The Secure and Fair Enforcement Regulation (SAFER) Banking Act, a bill that would allow state-legal cannabis businesses to access banking services, has cleared a major hurdle in the Senate. The Senate Committee on Banking, Housing and Urban Affairs voted 14-9 to advance the bill to the full chamber’s floor last week, with some new amendments added to address the concerns of Republican lawmakers.
What is the SAFER Banking Act?
The SAFER Banking Act is a bipartisan legislation that aims to resolve the longstanding financial deadlock that has forced cannabis-related companies to operate using only cash. Under current federal law, providing banking services to cannabis businesses is strictly regulated, leaving many operators, especially small and independent ones, without access to bank accounts, credit card processing, loans and other financial services. This creates a number of challenges and risks for the industry, such as security threats, tax evasion, money laundering and lack of transparency.
The SAFER Banking Act would provide legal protection to banks or other financial institutions that offer services to state-legal marijuana businesses, as well as their employees, customers and service providers. The bill would also require federal regulators to issue guidance and examination procedures for cannabis-related banking activities, and prohibit them from ordering banks to close accounts without a valid reason. Additionally, the bill would protect employees of state-legal cannabis businesses from being denied residential mortgages funded by federal programs.
What are the new amendments to the bill?
The SAFER Banking Act was introduced by a bipartisan group of senators on September 21, led by Sen. Steve Daines, a Republican from Montana, and Sen. Jeff Merkley, a Democrat from Oregon. The bill is a revised version of the Secure and Fair Enforcement (SAFE) Banking Act, which passed the House of Representatives in April 2021 with overwhelming support.
However, the bill faced some opposition from Republican senators in the Senate Banking Committee, who raised concerns about public health, public safety and interstate commerce issues related to cannabis legalization. To address these concerns, the bill sponsors agreed to add some new amendments to the bill before the committee vote on September 27.
Some of the new amendments include:
- Requiring banks to report suspicious activities related to cannabis businesses that may violate state or federal law.
- Requiring banks to verify that cannabis businesses are compliant with state or tribal laws and regulations.
- Requiring banks to obtain written consent from tribal governments before providing services to cannabis businesses on tribal lands.
- Requiring banks to disclose any ownership or control interests in cannabis businesses or service providers.
- Requiring the Government Accountability Office (GAO) to conduct a study on money laundering and illicit financing risks posed by cannabis businesses.
- Requiring the Department of Health and Human Services (HHS) to conduct a study on the public health impacts of cannabis legalization.
- Requiring the Department of Justice (DOJ) to report on the enforcement of federal marijuana laws and the impact of state legalization on interstate commerce.
What are the next steps for the bill?
The SAFER Banking Act has now cleared its first major hurdle in the Senate, but it still faces an uncertain future in the full chamber. The bill will need at least 60 votes to overcome a potential filibuster from opponents, which means it will need support from at least 10 Republicans. The bill sponsors have expressed optimism that they can garner enough bipartisan support for the bill, citing its narrow focus on banking issues and its potential benefits for public safety, tax collection and economic development.
However, some advocates and lawmakers have argued that the bill does not go far enough to address the broader issues of federal marijuana prohibition and criminal justice reform. They have called for a more comprehensive approach that would include descheduling marijuana from the Controlled Substances Act, expunging past convictions and ensuring social equity for communities disproportionately impacted by the war on drugs. Some of these provisions are included in another bill, the Cannabis Administration and Opportunity Act (CAOA), which was introduced by Senate Majority Leader Chuck Schumer and other Democratic senators in July. However, this bill has not yet been scheduled for a committee hearing or a floor vote.
The fate of both bills will depend largely on the political will and priorities of the Senate leadership and President Joe Biden, who has expressed support for decriminalizing marijuana but not legalizing it at the federal level. The cannabis industry and its supporters will continue to lobby for both bills, hoping that one or both of them will eventually become law.
