US Congress Passes Cannabis SAFE Banking Act
Updated: May 13
Cannabis Science and Technlogy
May 2021 | Vol.4 No.4
THE US HOUSE of Representatives recently approved the Secure and Fair Enforcement (SAFE) Banking Act of 2021, also known as the SAFE Banking Act (1). This law provides the possibility for financial institutions, such as banks, to conduct business with cannabis en- terprises that are licensed in states which allow can- nabis for either recreational, medical use, or both (2). The SAFE Banking Acts’ purpose is to remove the fear banks have of being penalized by federal authorities due to the illegality of cannabis at the federal level.
With a 321-101 vote, the House of Representatives passed the bill along to the US Senate where it may be considered for ratification.
The issues surrounding cannabis’ status at the fed- eral level have made banks hesitant to transact busi- ness with establishments that are involved in selling cannabis or cannabis-related products. Banks have experienced a reluctance to work with cannabis busi- nesses because of the concern of being found in trans- gression of federal regulations. The intentions of the SAFE Banking Act are to give clarification on any pro- ceeds that are generated by licensed cannabis firms within states that have cannabis laws should not be looked at as illegal. Instructions are included in the bill for federal regulatory agencies to draft appropri- ate guidelines so that banking activities could be over- seen at a national level.
Due to the limited options to do financial transac- tions, cannabis industry businesses were forced to run their establishments in cash or use smaller financial institutions such as credit unions. Analysts believe that the lack of collaboration with banks has held back the development of the cannabis industry in jurisdictions where it is legal (2). A considerate amount of banking associations lobbied in support of the legislation be- cause of being placed in difficult positions of listening to state regulators calls for banks to welcome canna- bis establishments but also fearing federal regulators that hold cannabis as a highly controlled substance that should not be available for use. Through pushing Congress to take action on the SAFE Banking Act, fi- nancial institutions hope to receive a concrete legal position on whether or not they are able to work with state-legal and licensed cannabis companies. Cur- rently in the US, 36 states have structures established to regulate medical cannabis and 17 states have ap- proved the recreational use of cannabis.
The SAFE Banking Act of 2021 will now be entering the US Senate where Majority Leader Chuck Schumer has indicated his support for the cannabis banking bill, along with various other policy reforms with respect to cannabis. Schumer has expressed that the legislative chamber is ready to move forward on cannabis meas- ures regardless of President Biden’s views on the top- ic, which has been considered “lukewarm” in regard to cannabis reform (3). Rep. Earl Blumenauer (D-OR), co-chair of the Con- gressional Cannabis Caucus, said (4) “it’s time for us to address this inconsistency, it’s time for us to pass, again, the SAFE Banking Act and it’s time for us to move forward with legalization on the federal level.” Additionally, he added, “I appreciate us being at this point—a critical first step along the path to full legal- ization, which I’m confident will happen this Congress, and not a moment too soon.” On the House floor, Rep. Ed Perlmutter (D-CO) stat- ed (4), “Even if you are opposed to the legalization of cannabis, you should support this bill. American vot- ers have spoken and continue to speak—and the fact is, you can’t put the genie back in the bottle. Prohibi- tion is over.”
If the SAFE Banking Act is ratified into law, cannabis industry enterprises will have to jump over one less hurdle in running their business activities.
REFERENCES (1) https://docs.house.gov/billsthisweek/20210419/BILLS-117hr1996-SUS.pdf
(2) https://www.cannabisnewswire.com/420-with-cnw- us-congress-passes-marijuana-banking-bill/
(4) https://www.marijuanamoment.net/u-s-house-debates- marijuana-banking-bill-with-final-vote-set-for-this-evening/