Despite best efforts by the U.S. House of Representatives in 2020, provisions related to the Safe Banking Act were not included in the $900 billion Coronavirus relief bill passed on Monday in the U.S. Congress. Supporters of the banking reform legislation included, among others, a group of bipartisan Attorneys General, state treasurers, and a majority of the members of the House. Unfortunately, those opposing any form of marijuana policy reform prevailed, and depending on the outcome of the Georgia Senate race in January, those same leaders may continue to impede reform efforts if the Republicans retain control of the U.S. Senate.
Nevertheless, the cannabis industry and financial institutions serving or considering serving the cannabis industry remain hopeful that the Safe Banking Act may still pass in 2021 when the President-elect Joe Biden is in office and if Pennsylvania Republican Pat Toomey becomes the new chair of the Senate banking committee. In an interview with Politico, Senator Toomey said that he is “sympathetic to the idea that people who are involved in the cannabis industry—in an entirely legal fashion, in the state in which they operate– ought to be able to have ordinary banking services.” Toomey will become the chair if the Republicans win the Georgia Senate runoffs.
Although the Safe Banking Act does nothing to legalize marijuana at the federal level, it would provide a true legal “safe harbor” for financial institutions and insurance companies providing financial services to cannabis-related businesses. This safe harbor removes the liability financial institution directors and officers have solely for providing services to state-legal cannabis businesses. Additionally, the Safe Banking Act would remove the threat of criminal, civil, or administrative forfeiture of any legal interest in collateral that a financial institution may have related to any loan provided by a financial institution to a cannabis-related business. Additionally, it contains a provision that will require the Federal Institutions Examination Council (FFIEC) to establish uniform examination guidance and procedures related to cannabis-related businesses. These provisions provide financial institutions with the assurances they need to expand services available to cannabis-related businesses, including lending, which would provide new sources of funding for cannabis businesses.
Some may see the exclusion of the Safe Banking Act from the most recent Coronavirus relief bill as another blow to marijuana reform efforts, but as the cannabis industry knows, meaningful policy reform often results from steady, incremental change. The 2020 elections showed that public support for marijuana legalization has never been higher, and those numbers will only grow as new states begin implementing legal marijuana programs. Leaders who are attuned to their constituencies will start to hear their messages. Even those votes deemed to be nothing more than symbolic such as the House’s vote on the MORE Act, show that more reform is on the horizon. In the meantime, while we wait for the Safe Banking Act to pass, those financial institutions serving the industry will continue to do so. Hopefully, these banks and credit unions will be rewarded with continued growth opportunities despite the challenging environment in which they operate.