Scarinci Hollenbeck, LLC, LLCScarinci Hollenbeck, LLC, LLC

Firm Insights

U.S. House of Representatives (again) Approves Cannabis Banking Reform Bill

Author: Daniel T. McKillop

Date: October 11, 2021

Key Contacts

Back
U.S. House (Again) Approves Cannabis Banking Reform Bill

The U.S. House of Representatives recently approved the Secure and Fair Enforcement (SAFE) Banking Act...

The U.S. House of Representatives recently approved the Secure and Fair Enforcement (SAFE) Banking Act. This is the fifth time the House has approved the cannabis banking reform bill since it was first introduced in 2019. This time around, the SAFE Banking Act passed as part of the National Defense Authorization Act.

Key Provisions of SAFE Banking Act

As discussed in greater detail in prior articles, the SAFE Banking Act seeks to improve access to financial services for legal cannabis businesses. Because marijuana remains illegal under the Controlled Substances Act (CSA), financial institutions providing banking services to legitimate and licensed cannabis businesses under state laws can face criminal prosecution under several federal statutes, such as “aiding and abetting” a federal crime and money laundering. In light of the liability risks, many banks are hesitant to provide services to the cannabis industry. As a result, cannabis businesses must deal exclusively in cash, which can make them targets for robberies and other types of crime.

The SAFE Banking Act seeks to increase access to financial institutions for legal cannabis businesses. Specifically, the bill would prevent federal banking regulators from:

  • Prohibiting, penalizing, or discouraging a bank from providing financial services to a legitimate state-sanctioned and regulated cannabis business, or an associated business (such as a vendor or landlord providing services to a legal cannabis business);
  • Prohibiting, penalizing or discouraging an insurer from providing insurance products to a legitimate, state-sanctioned and regulated cannabis business, or an associated business (such as a vendor or landlord providing services to a legal cannabis business);
  • Terminating or limiting a bank’s federal deposit insurance solely because the bank is providing services to a state-sanctioned cannabis business or associated business;
  • Recommending or incentivizing a bank to halt or downgrade providing any kind of banking services to these businesses; or
  • Taking any action on a loan to an owner or operator of a cannabis-related business.

The federal cannabis banking reform bill also creates a safe harbor from criminal prosecution and liability, as well as asset forfeiture, for banks who provide financial services to legitimate, state-sanctioned cannabis businesses. At the same time, it also preserves banks’ right to choose not to offer those services. The protections of the SAFE Banking Act also extend to hemp and hemp-derived CBD-related businesses.

What’s Next?

The Senate must now approve the SAFE Banking Act, which has proven to be a significant challenge in the past. Nonetheless, Sen. Jeff Merkley (D-OR), who is sponsoring the SAFE Banking Act in the Senate, expressed hope that his chamber would also pass the measure as part of the larger National Defense Authorization Act. “I’m hoping we can have similar success in the Senate,” he said. “This is a moment. The House has acted once again to push for this to be successfully passed in the counterpart in the Senate, or to get it done in conference with the House language.”

There are still hurdles for the Senate to approve the SAFE Banking, including members of Sen. Merkley’s own party that are pushing for comprehensive cannabis reform rather than more incremental cannabis banking legislation. With the Senate effectively split 50-50, sponsors will need to convince several Republicans or all of the Democrats to get on board.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact Dan McKillop, Teddy Eynon, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.

This article is a part of a series pertaining to cannabis legalization in New Jersey and the United States at large. Prior articles in this series are below:

Disclaimer: Possession, use, distribution, and/or sale of cannabis is a Federal crime and is subject to related Federal policy. Legal advice provided by Scarinci Hollenbeck, LLC is designed to counsel clients regarding the validity, scope, meaning, and application of existing and/or proposed cannabis law. Scarinci Hollenbeck, LLC will not provide assistance in circumventing Federal or state cannabis law or policy, and advice provided by our office should not be construed as such.

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Scarinci Hollenbeck, LLC, LLC

Related Posts

See all
Dissolving Your Business: Essential Legal Steps to Protect Your Interests post image

Dissolving Your Business: Essential Legal Steps to Protect Your Interests

If you’re considering closing your business, it’s crucial to understand that simply shutting your doors does not end your legal obligations. Unless you formally dissolve your business, it continues to exist in the eyes of the law—leaving you exposed to ongoing liabilities such as taxes, compliance violations, and potential lawsuits. Dissolving a business can seem […]

Author: Christopher D. Warren

Link to post with title - "Dissolving Your Business: Essential Legal Steps to Protect Your Interests"
The Role of Corporate Restructuring in Mergers & Acquisitions post image

The Role of Corporate Restructuring in Mergers & Acquisitions

Contrary to what many people think, corporate restructuring isn’t all doom and gloom. Revamping a company’s organizational structure, corporate hierarchy, or operations procedures can help keep your business competitive. This is particularly true during challenging times. Corporate restructuring plays a critical role in modern business strategy. It helps companies adapt quickly to market changes. Following […]

Author: Dan Brecher

Link to post with title - "The Role of Corporate Restructuring in Mergers & Acquisitions"
Crypto Enforcement: A Former Prosecutor’s Warning to Criminals and the Public post image

Crypto Enforcement: A Former Prosecutor’s Warning to Criminals and the Public

Cryptocurrency intimidates most people. The reason is straightforward. People fear what they do not understand. When confusion sets in, the common reaction is either to ignore the subject entirely or to mistrust it. For years, that is exactly how most of the public and even many in law enforcement treated cryptocurrency. However, such apprehension changed […]

Author: Bryce S. Robins

Link to post with title - "Crypto Enforcement: A Former Prosecutor’s Warning to Criminals and the Public"
Understanding Chattel Paper: A Key Component in Secured Transactions post image

Understanding Chattel Paper: A Key Component in Secured Transactions

Using chattel paper to obtain a security interest in personal property is a powerful tool. It can ensure lenders have a legal claim on collateral ranging from inventory to intellectual property. To reduce risk and protect your legal rights, businesses and lenders should understand the legal framework. This framework governs the creation, sale, and enforcement […]

Author: Dan Brecher

Link to post with title - "Understanding Chattel Paper: A Key Component in Secured Transactions"
Crypto Compliance: A Comprehensive Guide post image

Crypto Compliance: A Comprehensive Guide

For years, digital assets operated in a legal gray area, a frontier where innovation outpaced the reach of regulators and law enforcement. In this early “Wild West” phase of finance, crypto startups thrived under minimal oversight. That era, however, is coming to an end. The importance of crypto compliance has become paramount as cryptocurrency has […]

Author: Bryce S. Robins

Link to post with title - "Crypto Compliance: A Comprehensive Guide"
Supreme Court and Title VII: Implications for Reverse Discrimination post image

Supreme Court and Title VII: Implications for Reverse Discrimination

Earlier this month, the U.S. Supreme Court issued a decision in Ames v. Ohio Department of Youth Services vitiating the so-called “background circumstances” test required by half of federal circuit courts.1 The background circumstances test required majority group plaintiffs pleading discrimination under Title VII of the Civil Rights Act to meet a heightened pleading standard […]

Author: Matthew F. Mimnaugh

Link to post with title - "Supreme Court and Title VII: Implications for Reverse Discrimination"

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Sign up to get the latest from our attorneys!

Explore What Matters Most to You.

Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.

Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.

Let`s get in touch!

* The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!