US House Passes SAFE Banking Act
The U.S. House of Representatives once again passed H.R. 1996, the Secure and Fair Enforcement (SAFE) Banking Act of 2021, landmark legislation to reform federal cannabis laws and reduce the public safety risk in communities across the country. Authored by U.S. Rep. Ed Perlmutter (CO-07), sponsored by Reps. Nydia M. Velázquez (D-NY-07), Steve Stivers (R-OH-15), and Warren Davidson (R-OH-08), and cosponsored by 180 members, the bill would allow marijuana-related businesses in states with some form of legalized marijuana and strict regulatory structures to access the banking system. The bill passed with overwhelming, bipartisan support by a vote of 321 to 101, including 106 Republicans.
Forty-seven states, four U.S. territories, and the District of Columbia – representing 97.7 % of the U.S. population – have legalized some form of recreational or medical marijuana, including CBD. Yet current law restricts legitimate licensed marijuana businesses from accessing banking services and products, such as depository and checking accounts, resulting in businesses operating in all cash. This is a serious public safety risk for communities, inviting theft, robberies, and burglaries. An innocent bystander was shot just last week at a medical marijuana dispensary in Colorado Springs, Colorado during an attempted burglary. Additionally, Colorado saw the murder of Travis Mason in June 2016 and Michael Arthur in Portland, Oregon in December 2020.
In the 116th Congress, the SAFE Banking Act passed the U.S. House with a broad bipartisan vote of 321 to 103, with 91 Republicans and one Independent voting in support. The bill also passed as part of the Heroes Act, an earlier COVID relief package which was approved by the House on two separate occasions in 2020.
“After years of bringing up this issue, I’m thrilled to see overwhelming support for this bipartisan, commonsense legislation in the U.S. House once again. I feel optimistic about the path forward for the SAFE Banking Act and, more broadly, reforms to our federal cannabis laws,” said Perlmutter. “Congress needs to act in order to catch up with the will of the majority of voters across this county and to ensure we are reducing the public safety risk for our constituents and communities. Thank you to Reps. Velázquez, Stivers and Davidson for their partnership, and I look forward to working with Senators Merkley and Daines to get the SAFE Banking Act passed in the Senate and signed into law.”
The SAFE Banking Act provides protections from money laundering laws for any proceeds derived from these state-legal marijuana businesses. This will get cash off the streets and into the financial system which is built to root out fraud and illicit activity. This bill also includes protections for hemp and hemp-derived CBD related businesses, which still struggle in accessing financial services despite the legalization of hemp in the 2018 Farm Bill. The current version of the bill has been updated slightly to include minor technical changes to the safe harbor, strengthened hemp provisions, and other technical updates.
The U.S. cannabis industry continues to grow at a rapid rate, with the current value estimated at $17.7 billion, a substantial amount of which remains unbanked. As of January 2021, the legal cannabis industry supports 321,000 jobs across the country. Over the 2018-2028 period, job growth in this market is projected to climb 250%, the fastest rate for any sector in the U.S. Bringing in this cash will make the industry safer and give banks and credit unions more capital to lend during the economic recovery as a result of the COVID-19 pandemic.
On March 23, Senators Merkley and Daines introduced the SAFE Banking Act in the Senate with nearly a third of the chamber supporting the bill.
The SAFE Banking Act of 2021 is supported by a wide variety of organizations, including the recent endorsement of the National Association of State Treasurers and Governors from 21 states and territories. See the full list of supporters and additional background information at here.
National Cannabis Industry Association: “One thing is abundantly clear, states are continuing to legalize cannabis and the federal government must mitigate the state and federal conflict that legal cannabis businesses are facing. Access to banking is not only essential for any business to function, but a necessary measure for public safety. Laws making cannabis legal for adults have been passed in 18 states as well as the District of Columbia and the territories of CNMI and Guam, and 36 states, as well as several territories, have comprehensive medical cannabis laws. As the House of Representatives, again, has passed SAFE Banking, we will turn our focus to the Senate and keep up the momentum.”
National Industrial Hemp Council: “The NIHC believes the SAFE Banking Act is a good bill. We understand the reasons for the bill, and we agree with them. However, we believe this good bill can be made even better by eliminating any ambiguity that arises from those who may misinterpret the legislative text as excluding the overwhelming majority of businesses in our industry.”
Marijuana Policy Project: “The SAFE Banking Act would create protections for financial institutions that provide financial services to state-legal cannabis businesses. Currently, most banks are unwilling to work with the cannabis industry because they fear federal prosecution. Passing this legislation would also help to promote equity in the cannabis industry by offering small and minority-owned businesses access to banks and regulated financial services.
“Passing the SAFE Banking Act is among MPP’s top federal priorities, and we’ll continue advocating for its success.”
The U.S. Hemp Roundtable shared with its members the benefits the bill would offer hemp growers:
“It’s great for hemp, and it needs your support. The SAFE Banking Act, celebrated for offering banking and financial service access to marijuana-based businesses, was amended in 2019 to specifically assist hemp farmers and CBD companies with banking and merchant services. Later that year, the bill passed the U.S. House by an overwhelming margin, 321 to 103, but unfortunately never was heard by the U.S. Senate.
“Prospects for the bill appear brighter this year with the change in control of the Senate. And the bill itself is much improved to explicitly protect financial and credit card transactions for hemp farmers and processors, as well as businesses engaged in the handling, manufacturing and sale of hemp-derived cannabinoid products such as CBD. Meanwhile, the bill makes clear that hemp businesses are not subject to the additional scrutiny required for adult-use cannabis commerce.”
American Bankers Association:
“We applaud House lawmakers for passing the SAFE Banking Act of 2021 with strong bipartisan support. This legislation is an important step toward resolving the conflict between state and federal law so banks can serve legal cannabis and cannabis-related businesses. This includes ancillary businesses that provide the cannabis industry with goods and services such as vendors and utility companies that have been needlessly forced out of the financial system. The bill will help banks meet the needs of their communities while reducing cash-motivated crimes, increasing the efficiency of tax collections and improving the financial transparency of the cannabis industry.
“We thank Representative Perlmutter and the bill’s 180 cosponsors for their leadership and support, and urge the Senate to move quickly to pass this much-needed legislation to clarify these issues for both the banking industry and regulators.”