The path of the SAFER Banking Act still includes legislative hurdles

The path of the SAFER Banking Act still includes legislative hurdles


In the realm of U.S. cannabis policy, the Secure and Fair Enforcement Regulation Banking Act (SAFER) stands as a beacon of potential change, navigating the tumultuous waters of federal legislation. Currently, the SAFER Banking Act, evolved from its predecessor, the Secure and Fair Enforcement (SAFE) Banking Act, stands at a critical juncture in its legislative journey, reflecting the evolving landscape of cannabis banking in the United States.

The recent advancement of the SAFER Banking Act out of the Senate Committee on Banking, Housing, and Urban Affairs, led by Chairman Senator Sherrod Brown (D-OH), by a 14-9 vote, signifies a bipartisan acknowledgment of the pressing need for banking reform in the cannabis sector. This milestone is not just a procedural success; it embodies the gradual shift in political attitudes toward cannabis and its financial implications.

As it moves to the Senate floor, the SAFER Banking Act stands at the cusp of a more significant debate, transcending committee rooms and entering the broader arena of the Senate. The bill’s journey has been long and fraught with challenges. Initially introduced in 2023, it has been a subject of Congressional deliberation for over five years, indicating both its complexity and the contentious nature of cannabis legislation.

The House of Representatives has consistently shown support for cannabis banking reform, having passed the original SAFE Banking Act six times. This persistent advocacy underscores the House’s recognition of the legal quagmire facing financial institutions working with state-legal cannabis businesses. The disconnect between state legalization and federal prohibition has created a legal gray area, impeding the cannabis industry’s access to essential banking services.

However, the path to enactment of the SAFER Banking Act is far from straightforward. The need for more Republican support in the Senate is a crucial aspect highlighted by Senate Majority Leader Chuck Schumer (D-NY). Schumer’s emphasis on bipartisan backing is not merely a legislative strategy; it is a reflection of the Act’s potential to bridge the policy divide on cannabis.

If passed, the SAFER Banking Act would prevent federal regulators from penalizing banks and financial institutions for providing services to cannabis businesses in states where it is legal.


In late August 2023, the Department of Health and Human Services (HHS) recommended reclassifying marijuana from a Schedule I substance to a Schedule III substance under the Controlled Substances Act (CSA). This recommendation, which follows seven years after the Drug Enforcement Administration (DEA) declined to initiate rulemaking to reschedule marijuana, signals a potential seismic shift in the marijuana market.

Currently classified alongside substances like LSD and heroin, marijuana’s reclassification to a Schedule III drug, akin to ketamine and certain pain relievers, would redefine its legal and medical status. The DEA is set to conduct a review to evaluate marijuana’s safety and proceed through the formal rulemaking process. Importantly, under the CSA, the HHS’ recommendations are binding regarding scientific and medical matters.

The implications of rescheduling marijuana are profound. It would legally enable the manufacturing, distribution, dispensation, and possession of medical marijuana under the CSA, subject to state and federal licensing. This move would also likely increase U.S. Food and Drug Administration (FDA) oversight on marijuana products, impacting manufacturing practices and potentially easing research limitations, spurring innovation in the industry.

Additionally, the rescheduling of marijuana could significantly alleviate tax burdens on marijuana businesses. Currently constrained under Section 280E of the Internal Revenue Code, these businesses are unable to deduct common business expenses due to marijuana’s Schedule I status. Rescheduling would permit these deductions, positively impacting their bottom line.

In this context, the SAFER Banking Act gains added relevance. This legislation addresses a critical barrier in the cannabis industry, offering a semblance of financial normalcy and security to an industry operating under the shadow of federal illegality. For cannabis businesses, the Act represents an opportunity to emerge from the financial fringes and the ability to access banking services that are foundational to operational stability and growth. For financial institutions, it provides a legal framework to engage with an emerging industry without the fear of federal repercussions.

The Act’s journey is emblematic of the broader shifts in cannabis policy, capturing the complexities and nuances of reconciling state-level legalization with federal law. The coming weeks will be critical in determining the fate of this landmark legislation, with implications that extend far beyond the corridors of Congress into the very fabric of the American cannabis industry.