The SAFE Banking Act Passes in the House, but its Fate in the Senate Remains Unclear

Foley Hoag LLP - Cannabis and the Law

Foley Hoag LLP - Cannabis and the Law

On April 19, the U.S. House of Representatives passed the Secure and Fair Enforcement (SAFE) Banking Act in a 321-101 vote. The bill has benefitted from bipartisan support after being co-sponsored by a large group of both Democrats and Republicans in the House. Only one representative, Rep. Patrick McHenry of North Carolina, spoke in opposition to the bill during the House debate. The SAFE Banking Act will next move to the Senate.

If the Senate votes to pass the bill, the SAFE Banking Act would allow financial institutions to provide services to cannabis clients without fear of federal penalties by establishing a safe harbor for depository institutions doing business with cannabis clients.

However, the Senate’s stance on the bill is not yet clear. The SAFE Banking Act was previously introduced in 2019, but died in the Senate after passing in the House. The Senate did not vote on the SAFE Banking Act that year because former Senate Majority Leader Mitch McConnell chose not to introduce the bill to the Senate floor.

Current Senate Majority Leader Chuck Schumer is much friendlier to cannabis legalization, but has still shown reservations about the SAFE Banking Act. Schumer is an advocate of federal legalization and has indicated that he, Senator Ron Wyden, and Senator Cory Booker intend to introduce a federal legalization bill to the Senate floor sometime soon. He has voiced concerns that, in light of the federal legalization bill, the SAFE Banking Act may not be broad enough. In an interview with Marijuana Moment, Schumer stated that he hopes for a more comprehensive bill that includes “things that deal with banking and finance, although we certainly think that we ought to make sure that the communities that have been most affected by these draconian laws get the benefits here, and we want to make sure that there are reinvestment initiatives and it doesn’t all go to the big shots, that smaller businesses and minority businesses get a chance to be involved once marijuana is legalized.” Schumer stated that he may suggest that the SAFE Banking Act be combined with a federal legalization bill to get it to the floor.

Senate Banking Committee Chairman Sherrod Brown has also expressed concerns about the bill. Echoing Schumer, Brown stated that the Banking Committee has “been too much about Wall Street and not enough about housing, not enough about rural and urban affairs and people’s everyday economic lives.” Sherrod believes that the marijuana banking reform needs to come with sentencing reform, as well, to support the needs of those most affected by the criminalization of marijuana.

Schumer has not indicated when exactly the federal legalization bill will be released, nor has he shared the details of the bill or how banking will be impacted. With the SAFE Banking Act passing in the House, there may be some pressure to see movement on the federal legalization bill sooner rather than later.

You can view our last post on the SAFE Banking Act here.

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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