WASHINGTON–The House has passed the Secure and Fair Enforcement (SAFE) Banking Act, which provides a number of protections for financial institutions serving cannabis businesses in states where marijuana has been legalized in some form.
In response, CUNA praised the passage of the bill, saying it will help keep communities “safe.” NAFCU has also pushed for passage of the bill, which now heads to the Senate where its prospects of passing in the current Congress are slim.
The bill passed easily, 321 to 103, with 229 Democrats and 91 Republicans voting in support. Just one Democrat opposed the bill, Rep. Terri Sewell, of Alabama.
‘Voters Have Spoken’
“American voters have spoken and continue to speak, and the fact is you can't put the genie back in the bottle,” said Rep. Ed Perlmutter (D-CO), the bill’s lead sponsor, following the vote. “Prohibition is over. Our bill is focused solely on taking cash off the streets and making our community safer.”
Cannabis remains illegal under federal law even though 33 states have legalized medical or recreational use. Another 14 allow residents to use non-intoxicating cannabidiol (CBD) products.
Afraid of running afoul of federal law, credit unions and banks have largely avoided serving cannabis-related businesses, although a number of credit unions have launched sophisticated programs aimed at serving the market.
The SAFE Act, which has long had backing from credit unions, seeks to limit risks for financial institutions serving cannabis businesses by prohibiting federal regulators from penalizing those FIs that serve cannabis businesses that comply with state laws.
The legislation also provides protections for other firms that serve legal cannabis businesses.
CUNA Response
“Today’s landmark vote will help credit unions keep communities across the country safe and serve those state-legalized businesses previously left in the lurch,” said CUNA President Jim Nussle. “We offer our congratulations and appreciation to Representatives Perlmutter, Heck, Stivers, Davidson and others who have worked on this critical issue for so long. Our work is not done: We are ready to work in the Senate to advance legislation on this issue to the President’s desk.”
Earlier this year, on behalf of CUNA, Rachel Pross, chief risk officer with Maps Credit Union in Salem, Ore., testified before the House Financial Services Committee and Senate Banking Committee and that with no access to the financial system, cannabis businesses are forced to deal in cash only, creating a public safety hazard in the communities served by these businesses.
ICBA Response
The banking industry is also applauding passage of the bill.
“ICBA and the nation’s community banks applaud the House of Representatives for advancing legislation to enhance public safety and address regulatory compliance concerns by opening the traditional banking system to cannabis-related businesses,” said ICBA President Rebeca Romero Rainey. “The cannabis-banking safe harbor is a high priority for ICBA—the first national banking trade group to support this legislation and to testify before a congressional committee on its behalf.
“The conflict between state and federal law on cannabis-related businesses has created significant legal and compliance concerns for financial institutions that could provide needed banking services to these companies. This uncertainty has forced cannabis-related businesses to operate mostly in cash, which presents a significant public safety risk. The bipartisan SAFE Banking Act would help eliminate this risk in states where cannabis is already legal.
NASCUS Response
NASCUS noted that earlier this year, its leadership, its Regulator Board and Credit Union Advisory Council approved a cannabis banking policy that supports federal safe harbor legislation, such as the SAFE Act.
“We appreciate the House heeding our call and passing the SAFE Act,” said NASCUS President & CEO Lucy Ito. “It is imperative that credit unions and other financial institutions in the states that have legalized some form of cannabis use, be able to provide financial services to the state-authorized cannabis businesses in their communities. Without access to financial institutions, cannabis businesses would have to operate in cash, which creates public safety issues and fraud risks. While today’s House vote is monumental, the Senate must follow suit to ensure credit unions can serve their members and meet the needs of their communities by providing secure, financial services.”
Next: the Senate
As CUToday.info reported earlier here, the bill’s prospects in the Senate are hazy.
“Although anything can happen, I don’t think it will pass the Senate this year,” said Carrie Hunt, EVP and general counsel with NAFCU.