Can The Reintroduced SAFE Banking Act Finally Pass Congress?

A group of bipartisan lawmakers reintroduced the Secure And Fair Enforcement Banking Act, also known as the SAFE Banking Act, in the House of Representatives and Senate last week. The legislation is intended to allow the cannabis industry access to federally regulated and insured banking services.

The bill has been reintroduced several times since its unveiling nearly a decade ago. And it’s passed an approval vote in the House of Representatives seven times. But unfortunately, the legislation has never made it through the Senate. Could this latest bid finally push the SAFE Banking Act into law? Hopes are high, if not confident.

The SAFE Banking Act, The Cannabis Industry + Conflicts Between State + Federal Law

So, what is the SAFE Banking Act all about, and why does it matter to the cannabis industry? We get this question a lot at Cannawayz.com. And it’s not surprising considering the amount of press attention this ten-year-old but yet-to-pass legislation receives. Not to mention that if the act passed, it would revolutionize the current cannabis industry.

What’s at issue here? It boils down to discrepancies between state and federal cannabis law that put legal cannabis operators at a severe financial disadvantage.

Expressly, retail banks, credit unions, credit card processors, and any financial institution federally insured under FDIC protection are prohibited from making loans, handling funds, or processing payments for activities the federal government deems “illegal.”

And given that cannabis is a Schedule I Controlled Substance and thereby classified as an “illegal drug” (alongside heroin, LSD, and a host of other “street drugs”) by the federal government, cannabis operators are locked out of banking services.

All of which means cannabis businesses cannot get loans from typical lenders. Nor can they deposit funds in traditional, federally insured banks. And they’re unable to accept credit card or bank debit card payments.

How Regressive Banking Regulations Hurt The Cannabis Industry

Current banking regulations put cannabis enterprises at a massive disadvantage because their business must be conducted almost entirely in cash.

Operating on a cash basis creates several significant problems. To begin with, handling cash, especially on a large scale, is an enormous security risk, significantly increasing the potential for theft or robbery.

When you can’t deposit money in the bank and cut checks, it’s tough to pay employees, rent, assorted bills, and even taxes (which you’d think the government would be dying to get ahold of). And regulation is far more challenging as tracking and verifying cash transactions is complex.

Plus, growing a business is all the more difficult if you can’t obtain loans or secure lines of credit.

How The SAFE Banking Act Can Help Cannabis

Under current regulations, banks, credit unions, and credit card companies have no latitude in serving the cannabis industry. There are no loopholes, workarounds, or alternative means – It’s simply not allowed. And if these institutions were to do business with cannabis operators, those in charge would face federal criminal prosecution and the loss of FDIC insurance for serving cannabis businesses.

The SAFE Banking Act eliminates these threats. Any financial federally regulated institution would be authorized to provide legal cannabis businesses access to a full range of banking services. A game-changing shift that would yield another significant stride toward legitimizing the cannabis industry.

Will The SAFE Bank Act Pass This Time Around?

If the past decade's history is any indicator, the odds aren’t great. Even with bipartisan support, previous incarnations of the bill never made it to an actual Senate vote.

But the financial side of the cannabis industry is in desperate need of reform. Which most congressional members acknowledge. And with five primary sponsors, 38 additional cosponsors in the Senate, and eight additional cosponsors in the House of Representatives, perhaps the outcome will be different this time.