The Return of the SAFE Banking Act

On March 18, 2021, the Secure and Fair Enforcement (“SAFE”) Banking Act was reintroduced in the U.S. House of Representatives by Rep. Ed Perlmutter (D-CO). On April 19 (just before 4/20), the House approved the legislation again; this time by a vote of 321-101, which also includes a majority of voting Republicans. This reintroduction presents yet another opportunity for the cannabis community, and with a Democratic majority now in the Senate, the chances that this bill gets passed have significantly increased. Below, we take a closer look at the SAFE Banking Act to refamiliarize and reiterate its critical points and examine what this could mean for the hemp and cannabis industries.  

What is the SAFE Banking Act? 

The SAFE Banking Act aims to impact federal banking regulators’ ability to intervene in the actions of banks dealing with legal cannabis businesses. More specifically, the SAFE Banking Act would prohibit regulators from limiting or denying insurance to financial institutions simply because they work with cannabis businesses. The bill was first introduced to the House in 2017 by Senator Jeff Merkley (D-OR) and then reintroduced in 2019 by Senator Merkley and Senator Cory Gardner (R-CO). 

Cannabis banking has been a considerable risk for chartered banks, based on laws designed to support the federal Controlled Substances Act (“CSA”) that discourage and prohibit money laundering of illicit transactions. Even state banks and local credit unions have been generally unsuccessful in accessing the federal reserve system on behalf of cannabis businesses. The SAFE Banking Act was designed to allow and guarantee banking access to state-authorized, legal cannabis businesses. The bill also directs federal regulators (FDIC, Federal Reserve, and others) to issue clear and formal guidance to financial institutions about the legality of cannabis.

What does the return of the SAFE Banking Act Mean for Cannabis and Hemp? 

While cannabis legislation is still very much in flux, the U.S. has made substantial progress since the SAFE Banking Act initially surfaced. Forty-seven states have now legalized marijuana for medical and/or recreational use, but cannabis remains federally illegal. Many banks still refuse to support or collaborate with legal marijuana, hemp, or CBD businesses. “Thousands of cannabis businesses and employees across the country have been forced to deal in cash, piles of cash,” said Rep. Perlmutter, which is a notable public safety concern.

With the newly Democratic-controlled Senate, the future for the SAFE Banking Act seems brighter. With support from over 100 bipartisan members and over 30 members of the Senate, the SAFE Banking Act could pave the way for safe harbor for banks and credit unions to work with cannabis-related businesses. Additionally, while the bill was originally aimed solely at marijuana, it has since been amended to include hemp and CBD companies. Moreover, this bill would reform a broken sector of cannabis and hemp commerce to ideally provide smoother transaction processes and safer communities. 

After passing the U.S. House of Representatives, and in order to become law, the SAFE Banking Act must now pass the U.S. Senate. 

Cannabis lawyer Chelsie Spencer remains active in the cannabis community and is dedicated to providing legal services and counsel to a range of marijuana, hemp, and CBD businesses. With extensive experience in cannabis, marijuana, hemp, and CBD law, Chelsie also focuses on transactional issues in commercial law, intellectual property law, and business law. Contact Ritter Spencer Cheng or give us a call at 214.295.5070 for more information.