Politics
Major Banking Group Pushes Congress To Pass Bill Easing Marijuana Businesses’ Access To Financial Services
A major banking organization is calling on Congress to pass legislation to ease marijuana businesses’ access to financial services.
The Secure and Fair Enforcement (SAFE) Banking Act would “provide important legal and regulatory clarity” and “address a significant challenge facing American businesses, our communities, and the banks that serve them,” the American Bankers Association (ABA) wrote in a letter to House of Representatives and Senate leaders.
Bipartisan lawmakers in both chambers of Congress refiled the cannabis banking legislation last month—the latest development in a long-term push for the reform, which has been approved by the House several times and advanced through a Senate committee, but has yet to be enacted into law.
“Although nearly every U.S. state has legalized marijuana in some form, the uncertain legal landscape governing the proceeds of these state-licensed businesses means these businesses frequently operate on a cash basis, outside the regulated banking system,” ABA’s new letter says. “These state-legal proceeds also flow to non-cannabis businesses and service providers, including accountants, skilled trades, landlords, and law firms.
“The SAFE Banking Act would remove barriers to banking these funds, materially reducing the amount of cash moving through state-licensed cannabis businesses and service providers,” the group wrote. “That, in turn, would reduce the risk that these businesses are targeted by bad actors, thereby improving public safety in the communities where they operate.”
Developments surrounding the legal definition of hemp and the federal rescheduling of medical marijuana “underscore the need for Congress to act” on the issue, ABA said.
“As a result, the volume of marijuana-related products and state-licensed proceeds is likely to increase substantially, exacerbating potential public safety and illicit finance risks,” the letter says. “SAFE Banking would provide needed certainty by allowing these funds to enter—or remain in—the regulated banking system.”
“Passing this legislation would reduce illicit finance risk and increase financial transparency for cannabis- and hemp-derived proceeds. Highly regulated banks and other financial institutions must adhere to stringent anti-money laundering and counter-terrorist financing laws and rules, conduct due diligence regarding their customers, screen transactions for suspicious activity, and keep records. Bringing these state-licensed businesses and their proceeds into the formal financial system would provide a meaningful level of transparency and accountability by enabling financial institutions to better identify and report illicit finance risk.”
The letter, which is addressed to House Speaker Mike Johnson (R-LA), Senate Majority Leader John Thune (R-SD), Senate Minority Leader Chuck Schumer (D-NY) and House Minority Leader Hakeem Jeffries (D-NY), along with the chairs and ranking members of the Senate Banking Committee and House Financial Services Committee, urges that the SAFE Banking Act receive “prompt consideration” by the panels and “timely passage by Congress.”
The House passed versions of the SAFE Banking Act seven times, and the Senate Banking Committee approved a cannabis banking measure in 2023 but it was not subsequently taken up on the floor and died at the end of the 118th Congress.
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Sen. Tim Scott (R-SC), who currently chairs the banking panel, said recently that the fact that marijuana remains illegal at the federal level while more states legalize it has created a “quandary” for cannabis businesses and banks that wish to serve them.
Even though Scott has opposed the cannabis banking reform in the past, he said that the bill would “allow for the banking question to be solved by making it legal to bank it,” Scott said. “What you don’t want is to have a situation where you have these cash rooms where you have hundreds of thousands of dollars cash sitting in a location. Everyone knows you can’t bank it and therefore the criminal activity is much higher in these places.”
