WASHINGTON, D.C., – The SAFE Banking Act passed the House today by a voice vote. The act essentially allows cannabis companies to access normal federal banking services. The House move clears the way for the law to move to the U.S. Senate where Democrats, have a slight advantage.
Democrats in the Senate could well pass the bill in the Senate without Republican support. The majority of Democrats favor cannabis legalization and the SAFE act. U.S. Senate Majority Leader, Chuck Schumer, has been very vocal about legalization of cannabis lately.
The act reads. ”To create protections for financial institutions that provide financial services to cannabis-related legitimate businesses and service providers for such businesses, and for other purposes.”
Absurdly cannabis is an all-cash business. The act aims to increase transparency in the industry by creating a ”safe harbor” from criminal prosecution, liability and asset forfeiture for financial institutions, and their directors, officers and employees, who choose to provide financial services to legitimate, state-sanctioned cannabis businesses. Under the bill, federal regulators would be prevented from taking any of the following actions:
- Prohibiting, penalizing or discouraging a financial institution from providing financial services to a legitimate state-sanctioned cannabis businesses, or an associated business (i.e. a law firm who provides legal services to a legitimate cannabis business);
- Terminating or limiting a financial institution’s deposit or share insurance solely because the financial institution is providing services to a cannabis business or associated business;
- Recommending, incentivizing or encouraging a financial institution to halt or downgrade providing any kind of banking services to these cannabis businesses; or
- Taking any adverse or corrective action on a loan made to an owner or operator of a cannabis-related business (or who owns real estate or equipment leased to a cannabis-related business).
The new act will probably be taken up by the Senate in the coming months of 2021, but those timings remain to be announced.