The Secure and Fair Enforcement (SAFE) Banking Act, a bipartisan bill that addresses banking issues in the cannabis industry, will go before the House Financial Services Committee on Tuesday, March 26th. The legislation, led by Reps. Ed Perlmutter (D-CO), Denny Heck (D-WA), Steve Stivers (R-O) and Warren Davidson (R-OH), would protect banks from being prosecuted by the federal government for servicing the cannabis industry. The Financial Crimes Enforcement Network issued guidance to financial institutions in 2014 relating to servicing the state regulated cannabis industry in compliance with federal anti-money laundering laws. Despite that guidance, federally regulated institutions have in general refused to provide any services to cannabis industry participants because marijuana is classified as a Schedule I drug under the Controlled Substances Act.
Under the SAFE Banking Act, proceeds from transactions conducted by cannabis or cannabis-related companies would not be considered as proceeds from an unlawful activity. Further, the legislation clarifies that protections are extended to financial institutions that work with ancillary cannabis businesses, such as real estate owners, accountants, and other service providers that do not work directly with the cannabis plant. These ancillary businesses would be protected money laundering and other financial crimes” charges. Lastly, the bill would require the Federal Financial Institution Examination Council to develop further guidance for banks and credit unions to lawfully serve cannabis businesses.
Given that 47 U.S. states have legalized marijuana in some form, the proposed bill would help to alleviate the growing disconnect between increasing State legalization of the cannabis industry, and the continued illegality of cannabis under federal law. The SAFE Banking Act currently has 138 cosponsors -- totaling almost a third of the House.
As for the hearing on March 26th, Maxine Waters (D-CA), chair of the House Financial Services Committee, announced that the committee will mark up the proposed legislation. This means the committee will debate, amend, and vote on whether to send the bill to the full House. The markup is scheduled to take place at 2 p.m. E.T.; a live broadcast can be seen here.
For more information on the SAFE Banking Act and other cannabis or regulatory 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.