Marijuana companies could secure financial services and confusion over banking for hemp operators could be clarified after the reintroduction of the Secure and Fair Enforcement (SAFE) Banking Act in the U.S. Senate.
The measure, which is strongly supported by both Republican and Democrat lawmakers, has passed the House of Representatives seven times previously. But the Senate has never voted on the SAFE Act, which stalled in the lawmaking process last year. The legislation now goes before the Senate Banking Committee ahead of a first Senate vote.
Current rules discourage banks from providing financial services to marijuana businesses because their products are designated Schedule 1 drugs and are not legal at the federal level, although as many as 40 states allow the products. Banks are under threat of having their federal deposit insurance discontinued or limited, and could face criminal prosecution, liability and asset forfeiture by serving marijuana companies.
Confusion over hemp
Makers of legal hemp products have been eligible to work within the existing banking framework since the 2018 Farm Bill legalized the crop federally. But most banks turn away hemp businesses due to their confusion over the difference between marijuana and hemp.
The SAFE Act would remove those barriers.
“Let’s make 2023 the year that we get this bill signed into law so we can ensure that all legal cannabis businesses have access to the financial services they need to help keep their employees, their businesses, and their communities safe,” said Sen. Jeff Merkley, an Oregon Democrat who re-introduced the measure with Sen. Steve Daines, Republican of Montana. House sponsors were Representatives David Joyce, a Republican from Ohio, and Earl Blumenauer, an Oregon Democrat. The measure has 38 additional bi-partisan co-sponsors in the Senate and eight more in the House.
“It is past time that Congress addresses the irrational, unfair, and unsafe prohibition of basic banking services to state-legal cannabis businesses,” said Blumenauer, founder and co-chair of the Congressional Cannabis Caucus.
Majority Leader Chuck Schumer, a Democrat from New York, is supporting the SAFE Act, and said he would work to include criminal justice provisions when it reaches the Senate floor.
The legislation also provides safe harbor to Community Development Financial Institutions and Minority Depository Institutions that wish to invest in cannabis but face challenges in accessing capital and financial services.
Marijuana stocks rose Thursday on the news that U.S. banks could open up to the cannabis industries.
READ: Banking in Cannabis: The Other US Banking Crisis, by CannabisLaw.com