Policy Alert: U.S. House of Representatives Passes Cannabis Banking Bill
September 25, 2019
On September 25, in a historic vote, the U.S. House of Representatives passed the Secure and Fair Enforcement Banking Act of 2019 (H.R. 1595) or the SAFE Banking Act of 2019, which aims to shield depository institutions that serve cannabis-related businesses from federal penalties in states and in Indian Country where “cultivation, production, manufacture, sale, transportation, display, dispensing, distribution, or purchase” of cannabis is legal. The bill, which was co-sponsored by Representatives Ed Perlmutter (D-CO-07) and Denny Heck (D-WA-10), passed by a 321-103 vote on Wednesday after clearing the House Financial Services Committee back in March.
The bipartisan SAFE Banking Act is the first piece of standalone cannabis reform legislation to pass the House. Although the U.S. Senate has yet to consider its version of the SAFE Banking Act, Senator Mike Crapo (R-ID), Chairman of the Senate Banking Committee, recently stated that he plans to hold a committee vote on a cannabis banking bill before the end of the year.
Without access to banks, tribal cannabis businesses are unable to accept credit cards, write checks, or process payroll obligations, creating a risky cash-only business model. NAFOA has advocated for access to banking and ancillary services for tribal cannabis businesses to ensure that tribes can adequately participate in the fast-growing cannabis industry if they choose.
SAFE Banking Act Summary
The SAFE Banking Act prohibits federal banking regulators from penalizing a depository institution for providing banking services to a legitimate marijuana-related business, including tribal businesses. Specifically, the bill prohibits a federal banking regulator from:
- Terminating or limiting the deposit insurance or share insurance of a depository institution solely because the institution provides financial services to a legitimate marijuana-related business;
- Forbidding or otherwise discouraging a depository institution from offering financial services to such a business;
- Recommending, incentivizing, or encouraging a depository institution to not offer financial services to an account holder solely because the account holder is affiliated with such a business;
- Taking any adverse or corrective supervisory action on a loan made to a person solely because the person either owns such a business or owns real estate or equipment leased or sold to such a business; and
- Penalizing a depository institution for processing or collecting payments for such a business.
Several amendments were added to the legislation before the bill reached the floor, including banking protections for hemp and cannabidiol (CBD) businesses. The legislation also requires that financial regulators issue guidance “confirming the legality of hemp, hemp-derived CBD products, and other hemp-derived cannabinoid products, and the legality of engaging in financial services with businesses selling hemp, hemp-derived CBD products, and other hemp-derived cannabinoid products, after the enactment of the Agriculture Improvement Act of 2018.”