House Passes SAFE Banking Act

The U.S. House of Representatives passed the Secure and Fair Enforcement Banking Act of 2019 ("SAFE Banking Act") by a vote of 321 to 103.

The Act provides:

  • state-regulated cannabis businesses with access to banking services;

  • financial institutions with relief that they will not be penalized under federal law for providing services to state-legitimate cannabis businesses; and

  • protections for (i) ancillary businesses that may come into contact with funds derived from the cannabis industry, and (ii) the employees of legitimate cannabis-related businesses from being denied financial services.

Commentary

This long-anticipated vote marks a historic moment for the cannabis industry.

While FinCEN reported that there has been an increase in banks and credit unions servicing the legal cannabis industry, the federal prohibitions on cannabis have prevented most cannabis businesses from receiving banking services, forcing these businesses to operate almost entirely in cash transactions. This lack of banking accessibility results in cannabis businesses and their employees becoming targets for theft and violent crimes. Moreover, the legal cannabis industry's access to banking makes it easier for wrongdoers to evade taxes and money launder. The SAFE Banking Act will provide significant protections to public safety and assist the government in keeping track of the funds.

With the Senate set to consider the SAFE Banking Act before the end of 2019, this bill still faces an uphill battle. Senate Majority Leader Mitch McConnell has not kept secret his unfavorable view on marijuana, stating "I do not have any plans to endorse the legalization of marijuana" and described marijuana as hemp's "illicit cousin which I choose not to embrace." That said, in July, the U.S. Senate Committee on Banking, Housing and Urban Affairs considered testimony from supporters and adversaries of the SAFE Banking Act, and throughout that hearing, Republican Senators Mike Crapo and Cory Gardner offered pro-safe-harbor statements. Senator Gardner noted the widespread acceptance of the cannabis industry and support for safe harbor legislation. He stated that cannabis prohibition cannot continue, given the overwhelming shift in U.S. citizens' attitudes towards marijuana.

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