On March 28, the House Financial Services Committee voted 45 to 15 in favor of the Secure and Fair Enforcement (SAFE) Banking Act, which would protect financial institutions from being prosecuted by the federal government for servicing state-licensed marijuana-related and ancillary businesses. The vote means that the bill will now advance to the House floor.
Currently, there is a growing divide between the state legality and federal illegality of cannabis. While the Financial Crimes Enforcement Network (FINCEN), which is part of the U.S. Department of Treasury, issued guidance to financial institutions on how to service the cannabis industry in compliance with anti-money laundering laws, the overwhelming majority of financial institutions remain reluctant to move forward due to fear of prosecution by the federal government. As a result, a majority of marijuana-related businesses operate on a cash-only basis and there is no supervisory or audit oversight over their activities from an anti-money laundering perspective. There are also significant public safety concerns with regard to the cash-intensive nature of marijuana-related businesses because they are targeted by robbers.
The legislation now has 152 cosponsors—totaling more than a third of the House of Representatives. That is the most support a standalone cannabis bill has earned to date in the House and is only the third time in history that such a bill has cleared a congressional committee.
Notably, before the bill passed the House Financial Services Committee, it was amended to include provisions to provide a safe harbor for insurance companies and to improve the access of financial services to minority and women-owned marijuana-related businesses.
The proposed legislation was also amended to require that the Federal Financial Institutions Examination Council develop guidance and examination procedures for financial institutions who provide services to lawful marijuana-related and ancillary businesses. Moreover, the Government Accountability Office would be required to examine suspicious activity reports which certain financial institutions have been filing on marijuana-related and ancillary businesses to understand how effectively financial institutions can identify bad actors.
Moving forward, the bill is expected to be voted on by the entire House of Representatives within the next few weeks. Senators from Colorado and Oregon are expected to file companion legislation soon but it remains uncertain as to whether it will advance to a vote in the Senate.
For more information on providing financial services to marijuana-related and ancillary businesses in compliance with anti-money laundering requirements and other cannabis related issues, please feel free to contact Kerry Zinn at (954) 430-7817 or kzinn@bressler.com or Nikolas Komyati at (973) 245-0671 or nkomyati@bressler.com.