Cannabis Banking Bill Passes House, But Faces Senate Challenge

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A federal bill which would allow cannabis companies to access business banking products will progress from the House of Representatives, but its journey to the president’s desk must still cross through a divided Senate.

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The Secure and Fair Enforcement Banking Act of 2021 passed on an overwhelming vote on Monday, April 19, 2021, and will move to the senior chamber for consideration.

SAFE Banking Act Would Allow Banks to Do Business with Cannabis Companies

Introduced in March 2021, the SAFE Banking Act would allow those in the cannabis industry — including producers and dispensaries — to do business with commercial banks. Because the U.S. Drug Enforcement Administration still considers marijuana a Schedule I drug, banks have traditionally shied away from working with those working in cannabis, on fears they could end up on the wrong side of the law.

If passed, the bill would prohibit federal banking regulators from penalizing banks for doing business with legitimate cannabis-based businesses. Furthermore, banks would not be subject to having the assets or loans issued to those companies frozen or forfeited by federal law enforcement agencies. In states where recreational or medical cannabis use is allowed, proceeds from properly licensed producers and distributors would not be considered “unlawful activity.”

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The 321-101 vote by the House of Representatives marks the third time the legislation has moved forward to the upper chamber. However, the law will face a challenge from a split Senate, where Democrats have a tie-breaking majority. According to analysis from Cowen & Co., the issue could be the “most likely legislation to pass in the new Congress, potentially with some social equity component.”

Ohio Democrat Sherrod Brown, who is the chair of the Senate Banking Committee, previously said the SAFE Act would need to be paired with justice reforms. In an interview with cleveland.com, Brown noted he would be willing to consider the act if it comes with additional provisions on drug sentencing.

Bill Supported by Several Banking Groups, Including ABA and CUNA

Although the bill still faces potential opposition, banking groups are still hopeful it will pass and ultimately become law.

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Both the American Banking Association and the Credit Union National Association have written letters in support of the bill, endorsing opening banking solutions for cannabis companies without giving an opinion on the industry as a whole.

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About the Author

Joe Cortez is a personal finance writer for GoBankingRates. With over a decade of experience in financial journalism, Joe brings an insider knowledge of all things consumer finance, including credit cards, mortgages, and banking accounts. His work has appeared at NerdWallet, Business Insider and NextAdvisor. He is a member of the Society for Professional Journalists, National Association of Hispanic Journalists, and the Radio-Television-Digital News Association.

Cannabis Banking Bill Passes House, But Faces Senate Challenge
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