The U.S. House of Representatives has passed a bill aimed at enabling financial institutions to do business with cannabis companies in legal marijuana states.
The SAFE Banking Act, which passed the House on a 321-101 vote on Monday, creates a safe harbor from being prosecuted by a federal banking regulator for providing financial services to a cannabis-related business.
The threat of regulatory action has deterred banks from allowing marijuana businesses to open checking accounts, payroll accounts, and lines of credit. That has left the industry to rely on a handful of small financial institutions or do business in cash.
Thirty-six states have legalized medical cannabis while 17 states now allow adult use, according to the National Conference of State Legislatures.
“This legislation is an important step toward resolving the conflict between state and federal law so banks can serve legal cannabis and cannabis-related businesses,” Rob Nichols, CEO of the American Banking Association, said.
“The bill will help banks meet the needs of their communities while reducing cash-motivated crimes, increasing the efficiency of tax collections, and improving the financial transparency of the cannabis industry,” Nichols added.
The SAFE Banking Act previously passed the House in September 2019 but stalled in the Senate. According to Marijuana Business Daily, “Prospects for Senate passage are considered brighter than in previous years after Democrats won slim control of the upper chamber in the recent election.”
Green Market Report said advocates are “hopeful that Senate Banking Committee Chair Sherrod Brown [Ohio Democrats] will take up the bill in the near future so that it can begin to move through the upper chamber as soon as possible and become law before the end of the year.”
The law, among other things, bars a federal banking regulator from terminating or limiting the deposit insurance or share insurance of a financial institution solely because the institution provides financial services to a cannabis-related business.
“It is time for the Senate to start considering the [bill] without delay,” said Aaron Smith, co-founder and chief executive officer of the National Cannabis Industry Association.