The U.S. House of Representatives recently approved the Secure and Fair Enforcement (SAFE) Banking Act...
The U.S. House of Representatives recently approved the Secure and Fair Enforcement (SAFE) Banking Act. This is the fifth time the House has approved the cannabis banking reform bill since it was first introduced in 2019. This time around, the SAFE Banking Act passed as part of the National Defense Authorization Act.
Key Provisions of SAFE Banking Act
As discussed in greater detail in prior articles, the SAFE Banking Act seeks to improve access to financial services for legal cannabis businesses. Because marijuana remains illegal under the Controlled Substances Act (CSA), financial institutions providing banking services to legitimate and licensed cannabis businesses under state laws can face criminal prosecution under several federal statutes, such as “aiding and abetting” a federal crime and money laundering. In light of the liability risks, many banks are hesitant to provide services to the cannabis industry. As a result, cannabis businesses must deal exclusively in cash, which can make them targets for robberies and other types of crime.
The SAFE Banking Act seeks to increase access to financial institutions for legal cannabis businesses. Specifically, the bill would prevent 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 vendor or landlord providing services to a legal cannabis business);
Prohibiting, penalizing or discouraging an insurer from providing insurance products to a legitimate, state-sanctioned and regulated cannabis business, or an associated business (such as a vendor or landlord providing services to a legal cannabis business);
Terminating or limiting a bank’s federal deposit insurance solely 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.
The federal cannabis banking reform bill also creates a safe harbor from criminal prosecution and liability, as well as asset forfeiture, for banks who provide financial services to legitimate, state-sanctioned cannabis businesses. At the same time, it also preserves banks’ right to choose not to offer those services. The protections of the SAFE Banking Act also extend to hemp and hemp-derived CBD-related businesses.
What’s Next?
The Senate must now approve the SAFE Banking Act, which has proven to be a significant challenge in the past. Nonetheless, Sen. Jeff Merkley (D-OR), who is sponsoring the SAFE Banking Act in the Senate, expressed hope that his chamber would also pass the measure as part of the larger National Defense Authorization Act. “I’m hoping we can have similar success in the Senate,” he said. “This is a moment. The House has acted once again to push for this to be successfully passed in the counterpart in the Senate, or to get it done in conference with the House language.”
There are still hurdles for the Senate to approve the SAFE Banking, including members of Sen. Merkley’s own party that are pushing for comprehensive cannabis reform rather than more incremental cannabis banking legislation. With the Senate effectively split 50-50, sponsors will need to convince several Republicans or all of the Democrats to get on board.
If you have questions, please contact us
If you have any questions or if you would like to discuss the matter further, please contact Dan McKillop, Teddy Eynon, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.
This article is a part of a series pertaining to cannabis legalization in New Jersey and the United States at large. Prior articles in this series are below:
Disclaimer: Possession, use, distribution, and/or sale of cannabis is a Federal crime and is subject to related Federal policy. Legal advice provided by Scarinci Hollenbeck, LLC is designed to counsel clients regarding the validity, scope, meaning, and application of existing and/or proposed cannabis law. Scarinci Hollenbeck, LLC will not provide assistance in circumventing Federal or state cannabis law or policy, and advice provided by our office should not be construed as such.
Does Your Homeowners Insurance Provide Adequate Coverage?
Your home is likely your greatest asset, which is why it is so important to adequately protect it. Homeowners insurance protects you from the financial costs of unforeseen losses, such as theft, fire, and natural disasters, by helping you rebuild and replace possessions that were lost While the definition of “adequate” coverage depends upon a […]
Understanding the Importance of a Non-Contingent Offer
Making a non-contingent offer can dramatically increase your chances of securing a real estate transaction, particularly in competitive markets like New York City. However, buyers should understand that waiving contingencies, including those related to financing, or appraisals, also comes with significant risks. Determining your best strategy requires careful analysis of the property, the market, and […]
Fred D. Zemel Appointed Chair of Strategic Planning at Scarinci & Hollenbeck, LLC
Business Transactional Attorney Zemel to Spearhead Strategic Initiatives for Continued Growth and Innovation Little Falls, NJ – February 21, 2025 – Scarinci & Hollenbeck, LLC is pleased to announce that Partner Fred D. Zemel has been named Chair of the firm’s Strategic Planning Committee. In this role, Mr. Zemel will lead the committee in identifying, […]
Novation Agreement Process: Step-by-Step Guide for Businesses
Big changes sometimes occur during the life cycle of a contract. Cancelling a contract outright can be bad for your reputation and your bottom line. Businesses need to know how to best address a change in circumstances, while also protecting their legal rights. One option is to transfer the “benefits and the burdens” of a […]
What Is a Trade Secret? Key Elements and Legal Protections Explained
What is a trade secret and why you you protect them? Technology has made trade secret theft even easier and more prevalent. In fact, businesses lose billions of dollars every year due to trade secret theft committed by employees, competitors, and even foreign governments. But what is a trade secret? And how do you protect […]
What Is Title Insurance? Safeguarding Against Title Defects
If you are considering the purchase of a property, you may wonder — what is title insurance, do I need it, and why do I need it? Even seasoned property owners may question if the added expense and extra paperwork is really necessary, especially considering that people and entities insured by title insurance make fewer […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
U.S. House of Representatives (again) Approves Cannabis Banking Reform Bill
Author: Daniel T. McKillop
The U.S. House of Representatives recently approved the Secure and Fair Enforcement (SAFE) Banking Act...
The U.S. House of Representatives recently approved the Secure and Fair Enforcement (SAFE) Banking Act. This is the fifth time the House has approved the cannabis banking reform bill since it was first introduced in 2019. This time around, the SAFE Banking Act passed as part of the National Defense Authorization Act.
Key Provisions of SAFE Banking Act
As discussed in greater detail in prior articles, the SAFE Banking Act seeks to improve access to financial services for legal cannabis businesses. Because marijuana remains illegal under the Controlled Substances Act (CSA), financial institutions providing banking services to legitimate and licensed cannabis businesses under state laws can face criminal prosecution under several federal statutes, such as “aiding and abetting” a federal crime and money laundering. In light of the liability risks, many banks are hesitant to provide services to the cannabis industry. As a result, cannabis businesses must deal exclusively in cash, which can make them targets for robberies and other types of crime.
The SAFE Banking Act seeks to increase access to financial institutions for legal cannabis businesses. Specifically, the bill would prevent 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 vendor or landlord providing services to a legal cannabis business);
Prohibiting, penalizing or discouraging an insurer from providing insurance products to a legitimate, state-sanctioned and regulated cannabis business, or an associated business (such as a vendor or landlord providing services to a legal cannabis business);
Terminating or limiting a bank’s federal deposit insurance solely 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.
The federal cannabis banking reform bill also creates a safe harbor from criminal prosecution and liability, as well as asset forfeiture, for banks who provide financial services to legitimate, state-sanctioned cannabis businesses. At the same time, it also preserves banks’ right to choose not to offer those services. The protections of the SAFE Banking Act also extend to hemp and hemp-derived CBD-related businesses.
What’s Next?
The Senate must now approve the SAFE Banking Act, which has proven to be a significant challenge in the past. Nonetheless, Sen. Jeff Merkley (D-OR), who is sponsoring the SAFE Banking Act in the Senate, expressed hope that his chamber would also pass the measure as part of the larger National Defense Authorization Act. “I’m hoping we can have similar success in the Senate,” he said. “This is a moment. The House has acted once again to push for this to be successfully passed in the counterpart in the Senate, or to get it done in conference with the House language.”
There are still hurdles for the Senate to approve the SAFE Banking, including members of Sen. Merkley’s own party that are pushing for comprehensive cannabis reform rather than more incremental cannabis banking legislation. With the Senate effectively split 50-50, sponsors will need to convince several Republicans or all of the Democrats to get on board.
If you have questions, please contact us
If you have any questions or if you would like to discuss the matter further, please contact Dan McKillop, Teddy Eynon, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.
This article is a part of a series pertaining to cannabis legalization in New Jersey and the United States at large. Prior articles in this series are below:
Disclaimer: Possession, use, distribution, and/or sale of cannabis is a Federal crime and is subject to related Federal policy. Legal advice provided by Scarinci Hollenbeck, LLC is designed to counsel clients regarding the validity, scope, meaning, and application of existing and/or proposed cannabis law. Scarinci Hollenbeck, LLC will not provide assistance in circumventing Federal or state cannabis law or policy, and advice provided by our office should not be construed as such.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
