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ABA Supports the SAFE Banking Act of 2019

jodi.avergun@cwt.com's picture
Commentary by Jodi Avergun

The American Bankers Association (the "ABA") expressed support for the Secure and Fair Enforcement Banking Act ("SAFE Banking Act") of 2019.

In a letter to Senator Jeff Merkley (D-OR) and Senator Cory Gardner (R-CO), the ABA stated that the SAFE Banking Act takes a critical step toward enabling financial services for cannabis-related businesses by specifying that proceeds from "legitimate cannabis business" would not be illegal pursuant to federal money laundering statutes.

The ABA noted that, as the legal state-cannabis industry expands, the "indirect" connections to cannabis revenues will grow. These connections include "real estate owners, security firms, utilities, law firms and employees of cannabis businesses, as well as investors." The ABA expressed concern that without legislative action, the economic activity generated in legal cannabis states, "estimated to be in the tens of billions of dollars," would be "marginalized from the banking system." In addition, the ABA said that a "mechanism for the cannabis industry to access the banking system" would help communities reduce cash-driven crimes, increase the efficiency of tax collections, and enhance the financial transparency of the cannabis industry.

Commentary

In a direct appeal to legislators, the ABA urged Senators Gardner and Merkley to help end the legal uncertainties between the states and their federal cousins over marijuana. By removing from the definition of money laundering the proceeds of illegal activity, the SAFE Banking Act would quite handily allow banks and other financial institutions to bank the proceeds not just of a marijuana transaction but also of any cannabis customer. The ABA's endorsement is significant, since it is the first major trade group to endorse the legislation.

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