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SAFER Banking Act
12/15/2023, 4:09 PM
Summary of Bill S 2860
Currently, many banks and credit unions are hesitant to provide services to cannabis-related 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 risks for both employees and customers.
The SAFER Banking Act aims to address this issue by prohibiting federal banking regulators from penalizing financial institutions for providing services to cannabis businesses that are operating in compliance with state laws. This would give banks and credit unions the confidence to work with these businesses without fear of facing legal repercussions. In addition to providing legal protection for financial institutions, the bill also includes provisions to improve transparency and access to banking services for minority-owned and women-owned cannabis businesses. This is seen as a way to promote diversity and equity within the cannabis industry. Overall, the SAFER Banking Act is aimed at addressing the banking challenges faced by state-legal cannabis businesses and promoting a safer and more transparent financial environment for these businesses.
Congressional Summary of S 2860
Secure And Fair Enforcement Regulation Banking Act or the SAFER Banking Act
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 requiring 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 conducted by 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.
