By: Ken Chase.
The U.S. House of Representatives passed the Secure and Fair Enforcement (SAFE) Banking Act on July 14, after it was added as an amendment to the 2023 National Defense Authorization Act (NDAA). If passed by the Senate, the SAFE Act would prevent federal authorities from punishing financial institutions that provide bank services to cannabis-related business enterprises in states where those business activities are approved by state law.
The Act would create a legal safe harbor for banks that serve state-licensed cannabis businesses that grow, manufacture, produce, handle, transport, sell, or display cannabis and related products. In doing so, the SAFE Act seeks to better align federal law with state legislation that permits the sale and distribution of those products.
According to estimates, roughly nine in ten Americans live in areas where state law permits at least some legal uses for cannabis products. Advocates have long pressed lawmakers to modify federal law to reflect society’s evolving cannabis norms. In response, the House has previously passed the SAFE Act on six separate occasions. Each time, the legislation has died in the U.S. Senate.
The Act’s sponsor, U.S. Rep. Ed Perlmutter (D-CO), urged the Democrat-controlled Senate to quickly pass the measure. In a tweet, he said:
“Today marks the *7th time* the #SAFEBankingAct has passed the U.S. House. I’m calling on the Senate to take action for the safety of our communities and success of Veteran- and minority-owned businesses across the country. It’s time to get this done.”
The Act has received support from some of the largest financial organizations, including the American Bankers Association (ABA), National Association of Federally-Insured Credit Unions, Independent Community Bankers of America (ICBA), and the Credit Union National Association (CUNA). In a letter of support, those organizations’ CEOs noted that cannabis companies are currently being forced to operate on a cash basis, which leaves them vulnerable to robbery and other crimes.
While asserting that their organizations hold no position on the legalization of cannabis, the group suggested that the lack of financial access for those businesses represented a “public safety issue” that only Congress can properly address. It also noted that the Act would help to protect banks that might unwittingly run afoul of current federal laws:
“Additionally, even those financial institutions that choose not to bank the cannabis industry risk unknowingly serving cannabis businesses in states where cannabis is legal. Indirect connections are often difficult to identify and avoid because, like any other industry, those offering cannabis-related services work with vendors and suppliers. Under current law, a financial institution that does business with any one of these indirectly affiliated entities could unknowingly violate federal law.”
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