US House Passes Cannabis Banking Reform Legislation

US House Passes Cannabis Banking Reform Legislation

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

The U.S. House of Representatives passed the Secure and Fair Enforcement (SAFE) Banking Act on April 19, 2021, with broad bipartisan support. Democrats voted 215-0 in favor of the bill, while Republicans voted 106-101 in favor.

While this is the second time that the House has passed the SAFE Banking Act, there is greater optimism now. Last time around, the cannabis banking reform legislation stalled in the Republican-controlled Senate.

“After years of bringing up this issue, I’m thrilled to see overwhelming support for this bipartisan, commonsense legislation in the U.S. House once again. I feel optimistic about the path forward for the SAFE Banking Act and, more broadly, reforms to our federal cannabis laws,” said co-sponsor Rep. Ed Perlmutter. “Congress needs to act in order to catch up with the will of the majority of voters across this county and to ensure we are reducing the public safety risk for our constituents and communities

Importance of Banking Reform

Because marijuana is still 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. As a result, many banks are hesitant to provide services to the cannabis industry, forcing businesses to deal exclusively in cash. This not only makes cannabis-related businesses attractive crime targets, but also makes it more challenging for regulators to oversee their operations. 

Key Reforms Under the SAFE Banking Act

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 legislation also establishes a safe harbor from criminal prosecution and liability and asset forfeiture for banks and their officers and employees who provide financial services to legitimate, state-sanctioned cannabis businesses, while maintaining banks’ right to choose not to offer those services. The SAFE Banking Act also provides protections for hemp and hemp-derived CBD-related businesses.

What’s Next?

On March 23, Senators Jeff Merkley and Steve Daines introduced the SAFE Banking Act in the Senate. The Senate version also has bipartisan support, and nearly a third of the Senate has signed on to co-sponsor the bill.

The SAFE Banking Act is also attracting widespread support outside of Congress. Supporters include groups like the American Bankers Association and the Credit Union National Association. Most recently, the bill received the endorsement of the National Association of State Treasurers and Governors from 21 states and territories.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Dan McKillop, 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.


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AboutDaniel T. McKillop

Dan McKillop has more than fifteen years of experience representing corporate and individual clients in complex environmental litigation and regulatory proceedings before state and federal courts and environmental agencies arising under numerous state and federal statutes.Full Biography

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US House Passes Cannabis Banking Reform Legislation

US House Passes Cannabis Banking Reform Legislation
Author: Daniel T. McKillop

The U.S. House of Representatives passed the Secure and Fair Enforcement (SAFE) Banking Act on April 19, 2021, with broad bipartisan support. Democrats voted 215-0 in favor of the bill, while Republicans voted 106-101 in favor.

While this is the second time that the House has passed the SAFE Banking Act, there is greater optimism now. Last time around, the cannabis banking reform legislation stalled in the Republican-controlled Senate.

“After years of bringing up this issue, I’m thrilled to see overwhelming support for this bipartisan, commonsense legislation in the U.S. House once again. I feel optimistic about the path forward for the SAFE Banking Act and, more broadly, reforms to our federal cannabis laws,” said co-sponsor Rep. Ed Perlmutter. “Congress needs to act in order to catch up with the will of the majority of voters across this county and to ensure we are reducing the public safety risk for our constituents and communities

Importance of Banking Reform

Because marijuana is still 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. As a result, many banks are hesitant to provide services to the cannabis industry, forcing businesses to deal exclusively in cash. This not only makes cannabis-related businesses attractive crime targets, but also makes it more challenging for regulators to oversee their operations. 

Key Reforms Under the SAFE Banking Act

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 legislation also establishes a safe harbor from criminal prosecution and liability and asset forfeiture for banks and their officers and employees who provide financial services to legitimate, state-sanctioned cannabis businesses, while maintaining banks’ right to choose not to offer those services. The SAFE Banking Act also provides protections for hemp and hemp-derived CBD-related businesses.

What’s Next?

On March 23, Senators Jeff Merkley and Steve Daines introduced the SAFE Banking Act in the Senate. The Senate version also has bipartisan support, and nearly a third of the Senate has signed on to co-sponsor the bill.

The SAFE Banking Act is also attracting widespread support outside of Congress. Supporters include groups like the American Bankers Association and the Credit Union National Association. Most recently, the bill received the endorsement of the National Association of State Treasurers and Governors from 21 states and territories.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Dan McKillop, 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.