With the strike of a gavel on Wednesday, September 25, the House of Representatives overwhelmingly passed the Secure and Fair Enforcement (SAFE) Banking Act of 2019. This bipartisan bill represents the first time a body of Congress has approved pro-cannabis legislation and its passage would allow federally regulated banks to provide services to state-legal cannabis businesses. The SAFE Banking Act explicitly applies to the hemp and CBD industries as well as the cannabis industry.
Currently, U.S. cannabis business and related service providers have minimal access to basic banking services, including checking accounts, loans, and lines of credit. Were the SAFE Banking Act to pass the Senate and become law, banks and credit unions would be protected from penalization by the federal government for providing services to the cannabis and CBD industries. Specifically, under the SAFE Banking Act, federal regulators are prohibited from (i) terminating or limiting a bank’s deposit insurance solely for providing services to a legitimate cannabis-related business, (ii) discouraging banks from offering financial services to such businesses, (iii) encouraging or incentivizing banks not to offer financial services to customers solely because the customer is affiliated with a cannabis business, (iv) taking adverse action on a loan solely because the loan was made to a person who owns a cannabis-related business or provides services to such businesses, and (v) penalizing banks for processing or collecting payments from such a business.
To become law the SAFE Banking Act must now pass the Senate, the likelihood of which remains uncertain. The Senate Committee on Banking, Housing and Urban Affairs held a hearing on July 23, 2019 to consider the SAFE Banking Act. Although the hearing shifted the conversation around cannabis at the federal level to one of support and concern for public safety, the hearing saw little support from Republican members. Whether the bill’s passage through the House will have any impact on bipartisan resolve from the Senate remains to be seen. The Senate is expected to consider the SAFE Banking Act in the near future.
Passage of the SAFE Banking Act by the Senate would indicate an easing of U.S. federal cannabis laws but would not yet open the doors to federal legality. Until specifically addressed by Congress, barriers to cannabis business growth such as cannabis’ listing as a Schedule I drug (making cannabis federally illegal on par with heroin and LSD) and Internal Revenue Code Section 280E (prohibiting cannabis companies from taking normal business deductions) would remain in place. House approval is a step towards comprehensive legislation of the industry however, cannabis business operators will need to wait for Senate approval before safer banking options are available.
The SAFE Banking Act of 2019 is available here.