SAFE Banking Act Passes House, Extends Cannabis Safe Harbor Protections

McDermott Will & Emery

McDermott Will & Emery

First introduced in 2013, the SAFE Banking Act passed the House 321-103 Wednesday, September 25th, 2019. This bill provides safe harbor to banks and financial institutions doing business with state-legal cannabis businesses, and allows cannabis businesses to move away from conducting business exclusively in cash.


Wednesday night marked an exciting and promising development for cannabis advocates: the SAFE Banking Act passed the House of Representatives by a vote of 321-103.

The SAFE Banking Act, which was first introduced in 2013 and has been reintroduced in each Congress since, is industry advocates’ best opportunity to make meaningful policy change in the near term. The bill provides safe harbor to banks and financial institutions doing business with state-legal cannabis businesses, including medical and adult-use enterprises. Since marijuana is currently a Schedule I drug under the Controlled Substance Act, federally chartered banks do not currently work with the industry in order to avoid enforcement action by federal banking regulators. Some state-chartered banks and credit unions will work with state-legal businesses, but onerous reporting requirements make their services very expensive. Checking accounts commonly come with monthly fees of $5,000 or more. More to the point, Federal Reserve banks refuse to accept state-legal cannabis business deposits. The SAFE Banking Act extends safe harbor protections to the Fed. The bill also provides protections for ancillary businesses, including insurers, real estate firms, accountants and other professional services that may otherwise run afoul of federal anti-money laundering laws.

The current bill, introduced by Rep. Ed Perlmutter (D-Colo.), received its first true consideration earlier this year in a House Financial Services Committee hearing. A committee markup amended the bill and sent it to the floor for a vote of the full House. It passed “under suspension of the rules”—a House procedure typically reserved for non-controversial bills because it requires two-thirds of the body to pass instead of a simple majority. In July, the Senate Banking Committee convened a hearing to consider the merits of that body’s companion bill. It is unclear at this point if the Republican-controlled Senate will take up the House-passed bill, consider its own bill or do nothing on the topic.

The bill does not decriminalize or reschedule marijuana, nor does it include more ambitious restorative justice provisions found in many other pieces of pending federal cannabis legislation.

Cannabis businesses large and small are looking forward to moving away from conducting business exclusively in cash. The SAFE Banking Act would grant the cannabis business community access to many of the financial services most companies take for granted, like electronic payment processing, employer-sponsored 401(k) accounts and small business loans. Advocates, including state attorneys general and treasurers, argue that banking the industry will help identify the criminal actors, reduce crime associated with cash on the street and improve revenue collection.

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.

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