The SAFE Banking Act may fall victim to politics, again

The SAFE Banking Act may fall victim to politics, again


On 25 September 2019, for the first time, House members passed a piece of cannabis reform legislation by a 2 to 1 margin. The marijuana banking bill, titled the SAFE Banking Act, was approved to be sent to the Senate 321 to 103.

In the months that followed the bill floundered and failed to gain traction. It died in committee. 

This year’s version H.R.1996 – SAFE Banking Act of 2021 was approved 321-101 on April 19 and sent to the Senate on April 20 where it was read twice and referred to the Committee on Banking, Housing, and Urban Affairs.


The bill description as provided by CRS,

“This bill generally prohibits a federal banking regulator from penalizing a depository institution for providing banking services to a legitimate cannabis-related business. Prohibited penalties include terminating or limiting the deposit insurance or share insurance of a depository institution solely because the institution provides financial services to a legitimate cannabis-related business and prohibiting or otherwise discouraging a depository institution from offering financial services to such a business.

Additionally, proceeds from a transaction involving activities of a legitimate cannabis-related business are not considered proceeds from unlawful activity. Proceeds from unlawful activity are subject to anti-money laundering laws.

Furthermore, a depository institution is not, under federal law, liable or subject to asset forfeiture for providing a loan or other financial services to a legitimate cannabis-related business.

The bill also provides that a federal banking agency may not request or order a depository institution to terminate a customer account unless (1) the agency has a valid reason for doing so, and (2) that reason is not based solely on reputation risk. 

Valid reasons for terminating an account include threats to national security and involvement in terrorist financing, including state sponsorship of terrorism.”


The key highlights of the bill for marijuana and marijuana-related businesses are that “proceeds from a transaction involving activities of a legitimate cannabis-related business are not considered proceeds from unlawful activity.” This distinction and the prohibition of regulators from penalizing financial institutions or discouraging them from working with legitimate cannabis businesses allows traditional institutions that have been hesitant or unwilling to provide services much-needed assurances. 

Beyond that, cannabis businesses that currently pay exorbitant fees to be serviced due to regulatory reporting requirements and “specialty charges” will have the option to renegotiate their banking practices or move their accounts entirely.

While this year’s version of the Safe Banking Act has seen similar support to the previous version, one key difference comes in the structure of the Senate, for better or worse. Given the broad public support of cannabis reforms, a failure to pass legislation could be used as a motivator and stumping ground for Democrats in 2022 Senate races.

Senate Majority Leader Chuck Schumer has vowed to work on cannabis reform and told Politico in April that he supported the SAFE Banking Act, but that the priority was for it to move forward as part of comprehensive reform. Of note is the fact that the chairman of the Senate Banking Committee, Sen. Sherrod Brown, hails from Ohio, a state with an active medical marijuana industry. Sen. Patrick Toomey, the ranking member, is from Pennsylvania, a state with an active medical marijuana industry and is regarded to be one of the next to legalize adult use. 

The Safe Banking Act has strong support across party lines, and while all those aspects point toward the positive, the real issue for the Safe Banking Act may be in the overall goal of comprehensive reform. 

Dissent within the Democratic party regarding legalization could lead to another year of unrecognized promise if Schumer and the party are unwilling to pass stand-alone legislation. As of today legislation to legalize cannabis would fail.

Schumer has promised to introduce reform legislation, but has given no firm timeframe – nor has he detailed what that legislation may entail. 

According to the National Conference of State Legislatures; 36 states, the District of Columbia, Guam, Puerto Rico and U.S. Virgin Islands now have comprehensive medical marijuana programs, and at least 11 other states allow the use of products with low-THC for medical purposes. Additionally, 17 states now allow adult use of cannabis. The sole outliers being Idaho, Kansas, and Nebraska.