On March 28, 2019, the Secure and Fair Enforcement (SAFE) Banking Act cleared a House Financial Services Committee vote 45 to 15, and is now expected to proceed to a full House vote before the end of April 2019. The Act provides federal protection for financial institutions that serve state-sanctioned cannabis and cannabis-ancillary businesses, and allows these businesses to use banking services and products – a significant upgrade to the sector’s current means of cash management.

To date, a majority of banks and credit unions have been unwilling to serve legitimate cannabis operators due to stringent regulatory requirements – such as having to file suspicious activity reports for every transaction involving a marijuana business – that create additional administrative costs ultimately absorbed by the operator and introduce significant risks of running afoul of anti-money laundering laws. As such, banks and credit unions have been unable to provide banking services to an industry with an estimated market value opportunity of about $40-50 billion. The resulting lack of basic banking services – for instance, access to capital and availability of checking and savings accounts – available to compliant cannabis business operators impairs the growth of the industry.

The introduction of the SAFE Banking Act aims to remove this aura of uncertainty and consequently paves the way for new business opportunities in the cannabis sector by:

  • Preventing federal banking regulators from punishing financial institutions that serve compliant cannabis-related businesses.
  • Requiring the Federal Financial Institutions Examination Council (FFIEC) to develop uniform guidance and examination procedures for financial institutions that serve lawful cannabis businesses.

Notably, the Act would also require federal banking regulators to issue an annual report to Congress that contains data on the availability of financial services to minority- and women-owned cannabis businesses, as well as recommendations on how to expand those services.

The Act’s companion bill, SB 1152, has been reintroduced in the Senate and is currently pending a committee hearing.

Perhaps, one day soon, the days of transporting cash in armored trucks will be a distant memory to the cannabis sector.