Aaron Smith, chief executive officer of the National Cannabis Industry Association, speaks during a news conference on the Safe Banking Act outside the US Capitol in Washington, D.C., US, on Wednesday, Sept. 14, 2022.
Ting Shen | Bloomberg | Getty Images
A group of bipartisan lawmakers reintroduced the Secure and Fair Enforcement (SAFE) Banking Act in the House and Senate on Wednesday, after the legislation designed to free up banking services for the cannabis industry stalled in last year’s Congress.
The bill, which has been tweaked since last session, was introduced by Sen. Jeff Merkley, D-Ore., Sen. Steve Daines, R-Mont., Rep. Dave Joyce, R-Ohio, and Rep. Earl Blumenauer, D-Ore.
If the critical banking and financial protections advance through committees, they could see a vote on the Senate floor for the first time. The bill, which has always had strong bipartisan support, passed in the House seven times previously.
“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,” Merkley said in a statement. “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.”
Senate Majority Leader Chuck Schumer, D-N.Y., expressed his support for the legislation on Thursday and said he would work to make sure the legislation includes criminal justice provisions when it reaches the floor.
Cannabis stocks Curaleaf Holdings, Trulieve Cannabis Corp, and Terrascend Corp all rose by double-digit percentages on Thursday. The bipartisan nature of the SAFE Banking Act’s reintroduction appeared to boost hopes of more relief to come in the industry.
“The SAFE Banking Act will provide urgently needed relief to cannabis businesses of all sizes and act as a stepping stone to broader reforms,” said Matt Darin, CEO of multistate cannabis operator Curaleaf, in a statement after the bill’s reintroduction.
Under current federal law, banks and credit unions face federal prosecution and penalties if they provide services to legal cannabis businesses because cannabis is still a Schedule I substance, the same classification as heroin and LSD. Schedule I substances are defined as drugs with no currently accepted medical use and a high potential for abuse, according to the federal Drug Enforcement Administration.
Without access to financial services, state legal cannabis businesses are forced to operate their businesses solely using cash, which can result in robbery, money laundering, and organized crime.
“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 Blumenauer, founder and co-chair of the Congressional Cannabis Caucus.
The weeds
Key components of the bill protect banks that work with state-legal cannabis businesses from being penalized by federal regulators.
Under SAFE Banking, federal regulators are barred from taking several punitive steps against banks, according to the legislation:
- Prohibit, penalize or discourage a bank from providing financial services to legal cannabis businesses
- End or limit a bank’s federal deposit insurance if the bank provides those services
- Recommend or incentivize a bank to halt or downgrade providing banking services to cannabis businesses
- Take any action on a loan to an owner or operator of a cannabis business
The legislation also creates a safe harbor from criminal prosecution, liability and asset forfeiture for banks, their officers or employees. Moreover, a new component includes the safe harbor statute extended for underserved communities who face challenges in accessing capital and provide affordable access to financial services.
Executives sound off
SAFE Banking, which has 38 additional cosponsors in the Senate and eight additional cosponsors in the House, will be a boon for an industry that has seen a downturn. Top cannabis executives have pushed Congress for years to take action on banking and other federal reforms needed to fortify their businesses.
Brady Cobb, the CEO of Sunburn Cannabis, a leading Florida dispensary chain, said in a statement, “All eyes should be on the Senate Banking Committee to call the measure up for its first hearing in the Senate.”
“SAFE will serve as a springboard for the US banking and financial sectors to meaningfully participate in this budding industry, and most importantly it will significantly reduce the safety risks faced by the thousands of employees of this all cash business,” he said.
Morgan Paxhia, co-founder and managing director at Poseidon, a cannabis investment firm, called the measure’s reintroduction a major advancement for the industry.
“We have seen many firsts in legal cannabis and that now includes the scheduling of a hearing of cannabis banking reform in the Senate,” added Paxhia. “This is an historic step for the Senate.”
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