress on
its behalf, ICBA commends the Senate Banking Committee for advancing this important
measure and calls on Congress to fully pass it to enhance public safety and
address regulatory compliance concerns.”
The National Association of Federally-Insured Credit Unions
(NAFCU) also weighed in on the Senate committee’s recent vote in a release
offering a section-by-section assessment of the bill.
“The SAFER Banking Act would resolve these issues by
providing a safe harbor for banks, credit unions, other financial institutions,
and payment processors that provide services to these state-sanctioned
businesses, allowing them to operate in the financial mainstream,” the release
states. “By shifting these businesses and their employees away from
cash-reliant businesses and into the financial mainstream, this bill helps to
promote public safety for the communities in which these businesses operate.”
Industry advocates also have noted how the legislation would
essentially build upon federal guidance from the Financial Crimes Enforcement
Network and current agency practice 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.