In recent years, the intersection of the marijuana industry and federal banking regulations has been a source of risk and uncertainty. At the forefront of efforts to resolve this issue is the newest version of marijuana legislation, the Secure and Fair Enforcement Regulation (SAFER) Banking Act, which the Senate introduced on September 20, 2023. The House version of the bill, the Secure and Fair Enforcement (SAFE) Banking Act, has passed the House seven times, but this is the first time the topic has received bipartisan support across Congress.
On September 27, the Senate version moved to the Senate Banking Committee and passed to the full Senate with a vote of 14-9. According to CNBC, Jeff Merkley, an Oregon Democrat and lead sponsor of the bill, called its passage an “historic moment” and an “example of significant bipartisan cooperation.”
“Forcing legal businesses to operate in all-cash is dangerous for our communities; it’s an open invitation to robberies, muggings, money laundering, and organized crime—and the only people benefiting from the current system are criminals,” said Merkley.
The current legislation aims to provide a clear framework for financial institutions to serve marijuana-related businesses (MRBs) businesses without fearing federal retribution. This comes as an increasing number of states have legalized marijuana for medical or recreational use despite its continued federal classification as a Schedule I substance. As the SAFER Banking Act navigates its way through Congress, there is a sense of anticipation about the potential shifts in policy and their implications for both the marijuana and the financial services industry. Many in the industry believe this legislation will open the doors for marijuana-related businesses to obtain traditional banking services, such as checking accounts, loans, and credit card services.
Under current federal law, banks and credit unions face federal prosecution and penalties if they provide services to legal marijuana-related businesses. While 38 states, along with Washington D.C., Guam, Puerto Rico, the Northern Mariana Islands, and the U.S. Virgin Islands, have legalized marijuana in some form, many banks and credit unions are reluctant to take on the risks associated with providing services to marijuana-related businesses. According to a letter from the American Bankers Association (ABA) to the Senate Banking Committee, only about 11 percent of all U.S. banks and about 4 percent of all credit unions actively provide banking services to marijuana-related businesses. This lack of access to financial services hinders these businesses’ abilities to gain a market foothold and contributes to the flourishing of an unregulated, underground marketplace. Communities are flooded with cash associated with these businesses, with no place to deposit the funds.