A Cannabis Banking Bill, Sitting on Capitol HillLegislation that would pave the way for financial institutions to transact with cannabis-related businesses operating in states that have legalized marijuana (herein “cannabis-related legitimate businesses”) is quickly working its way through the House of Representatives.

The SAFE Banking Act of 2019 was introduced in the House by Rep. Ed Perlmutter (D-CO) on March 7, 2019. The bill is co-sponsored by 158 representatives—15 Republicans and 143 Democrats, representing over a third of the House. On March 28, 2019, the bill advanced, with bipartisan support, through the House Financial Services Committee by a vote of 45-15. The bill now heads to the House Judiciary Committee and is poised for a floor vote as early as May. If passed in the House, the bill still faces an uphill battle to make it through the Republican-controlled Senate.

As discussed in a previous post in this series, many financial institutions have been hesitant to transact with cannabis-related legitimate businesses given the ambiguity created by divergent state and federal cannabis laws and uncertain federal guidance. The bill seeks to remove many of these obstacles at the federal level, thereby opening the doors of financial institutions to cannabis-related legitimate businesses. While not an exhaustive list, some of the key aspects of the bill include:

  • Prohibiting federal regulators from terminating or limiting depository insurance solely because a financial institution provides services to a cannabis-related legitimate business.
  • Prohibiting federal regulators from taking adverse actions against, or otherwise discouraging, financial institutions for providing services to cannabis-related legitimate businesses.
  • Protecting depository institutions from civil, criminal, or administrative forfeiture for providing financial services to cannabis-related legitimate businesses.
  • Amending the suspicious activity reporting guidelines for cannabis-related legitimate businesses.
  • Directing the Financial Crimes Enforcement Network to issue guidance and exam procedures for financial institutions transacting with cannabis-related legitimate businesses.

Proponents of the bill argue that it will add legitimacy and transparency to the state-legal cannabis industry by placing it under the umbrella of federal banking laws, reduce violent crime, remove large amounts of unregulated and unprotected cash from the streets, and make communities safer. The bill has received strong support from both the American Bankers Association and the Credit Union National Association.

While it is still just a bill on Capitol Hill with a long, long journey ahead, the SAFE Banking Act of 2019 represents a significant step toward cannabis-related legitimate businesses having access to financial institutions. Financial institutions would be wise to keep abreast of this rapidly evolving space and be prepared to update their compliance programs accordingly.

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Photo of Whitt Steineker Whitt Steineker

As co-chair of Bradley’s Cannabis Industry team, Whitt represents clients in a wide range of cannabis issues. In addition to providing a full suite of legal services to cannabis companies, Whitt and the Cannabis Industry team advise non-cannabis clients – from banks to…

As co-chair of Bradley’s Cannabis Industry team, Whitt represents clients in a wide range of cannabis issues. In addition to providing a full suite of legal services to cannabis companies, Whitt and the Cannabis Industry team advise non-cannabis clients – from banks to commercial real estate companies to insurance companies and high net worth individuals – on best practices for interacting with cannabis companies.

Whitt is one of the leading voices in the cannabis bar – recognized as a “Go-To Thought Leader” by the National Law Review. He has presented on cannabis issues at conferences around the country.  His work has been featured in the National Law JournalLaw360, and the Westlaw Journal. And he has been quoted in an array of legal and mainstream publications from Law360 and Super Lawyers to the Atlanta Journal-Constitution and the Associated Press.

Photo of Riley McDaniel Riley McDaniel

Riley McDaniel is an associate in the firm’s Litigation Practice Group. Riley received his J.D. (with honors) from Emory University School of Law, where he was a managing editor of the Emory Law Journal. He was also an extern for…

Riley McDaniel is an associate in the firm’s Litigation Practice Group. Riley received his J.D. (with honors) from Emory University School of Law, where he was a managing editor of the Emory Law Journal. He was also an extern for the Hon. Richard W. Story of the U.S. District Court for the Northern District of Georgia. Riley graduated from Auburn University with a B.A. in Political Science (magna cum laude).