Despite the rapid growth of the cannabis industry, banks have been reluctant to provide financial services to cannabis-related businesses. Banks and other financial institutions fear that providing financial services to those in the cannabis industry could violate federal criminal laws and financial regulations such as “The Bank Secrecy Act” (“BSA”) and the “Money Laundering Control Act” codified under both sections 1956 and 1957 of title 18, of the United States Code.
In an attempt to create protections for banks that wish to provide financial services to cannabis-related legitimate businesses and service providers, the U.S. House of Representatives has each year since 2013 introduced the “Secure and Fair Enforcement Banking Act” (or “SAFE Banking Act”). With a change of control of the U.S. Senate in 2021, this may be the year that the SAFE Banking Act is finally enacted into law.
The SAFE Banking Act would provide a “safe harbor” for banks that provide financial services to legitimate cannabis-related businesses, specifically: (1) prohibiting federal banking regulators from terminating or limiting deposit insurance of the bank; (2) prohibiting or discouraging banks from providing financial services to such a business; (3) recommending, incentivizing, or encouraging a bank to not offer financial services to such a business; or (4) taking adverse or corrective supervisory action on a loan made to a person solely because the person owns such a business or owns real estate or equipment leased or sold to such a business.