SAFE Banking is Back

A slightly revised version of a bill that would allow banks and financial institutions to work with cannabis companies without fear of federal prosecution has been reintroduced. Advocates and lawmakers say that this could be the year that it’s passed. Key Senators that have blocked the bill in the past now seem to be willing to compromise.

Bipartisan Senate and House lawmakers filed the Secure and Fair Enforcement (SAFE) Banking Act weeks ago to praise from advocates and industry stakeholders. Sens. Jeff Merkley (D-OR) and Steve Daines (R-MT), and Reps. Dave Joyce (R-OH) and Earl Blumenauer (D-OR) have introduced the bill for the eighth time.

Under current federal law, banks and credit unions can be charged by federal prosecutors for assisting a criminal operation with money laundering. Although cannabis may be legal in their respective regions, banks are required to comply to federal regulations and most will not risk working with cannabis companies.

“Right now, legal cannabis businesses are forced to operate entirely in cash,” tweeted Merkley. “It’s a dangerous system—ripe for robbery, assaults, tax fraud, and money laundering. If you care about public safety, cash is a terrible system.”

The SAFE Banking Act would prohibit federal prosecutors from penalizing or discouraging banks from working with state-sanctioned cannabis companies or associated businesses. It would keep federal regulators from terminating or limiting a bank’s federal deposit insurance for accepting deposits from cannabis industry operators. It would also forbid regulators from incentivizing service downgrades for cannabis businesses.

Notably, the bill would also create a safe harbor from criminal prosecution and liability and asset forfeiture for banks holding legitimate cannabis business deposits. In many states, police are allowed to seize and keep funds and goods that they say are related to a criminal investigation without the owner ever being arrested or charged with a crime. The bill would protect legal cannabis funds from this sort of civil forfeiture.

“This legislation will save lives and livelihoods. It is past time that Congress addresses the irrational, unfair, and unsafe prohibition of basic banking services to state-legal cannabis businesses,” said Blumenauer, co-sponsor of the bill and founder and co-chair of the Congressional Cannabis Caucus.

The bill has been revised to includes language specifically extending protections to Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs). These entities offer loans to minority-owned small businesses. The new version also allows cannabis industry workers to access federal mortgage loans.

The bill will first go before the Senate Banking Committee, where Sens. Merkley and Daines said that the bill could still see further additions as lawmakers debate its fate. “We expect ‘SAFE Banking’ to go through the Banking Committee and on the floor there will be an opportunity to add additional regular-order passed provisions—such as the ‘HOPE’ and ‘GRAM Acts’—before final Senate passage,” said the senators in a joint statement. “This expanded ‘SAFE Banking Plus’ package will represent the largest-ever cannabis reform legislation with bipartisan support in Congress.”

Before the close of the last Congress, Senate Majority Leader Chuck Schumer and other legislators worked on a package bill that combined provisions from both SAFE Banking and CAOA. It was commonly known as “SAFE Banking Plus.”

“For the first time, we have a path for SAFE Banking to move through the Senate Banking Committee and get a vote on the floor of the Senate,” said Merkley in a press release.

But Sen. Sherrod Brown (D-OH), chairman of the Senate Banking Committee, recently said that the hearing has not yet been scheduled. “I’m always skeptical when bankers come to us and try to use bills like this to weaken bank rules to undermine safety,” he said in an interview with NBC News. “That’s been the delay.”

The bill will also have some hurdles in the form of Senate leadership blocking its progress, as was the case last year when advocates were particularly optimistic due to bipartisan support in both chambers of Congress.

Last year Schumer (D-NY) and his cohorts, Sens. Ron Wyden (D-Ore.) and Cory Booker (D-NJ), introduced the Cannabis Administration and Opportunity Act (CAOA), a highly anticipated and hyped cannabis legalization bill that was so expansive that it had little support in the rest of the Senate. To bolster its chances, the trio publicly swore to keep more modest and popular reform bills like the Safe Banking Act—which was accepted by far more legislators—from passing if the CAOA wasn’t given a chance.

In July 2021 Booker went so far as to say, “I will lay myself down to do everything I can to stop an easy banking bill that’s going to allow all these corporations to make a lot more money off of this as opposed to focusing on the restorative justice aspects.” Booker said the banking bill would have to include equity-driven reformations as well to receive his approval.

Schumer once again signaled that the bill could face opposition if it doesn’t incorporate aspects of the CAOA. “The SAFE Banking Act re-introduced this week would ensure cannabis businesses in states with legal cannabis have equal access critical banking infrastructure,” Schumer tweeted. “And I’m making it a top priority to ensure it contains social equity provisions to undo harm caused by the War on Drugs.”

While speaking on the Senate floor at the bill’s reintroduction, Schumer said, “I’ve also made it clear that one of my top priorities to ensure SAFE Banking passes is that it contain critical criminal justice provisions, most importantly, expunging criminal records for certain low-level marijuana offenses.”

Only two banks in New Mexico openly take cannabis companies on as clients: Southwest Capital Bank and U.S. Eagle Federal Credit Union.