SAFE Banking Act of 2023

Secure and Fair Enforcement Banking Act of 2023 or the SAFE Banking Act of 2023

This bill provides protections for federally regulated financial institutions that serve state-sanctioned marijuana businesses. Currently, many financial institutions do not provide services to state-sanctioned marijuana businesses due to the federal classification of marijuana as a Schedule I controlled substance.

Under the bill, a federal banking regulator may not penalize a depository institution for providing banking services to a state-sanctioned marijuana business. For example, regulators may not terminate or limit the deposit or share insurance of a depository institution solely because the institution provides financial services to a state-sanctioned marijuana business.

The bill also prohibits a federal banking regulator from requesting or ordering a depository institution to terminate a customer account unless (1) the regulator has determined that the depository institution is engaging in an unsafe or unsound practice or is violating a law or regulation, and (2) that determination is not based primarily on reputation risk.

Additionally, proceeds from a transaction involving activities of a state-sanctioned marijuana business are no longer considered proceeds from unlawful activity. (Financial institutions that handle proceeds from unlawful activity are subject to anti-money laundering laws. Violators of these laws are subject to fines and imprisonment.)

Furthermore, 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 SAFE Banking Act of 2023, also known as Bill 118 hr 2891, is a piece of legislation currently being considered by the US Congress. The main goal of this bill is to provide a safe harbor for financial institutions that choose to work with cannabis-related businesses that are operating legally under state law.

Currently, many banks and credit unions are hesitant to provide financial services to cannabis businesses due to the conflicting federal and state laws regarding marijuana. This has forced many cannabis businesses to operate on a cash-only basis, which poses significant safety and security risks.

The SAFE Banking Act aims to address this issue by prohibiting federal banking regulators from penalizing financial institutions for providing services to cannabis businesses that are compliant with state laws. This would allow cannabis businesses to access banking services like any other legal business, improving transparency, accountability, and safety in the industry. The bill has received bipartisan support in Congress, with proponents arguing that it will help to bring the cannabis industry out of the shadows and into the mainstream economy. Opponents, however, have raised concerns about the potential risks of increased access to banking services for cannabis businesses. Overall, the SAFE Banking Act of 2023 seeks to create a more secure and transparent financial environment for cannabis businesses while respecting the rights of states to regulate marijuana within their borders. It remains to be seen whether this bill will ultimately be passed into law, but it represents an important step towards addressing the challenges faced by the cannabis industry in the United States.