The SAFE Banking Act is back. Bipartisan legislation to increase public safety through statutorily authorizing state-legal marijuana businesses access to the financial sector was reintroduced in both the House and the Senate on Thursday.
The bill addresses the inconsistent and costly access that state-legal medical and recreational marijuana businesses contend with as a result of marijuana's continuing illegality under federal law. Because pot is still federally illegal, banks fear they could run afoul of regulators or even prosecutors under the complex anti-money laundering rules in place for controlled substances. SAFE Banking would bar federal banking regulators from:
- Prohibiting, penalizing or discouraging a bank from providing financial services to a legitimate state-sanctioned and regulated cannabis business, or an associated business (such as a lawyer or landlord providing services to a legal cannabis business);
- Terminating or limiting a bank's federal deposit insurance primarily because the bank is providing services to a state-sanctioned cannabis business or associated business;
- Recommending or incentivizing a bank to halt or downgrade providing any kind of banking services to these businesses; or
- Taking any action on a loan to an owner or operator of a cannabis-related business.
This legislation would also create a safe harbor from criminal prosecution and liability and asset forfeiture for banks and their officers and employees who provide financial services to state-sanctioned cannabis businesses, while maintaining banks' right to choose not to offer those services. The bill also provides protections for hemp and hemp-derived cannabidiol (CBD) related businesses.
For the first time, it explicitly extends the safe harbor to Community Development Financial Institutions (CDFI) and Minority Depository Institutions (MDI). CDFIs and MDIs support underserved communities who face challenges in accessing capital and provide affordable access to financial services.
"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 Rep. Blumenauer [13], founder and co-chair of the Congressional Cannabis Caucus. "The House has passed the SAFE Banking Act on a bipartisan basis seven times. I am delighted that the Senate is joining us in making it a priority."
Last year, much to the ire of the marijuana industry, although the House indeed repeatedly passed the measure, it was stalled in the Senate by Majority Leader Chuck Schumer (D-NY) and Sen. Cory Booker (D-NJ), who were holding out for a full-blown marijuana legalization bill or other broad reform measures. By the time they realized they did not have the votes for legalization and were ready to move the bill in the Senate, Minority Leader Mitch McConnell (R-KY) was in a position to kill it -- and did so.
"Forcing legal businesses to operate in all-cash is dangerous for our communities; it's an open invitation to robbery, money laundering, and organized crime -- and it's way past time to fix it," said Senator Merkley [13]. "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. Let's make 2023 the year that we get this bill signed into law so we can ensure that all legal cannabis businesses have access to the financial services they need to help keep their employees, their businesses, and their communities safe."
(Regarding the dangerousness of forcing pot businesses to deal in cash, see the report from StoptheDrugWar.org Executive Director David Borden, Dangerous Delays: What Washington State (Re)Teaches Us About Cash and Cannabis Store Robberies [14].)
"As it stands, the federal government has denied state-legal cannabis companies the same access to financial services as every other legal business across the Buckeye State and our country," said Rep. Joyce [13], co-chair of the Congressional Cannabis Caucus. "Not only does this distort the market in a growing industry, but it also forces businesses to operate in all cash, making them and their employees sitting ducks for violent robberies. The bipartisan SAFE Banking Act will allow cannabis businesses to operate legally without fear of punishment by federal regulators, making our communities safer."
Splits in the drug reform community last year over whether to support the SAFE Banking Act or hold out for a "SAFE Plus" or legalization bill with social equity components appear to have abated somewhat. The Drug Policy Alliance (DPA), which had been in the latter camp previously, is not endorsing the bill, but is not opposing it either, citing strengthened data collection among other provisions in the new version.
"The improvements to the study and data collection provisions in the SAFE Banking Act are a welcome addition to the bill," said Maria Perez Medina [15], DPA Director of the Office of Federal Affairs. "These minor modifications to the bill will ensure that timely and more comprehensive data collection takes place to measure whether banking services are being provided in a fair way. While there remains much more work to be done and we remain neutral on the legislation, the changes are an encouraging sign that the bill is headed in the right direction," she added.
"As this legislation moves forward, more should be done to lessen the barriers to entry small marijuana businesses face in obtaining commercial lending. Without this, it remains impossible for them to compete with large, multi-state operators," Perez Medina continued. "As such, we look forward to continuing working with stakeholders to improve this bill in a way that most benefits the communities that have been disproportionately impacted by prohibition."
And while the National Organization for the Reform of Marijuana Laws (NORML) naturally wants legalization, it has consistently supported SAFE as well, and continues to.
"If cannabis businesses are to have any hope of operating safely, transparently, and in a manner that is competitive with the existing underground market, Congress must pass SAFE Banking now," said NORML Political Director Morgan Fox [16]. "It is irresponsible to shut this heavily regulated industry out of the US financial system. Every day that Congress fails to act further endangers small businesses and consumers, puts regulators and law enforcement at a disadvantage, and facilitates the activities of unlicensed operators and criminal organizations."
Now, let's see if this thing can pass Congress this year.