April 29, 2022

AGs Urge Creation of Safe Harbor for Financial Institutions Serving Cannabis Businesses

Lori Kalani, Bernard Nash

Cozen O'Connor

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Cozen O'Connor

Writing as co-chairs of the National Association of Attorneys General Federalism Committee, Ohio AG Dave Yost and Colorado AG Philip Weiser wrote a letter to Senate Majority Leader Chuck Schumer and Senate Minority Leader Mitch McConnell urging them to bring the Secure and Fair Enforcement (SAFE) Banking Act to the Senate floor for a vote as soon as possible. If passed, the SAFE Banking Act would prevent financial institutions from being penalized by federal regulators for servicing state-legal cannabis businesses.
In the letter, the AGs discussed how the federal government’s classification of marijuana as an illegal substance exposes banks providing services and products to state-licensed cannabis businesses to criminal and civil liability under both the federal Controlled Substances Act and federal banking statutes. This risk has curtailed the ability of financial institutions to serve the cannabis industry.
The letter also pointed out that nationwide licensed cannabis sales are expected to exceed $43 billion by 2025. Because these funds are handled outside the regulated banking system, cannabis businesses must operate on a cash basis. This makes tracking revenues for taxation and regulatory compliance difficult, prevents proper tracking of funds and makes these businesses targets for criminal activity. By allowing banks to service state-legal cannabis businesses without fear of repercussions, state law enforcement could better monitor these businesses and their transactions to curb illegal conduct.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.