SAFE Banking Act Part Deux

This week, the U.S. House of Representatives once again passed the SAFE Banking Act, a bill that, if taken up and passed by the U.S. Senate, would effectively pave the way for banks and credit unions to conduct business with cannabis companies operating in states with legal medical or recreational markets.

As many in the industry have learned the hard way, it has been nearly impossible for cannabis companies to secure banking services from institutions that are federally insured–a challenge that has greatly hindered the ability of companies to safely and effectively operate in the cannabis market. Senate passage of this bill would be the second most important development in the cannabis industry, only behind the passage of the 2018 Farm Bill which triggered the rapid professionalization and legitimization of the industry.

For now, this is still very much an exercise of wait and see what happens next. As many may recall, this Act had previously passed the House in 2019 but quickly died in the Senate. Now that the Democrats have a thin majority due to Vice President Harris’s ability to break tie votes, many are hopeful that this Act will finally pass the Senate. Concurrently, Senate Majority Leader Schumer is pushing hard for the decriminalization of marijuana by next year.

Whether or not the bill passes the Senate in its current form or includes major changes is another matter and brings its own set of complications. Rep. Ed Perlmutter (D-CO), the leading cannabis advocate in the House, said, “The Senate just needs to do something…Whatever actions they take, I would applaud. And then we can see whether or not they can pass it in the Senate and whether or not the House would agree to it or whether we have to go to a conference committee to iron out differences.”

But even if the bill passes the Senate, it goes to conference committee and all of the details are ironed out with the House, there will still be hurdles to jump as administrative officials will need to work together to create a regulatory rulebook for exactly how banks will be permitted to conduct business with cannabis companies. And, obviously, major financial institutions will be forced to develop internal policies and protocols for how to best conduct their business and minimize risk. Nevertheless, even though there is a long road ahead, this is a major first step toward cannabis operators being able to start and run their businesses more safely and efficiently.

There is optimism in the air, and we at CBDA believe it won’t be long before major financial institutions finally open their doors to cannabis operators.  But it may be a bumpy road ahead – so buckle up.