SAFE Banking Act Reintroduced in US House


The Secure and Fair Enforcement (SAFE) Banking Act was officially reintroduced into the US House of Representatives on Thursday, giving American cannabis firms renewed hope for federally protected access to major banks and credit unions.

The bipartisan bill, authored by Rep. Ed. Perlmutter (D-CO) and sponsored by Reps. Nydia Velazquez (D-NY), Steve Stivers (R-OH) and Warren Davidson (R-OH), would provide U.S. cannabis businesses with greater access to capital and has bipartisan support from more than 100 co-sponsors.

A previous version of the bill overwhelmingly passed the House in 2019 by a vote of 321-103 but later stalled in the Republican-controlled Senate.

The 2021 version contains mostly the same language as the earlier bill and, if passed, would allow state-legal cannabis businesses to bank with major financial institutions.

As written, the bill stipulates that federal banking regulators cannot “terminate or limit the deposit insurance or share insurance” or “take any other adverse action against a depository institution” simply because it provides banking services to legal cannabis businesses.

Specifically, the bill prevents regulators from prohibiting, penalizing or discouraging major banks from providing financial services to the cannabis sector. It also stops regulators from recommending, incentivizing or encouraging financial institutions to restrict services from owners and employees in the legal cannabis industry.

Proponents of the legislation say it provides cannabis businesses much-needed access to traditional lending while also addressing “serious public health and safety concerns.”

“Thousands of employees and businesses across this country have been forced to deal in piles of cash for far too long,” Rep. Perlmutter said via a news release. “It is the responsibility of Congress to step up and take action to align federal and state laws for the safety of our constituents and communities.”

Since the sale of marijuana is not federally legal, the cannabis industry largely operates in a cash-only environment. Advocates of the SAFE Banking Act say the current system invites nefarious behavior such as theft and tax evasion.

In a letter to Congress, American Bankers Association (ABA) chief Rob Nichols conveyed his group’s support of the bill while clarifying that it does not “take a position on the legalization of cannabis.”

“Our member banks find themselves in a difficult situation due to the conflict between state and federal law, with local communities encouraging them to bank cannabis businesses and federal law prohibiting it,” he wrote. “Congress must act to resolve this conflict between state and federal law.”

According to the Financial Crimes Enforcement Network (FinCEN), 515 banks and 169 credit unions are actively banking marijuana-related businesses.

However, as Nichols points out, “the majority of financial institutions will not take the legal, regulatory, or reputational risk associated with banking cannabis-related businesses without congressional action.”

Passage of the SAFE Baking Act would provide a “mechanism for the cannabis industry to access the banking system,” Nichols wrote, arguing that it would also help to “reduce cash-motivated crimes, increase the efficiency of tax collections, and improve the financial transparency of the cannabis industry.”

Additionally, the bill would deliver protection for ancillary businesses that transact with legal plant-touching cannabis companies, as well as those operating in the hemp and CBD sectors.

"Lack of access to banking services continues to create serious unnecessary issues for public safety, transparency, and access to traditional lending that smaller operators desperately need,” National Cannabis Industry Association CEO Aaron Smith said via a news release. “These businesses are contributing billions of dollars to the national economy every year and need to be treated like any other legal regulated industry.”

The House is expected to pass the bill, and its chances of advancing through the Senate are improved now that Democrats are in control.

However, at least one anti-legalization group -- Smart Approaches to Marijuana (SAM) -- has already come out in opposition of the bill.

“This bill, the UN-SAFE Act, is nothing more than a backdoor attempt at legalizing marijuana,” SAM co-founder Kevin Sabet said. “Allowing banking access to the marijuana industry would open up direct access to Wall Street investment into the sale and marketing of today’s highly potent marijuana at a time when such products are increasingly under scrutiny for their damaging effects on mental health.”

However, according to Michael Auerbach, the chairman of California-based cannabis firm The Parent Company, the SAFE Banking Act would not allow U.S. cannabis companies to begin trading on major American exchanges like the NYSE or Nasdaq. 

"SAFE Banking is a head fake," he tweeted. "Yes, it will make it easier for some operators to process payoll [sic], deposit funds, and pay taxes, but it won't allow US companies to list on US exchanges, gain access to Tier 1 and Tier 2 banks, or solve any of the AMA issues associated with the CSA [Controlled Substances Act]."

Currently, large U.S. multistate operators like Curaleaf Holdings and Green Thumb Industries, among others, list their shares in Canada, where cannabis is federally legal, and on the over-the-counter market, which has less stringent requirements.

Bluma Wellness CEO Brady Cobb notes that while current language in the bill doesn't "expressly allow" companies to uplist to U.S. exchanges, it doesn't prohibit it either.

"The new FINCEN and AML [anti-money laundering] guidance that SAFE will trigger to be issued (what exchange and regulator decisions are guided by) is where the real work will be done on uplisting," he wrote.

Meanwhile, Sabet, a longtime critic of the cannabis industry, also contends that passage of the SAFE Banking Act would be a “significant gift" to large alcohol and tobacco firms who have already invested in the sector.

“Granting industry access to banks will bring billions of dollars of institutional investment from the titans of addiction and vastly expand the harms we are already witnessing,” he said.

It’s unclear what “harms” Sabet is referring to, but new research suggests that there are fewer opioid deaths in states where cannabis is legal, and that cannabis "significantly reduces" the use of dangerously addictive prescription opioids.

Meanwhile, many cannabis industry stakeholders believe that sales of alcohol will fall as more people turn to products like THC-infused drinks instead of wine or beer.

For his part, U.S. Cannabis Council interim president Steve Hawkins, who also leads the Marijuana Policy Project, called the introduction of the SAFE Banking Act an "essential step forward."

"The SAFE Banking Act provides access to financial services such as small business loans, which create equal opportunity, ensuring more diverse representation within the industry," he said. "The Act also protects public safety as the billions of dollars in annual retail revenues are from mostly cash transactions, creating targets for crime and unnecessarily endangering communities.”

15 states currently permit the sale of adult-use cannabis, while 36 states have established medical marijuana laws. The substance is legal in some form across 47 states, and legal sales eclipsed $17.5 billion last year, according to BDSA.

The cannabis industry now supports 321,000 full-time equivalent positions, according to a recent report from Leafly and Whitney Economics. That figure is expected to approach 575,000 by 2024, accorded to MJBizDaily.

In a statement, National Cannabis Roundtable vice chair Chanda Macias said passage of the SAFE Banking Act would “create more jobs, more opportunity and more public safety.”

Pro-cannabis advocacy group NORML also supports the legislation.

Read the full text of the new SAFE Banking Act.

Additional information is also available in NCIA's news release below.

SAFE Banking Act Reintroduced in House of Representatives

Bipartisan bill would remove barriers for financial institutions to work with state-legal cannabis businesses

House passage expected after being approved three times since 2019

WASHINGTON, D.C. – The Secure and Fair Enforcement (SAFE) Banking Act was reintroduced in the House of Representatives today. This bill, which was introduced by Reps. Ed Perlmutter (D-CO), Steve Stivers (R-OH), Nydia Velazquez (D-NY), and Warren Davidson (R-OH), would provide a safe harbor for banks and other financial institutions working with state-legal cannabis businesses.

In the last Congress, this legislation was the first cannabis policy reform bill brought to the floor of the House in recent history — with 206 co-sponsors — and was the first to be approved by either chamber of Congress with an overwhelming bipartisan vote of 321-103 in September 2019. The bill moved to the Senate but consideration in that chamber was delayed due to the onset of the coronavirus pandemic. The House also approved two separate pandemic relief bills last year that included the legislation’s language.

“Thousands of employees and businesses across this country have been forced to deal in piles of cash for far too long,” said Rep. Perlmutter. “It is time to enact SAFE Banking to align federal and state laws and reduce the public safety risk in our communities. I appreciate the partnership of the cannabis industry and businesses across this country who have added their voice to this effort. The SAFE Banking Act is an important first step to treating cannabis businesses like legal, legitimate businesses and beginning to reform our federal cannabis laws.”

The SAFE Banking Act would protect financial institutions from federal prosecution for providing banking and other services to cannabis businesses that are in compliance with state law, as well as help address serious public health and safety concerns caused by operating in predominantly cash-only environments. The legislation would make traditional lending more accessible for the cannabis industry, helping alleviate the lack of access to capital that has presented major hurdles for smaller businesses. It would also mandate a study on diversity in the cannabis industry. The latest version makes clear that protections would extend to financial services providers working with the hemp industry as well.

"At a time when small businesses need all the support they can get, and after cannabis businesses specifically have been providing essential services and generating significant tax revenues for states and the federal government with little to no financial relief, it is more imperative than ever to get the SAFE Banking Act passed into law," said Aaron Smith, co-founder and CEO of the National Cannabis Industry Association (NCIA). "Lack of access to banking services continues to create serious unnecessary issues for public safety, transparency, and access to traditional lending that smaller operators desperately need. These businesses are contributing billions of dollars to the national economy every year, and need to be treated like any other legal regulated industry. We are grateful to the sponsors of this legislation who have generated strong and consistent bipartisan support year after year, and we are confident that it has a clear path to approval again."

Cannabis is legal for adults in 15 states as well as the District of Columbia and the territories of CNMI and Guam, and 36 states as well as several territories have comprehensive medical cannabis laws. The substance is legal in some form in 47 states. Virginia is poised to become the 16th state to pass adult use legislation when Gov. Ralph Northam signs a bill approved by the legislature into law.


The National Cannabis Industry Association (NCIA) is the largest cannabis trade association in the U.S. and the only organization broadly representing cannabis-related businesses at the national level. NCIA promotes the growth of a responsible and legitimate cannabis industry and works toward a favorable social, economic, and legal environment for that industry in the United States.

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