Senate to work over cannabis banking bill, but passage in House unlikely

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The U.S. Senate Banking Committee is expected to sign off a long-awaited cannabis banking bill next week that would help the hemp industry, but don’t expect any significant legislation to pass this year.

While the Democrat-led Senate is likely to approve S. 1323, the Senate version of the Secure and Fair Enforcement (SAFE) Banking Act, many observers say the Republican-run House of Representatives will likely set the measure aside until after the 2024 presidential election.


Makers of legal hemp products have been eligible to work within the existing banking framework since the 2018 Farm Bill legalized the crop federally. However, most banks turn away hemp businesses due to their confusion over the difference between marijuana and hemp. While the bill’s main intention is to set a clear framework for banking for marijuana operators, the SAFE Act would eliminate any such confusion.

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 them. 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.

Lawmaking gridlock

Such a measure, which both Republican and Democrat lawmakers generally support, has been around since 2017. Representatives in the House passed their version of the SAFE Act seven times but the Senate never voted; one version stalled in the Senate process last year. Now the situation could be reversed.

Jaret Seiberg, an analyst at TD Cowen Washington Research Group, told MarketWatch earlier this month that the most likely path forward for the legislation will be as a provision in a year-end package in 2024 that’s enacted during a lame-duck session, suggesting even that scenario could be “an uphill fight.”


Some experts implied to American Banker that the SAFE act could be superfluous because banks have adapted to sufficiently serve the industry since state-level marijuana legalization has taken root. Robert Baron, a cannabis banking and risk management expert, said the solutions the SAFE Act offered to marijuana banking when it was introduced six years ago have since grown obsolete, and enactment of the measure may actually increase compliance burdens for banks with cannabis clients. 

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