The cannabis industry may soon offer retirement plans and other financial services thanks to proposed legislation approved by the Senate Banking, Housing, and Urban Affairs Committee.
The Committee approved the Secure and Fair Enforcement Regulation (SAFER) Banking Act on September 27 in a 14-9 vote, now guaranteeing its way onto the Senate for consideration. The bill would expand banking, insurance, and financial services access, including employer-sponsored retirement plans, to state-sanctioned marijuana businesses.
It would also provide protections to financial institutions who choose to work with cannabis companies. Clashing Federal and State laws have previously scared some financial institutions from conducting business or associating with the cannabis industry, as marijuana is still classified as a federal substance.
As a result, these businesses and their employees are blocked from accessing deposit accounts, securing lines of credit and other financial services—including commercial and residential mortgages, and accepting credit and debit cards while operating a retail business.
“The SAFER Banking Act would resolve these issues by providing a safe harbor for banks, credit unions, other financial institutions, and payment processors that provide services to these State-sanctioned businesses, allowing them to operate in the financial mainstream,”
SAFER Banking Act
The SAFER Act would quell institutional fears, as long as the business it works with is operating legally in the state, Senate Democrats wrote in a summary of the bill.
Under the bill, financial banking regulators could not penalize a depository institution for providing banking services to a state-sanctioned marijuana business, and cannot request nor require a depository institution to terminate a deposit account unless (1) there is a valid reason, such as the regulator has cause to believe that the depository institution is engaging in an unsafe or unsound practice; and (2) reputational risk is not the dispositive factor.
Additionally, proceeds from a transaction involving activities of a state-sanctioned marijuana business would no longer be considered proceeds from unlawful activity.
Lastly, a financial institution, insurer, or federal agency may not be held liable or subject to asset forfeiture under federal law for providing a loan, mortgage, or other financial service to a state-sanctioned marijuana business.
“The SAFER Banking Act would resolve these issues by providing a safe harbor for banks, credit unions, other financial institutions, and payment processors that provide services to these State-sanctioned businesses, allowing them to operate in the financial mainstream,” the bill read.
The SAFER Banking Act was introduced by Sen. Jeff Merkley (D-Ore.) and saw support from 12 cosponsors including Sens. Steve Daine (R-Mont.), Chuck Schumer (D-N.Y.), Kyrsten Sinema (I-Ariz.), Cynthia Lummis (R-Wyo.), Kevin Cramer (R-N.D.), Cory Booker (D-N.J.), Dan Sullivan (R-Alaska) and Robert Menendez (D-N.J.).
“Cannabis policies look different in different states, but legal cannabis small businesses and their employees are running into many of the same issues. One of these issues is access to financial services,” said Sen. Sherrod Brown (D-OH), chairman of the Committee.
“Regardless of how you feel about states’ efforts to legalize marijuana, this bipartisan bill is necessary – it will make it safer for legal cannabis businesses and service providers to operate in their communities and protect their workers.”
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