Marijuana Banking Law Re-Introduced in Congress

Marijuana Banking Law Re-Introduced in Congress

In late March 2021 the Secure and Fair Enforcement Banking Act of 2021 (the “SAFE Banking Act”) was re-introduced in both houses of Congress, with broad bi-partisan support.


Currently, many legal cannabis-related businesses are essentially forced to hold a lot of cash because of impediments to those businesses in accessing banking services.


The goal of the SAFE Banking Act is to reduce the need of legalized cannabis-related businesses to hold cash, reducing the risk that such businesses become the targets of criminal activity such as robberies and money-laundering.


Important features of the Act include the following:


  • FDIC insurance can’t be denied simply because a bank provides financial services to a cannabis-related business, nor may a bank be penalized, prohibited, incentivized, or otherwise discouraged from providing financial services (including loans) to such a business. The Act also provides a safe harbor for new banks applying for a depository institution charter. 
  • Proceeds from a transaction involving activities of a cannabis-related business will not be considered proceeds from an unlawful activity.
  • Banks and insurers will not be liable under federal law, or subject to criminal, civil, or administrative forfeiture, for providing financial services to cannabis-related businesses, nor for investing any income derived therefrom.  The same protections apply to Federal reserve banks and Federal Home Loan Banks.
  • The Act does not mandate the provision of financial or insurance services to cannabis-related businesses, and so banks and insurance carriers are free to make their own decisions as to how involved they want to get in the sector, either by blanket policy or on a case-by-case basis.
  • The power of banking and insurance regulators is unaffected, except that the basis for any supervisory or enforcement action cannot simply be the provision of services to the cannabis sector. 
  • Federal banking regulators and the General Accountability Office are to submit annual reports to Congress on the availability of financial services for minority-owned and women-owned cannabis-related businesses, as well as recommendations for expanding access to such services to those groups.  
  • The criteria for filing of “suspicious activity reports” will be updated to be consistent with the Act, and two years after passage of the Act, the GAO is to report to Congress on the effectiveness of reports of suspicious transactions at finding individuals or organizations suspected or known to be engaged with transnational criminal organizations.
  • Federal banking agencies may not request or order a bank to terminate, restrict or discourage entry and maintenance of a specific customer account or group of customer accounts unless the agency has a valid reason (including but not limited to a threat to national security, terrorist financing or trade with a banned country) and the reason is not based on reputational risk. The financial institution must be notified in writing, and must give notice to the affected customer, unless the reason is a national security threat or would interfere with an on-going criminal investigation.
  • The provisions of the Act also apply to hemp-related businesses.



The timetable for consideration of the Act in both houses of Congress is not yet known, but as recreational marijuana becomes legal in more states supporters are optimistic about passage.


The foregoing is not to be considered legal advice.


For more information, please contact Catania, Mahon & Rider, PLLC.


Jonathan S. Berck