Cannabis Banking in the US – The Latest on the SAFE Act

By: Brenden R. Chainey, Daniel S. Cohen, Daniel F. C. Crowley, Scott J. Gelbman, Barry M. Hartman, Kathleen L. Nicholas

In September 2019, the U.S. House of Representatives passed the “Secure and Fair Enforcement (SAFE) Banking Act of 2019”, the first stand-alone cannabis legislation to be approved by the House of Representatives. Earlier this month, revised versions of the bill were introduced in the House and Senate “to reform federal cannabis laws and reduce the public safety risk in communities across the country.”

The core of the legislation is the same as the prior bill passed by the House. For instance, the proceeds of transactions with cannabis-related legitimate businesses (CLBs) and their service providers would no longer be considered proceeds from an unlawful transaction and thus, not money laundering, and would not be subject to forfeiture.  Moreover, the bill would prohibit “federal banking regulators” from, among other things:

  • Terminating or limiting deposit or share insurance, or taking any adverse action against a “depository institution,” solely because the institution provides, or has provided, “financial services” to CLBs or service providers of a CLB;
  • Prohibiting, penalizing, or discouraging a depository institution from providing financial services to a CLB or service provider;
  • Recommending, incentivizing, or encouraging a depository institution not to offer financial services to an account holder because of the account holder’s connection to a CLB; or
  • Taking any adverse or corrective supervisory action on a loan made to a CLB or service provider (or their employees, owners, and operators), or to the owner or operator of real estate leased to a CLB or service provider.

While the prospects of the bill passing the House look favorable, its chances in the Senate are more daunting.  For more information on key modifications to this version of the SAFE Act and the likelihood of passage, see our client alert at .

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