US House Again Passes SAFE Banking Act
On the eve of 420, the U.S. House of Representatives has once again approved the Secure and Fair Enforcement (SAFE) Banking Act.
It is the fourth time language from the bill has been approved by the House. The 2019 version of the SAFE Banking Act was the first standalone cannabis reform bill to pass either chamber of Congress.
“After years of bringing up this issue, I’m thrilled to see overwhelming support for this bipartisan, commonsense legislation in the U.S. House once again,” Rep. Perlmutter said via a news release. “I feel optimistic about the path forward for the SAFE Banking Act and, more broadly, reforms to our federal cannabis laws.” said Perlmutter.
Under the 2021 version of the SAFE Banking Act, state-legal cannabis companies would have federally protected access to major banks and credit unions.
Currently, cannabis firms are mostly shut out from accessing the commercial banking system due to the federal prohibition on cannabis.
As written, the SAFE Banking Act 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.
In a statement, U.S. Cannabis Council interim president Steven Hawkins, who also serves as the executive director of the Marijuana Policy Project, said passage of the SAFE Banking Act “enhances public safety and economic growth.”
“This is the first step on the road to achieving comprehensive reform on cannabis regulation,” Hawkins said, adding that the bill would provide small cannabis firms and their employees with “urgently-needed banking services.”
For his part, Aaron Smith, CEO of the National Cannabis Industry Association said the bill would “help level the playing field for small businesses and communities with limited access to capital.”
“The SAFE Banking Act is vital for improving public safety and transparency and will improve the lives of the more than 300,000 people who work in the state-legal cannabis industry,” he said.
Adult-use cannabis is legal in 18 states and Washington D.C., while 37 states have established medical marijuana laws. The substance is legal in some form (including CBD) in 47 states.
Advocates of the legislation argue that it would improve public safety and promote greater regulatory compliance.
In a letter to Congressional leaders ahead of Monday’s vote, Governors from 20 states said that without commercial banking services, cannabis firms across the U.S. are “unable to write checks, make and receive electronic payments, utilize a payroll provider, or accept credit and debit cards.”
Additionally, because the industry predominantly deals in cash, the risk of criminal activity is higher and the ability to collect taxes is hindered.
“Cash only businesses pose a significant public safety risk to customers and employees,” the Governors wrote. “The cash-only environment also burdens state and local government agencies that must collect tax and fee payments in person and in cash, which creates additional public expenses and employee safety risks.”
Rep. Earl Blumenauer (D-OR), a longtime champion of the legal cannabis industry, said in a tweet that the “insane prohibition” on accessing the banking system “only helps money launderers, tax evaders, and those robbing these cash-rich businesses.”
“As we work toward full legalization, this is a critical element of reform that can’t wait,” he said.
The bill will now head to the Senate, where a broader cannabis reform bill is current being drafted by Majority Leader Chuck Schumer (D-NY), Senate Finance Chairman Ron Wyden (D-OR) and Sen. Cory Booker (D-NJ).
According to the NCIA, industry stakeholders are “hopeful that Senate Banking Committee Chair Sherrod Brown (D-OH) will take up the bill in the near future.”