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Rep. Stevens Applauds House Passage of the SAFE Banking Act

September 27, 2019

WASHINGTON, D.C. – This week, the U.S House of Representatives passed landmark bipartisan legislation to reform federal cannabis laws and reduce the public safety risk in communities across the country. H.R. 1595, the Secure and Fair Enforcement Act of 2019 (SAFE Banking Act) passed by a vote of 321 to 103. The bill allows marijuana-related businesses in states with some form of legalized marijuana and strict regulatory structures to access the banking system. Today, 47 states – including Michigan – have legalized some form of recreational or medical marijuana, including CBD oil.

Congresswoman Haley Stevens (MI-11), a cosponsor of the SAFE Banking Act, released the following statement in support of the bill’s passage:

“Nearly 98% of Americans live in states where some form of marijuana is legal,” said Congresswoman Stevens. “It’s time for our federal laws to catch up to this reality, and allow legitimate, legal cannabis-related businesses to access banking services. The SAFE Banking Act is a reasonable, bipartisan bill that will address the public safety issue created by forcing a multi-billion dollar industry to deal in all cash. This bill would be a good first step forward for states like Michigan that have voted to legalize cannabis for medical or recreational use, and need to adjust their criminal justice and commercial laws.”  

The SAFE Banking Act prompted the first-ever congressional hearing on the issue of cannabis banking in February. On March 27, 2019, the Financial Services Committee approved the bill by a vote of 45-15. Following the markup, several improvements were made to the bill, including: 1) strengthening the safe harbor for insurance coverage provided to cannabis-related businesses; 2) prohibiting bank regulators from directing a bank to close an account for reputational reasons; and 3) extending the safe harbor to legitimate hemp-related businesses and requires guidance from the Federal banking regulators for financial institutions that choose to serve hemp businesses. In addition, the SAFE Banking Act requires a GAO study and annual regulator reports to Congress to monitor that there is equal access to credit and to reduce barriers to marketplace entry for potential and existing minority-owned and women-owned cannabis-related legitimate businesses.

Under current law, financial institutions providing banking services to legitimate and licensed cannabis businesses under state laws are subject to criminal prosecution under several federal statutes such as "aiding and abetting" a federal crime and money laundering. Therefore, businesses which legally grow, market or sell cannabis in states that have legalized its sale are generally locked out of the banking system, making it difficult for them to maintain a checking account; access credit; accept credit and debit cards; meet payroll; or pay tax revenue. This has created a significant public safety risk, as these businesses are forced to operate as cash-only businesses in an industry with billions of dollars in transactions. These high-volume cash businesses are being targeted by violent criminals and putting our communities at risk.

In response, the SAFE Banking Act seeks to harmonize federal and state law by prohibiting federal regulators from taking punitive measures against depository institutions that provide banking services to legitimate cannabis-related businesses and ancillary businesses (e.g. electricians, plumbers, landlords, etc.) that serve them. The bill establishes a safe harbor for any depository institution that chooses to provide banking services to a cannabis-related legitimate business which holds and maintains a license from a state or local government to engage in manufacturing, growing, or producing, as well as any business who handles, sells, transports, displays or distributes cannabis or cannabis products. The SAFE Banking Act is seen as the first of many cannabis reform measures Congress needs to address.

In April, the Senate companion bill (S. 1200) was introduced by Sens. Cory Gardner (R-CO) and Jeff Merkley (D-OR). The Senate Banking Committee held a hearing on the issue in July, and Banking Committee Chairman Mike Crapo (R-ID) recently announced plans to take up cannabis banking legislation this fall.

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