Washington, D.C. – September 29, 2023
In a significant development on Capitol Hill, a groundbreaking bill aimed at granting the marijuana industry access to essential banking services advanced in the Senate on Wednesday. The Secure and Fair Enforcement Regulation (SAFER) Banking Act, introduced just last week by a bipartisan group of senators, garnered crucial support in a key committee vote.
The SAFER Banking Act seeks to offer legal protections to financial institutions that opt to provide services to state-legal marijuana businesses. As momentum built behind the legislation, the Senate Banking Committee voted 14-9 in favor, moving the bill closer to consideration on the Senate floor.
Sen. Jeff Merkley, a Democrat representing Oregon and the lead sponsor of the SAFER Banking Act, hailed the committee's decision as a “historic moment” and a testament to “significant bipartisan cooperation.” The bill also enjoys support from Senators Steve Daines (R-Mont.), Kyrsten Sinema (I-Ariz.), Cynthia Lummis (R-Wyo.), and Majority Leader Chuck Schumer (D-N.Y.).
Despite the widespread legalization of marijuana in 39 states for either recreational or medical purposes, the industry has faced hurdles in scaling due to its Schedule I classification at the federal level, which designates it as a substance with no accepted medical use and high potential for abuse. This federal prohibition has discouraged banks from engaging with marijuana-related businesses, thereby restricting access to financing and a broader market.
Furthermore, the absence of financial services forces state-legal cannabis enterprises to operate exclusively in cash, a situation fraught with risks such as robbery, money laundering, and involvement in organized crime.
“The passage of SAFER Banking is a long-awaited first step towards the economic legitimacy of the cannabis industry. It is our hope that this movement will continue to push the needle forward toward evolving federal policy, such as eliminating 280E and opening capital markets to the cannabis industry. With that being said, today we celebrate a win in an ongoing fight, and we’re optimistic that the passing of this crucial legislation will contribute significant growth to the overall cannabis industry at a time when it is most needed.”
The founder and CEO of Green Check (GC), Kevin Hart, has also given his input. “This is the first time we’ve been optimistic about the passage of the SAFER Act. It’s encouraging that the bill is originating in the Senate, where its antecedents were unsuccessful.
While the proposed language in the legislation is far from perfect, it would represent real progress if it is adopted. I’m confident that, if approved, the bill will serve as a catalyst for more banks and credit unions to serve the legal cannabis industry. The language provides more solid guidance on the requirements for a wider range of financial services, including payments.
We know the markup is merely the next step but with each hint of action out of Congress, more financial institutions recognize that federal legislation will eventually be adopted and that they can serve the cannabis industry today,” he said.
This historic Senate vote marked the first time the chamber considered the legislation. The earlier version of the bill, known as the SAFE Banking Act, previously passed in the House seven times but encountered roadblocks in the Senate, both under Democratic and Republican control. If the SAFER Banking Act makes its way to the GOP-controlled House, it may face a more challenging path to passage.
The new bill incorporates more stringent requirements for federal regulators, including provisions preventing the termination of marijuana-related accounts without a “valid reason” and the denial of banking services based on “personal beliefs or political motivations.”
The advancement of the SAFER Banking Act signals a significant shift in the national conversation surrounding marijuana legalization and the associated financial challenges faced by the industry. Stakeholders eagerly await further developments as the bill progresses through the legislative process.