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SAFE Banking Act Introduced as Congress Looks to Address Cannabis Banking Issue
Despite 47 states plus DC permitting some form of marijuana, legal and legitimate businesses forced to operate in cash
Washington, March 7, 2019
Tags: Jobs & the Economy
Washington, D.C. – On the heels of the first-ever congressional hearing on the issue of cannabis banking, H.R. 1595, the Secure and Fair Enforcement (SAFE) Banking Act of 2019 was introduced today as the leading bipartisan legislation tailored to specifically address the cannabis banking issue. Authored by Reps. Ed Perlmutter (D-CO-07) and Denny Heck (D-WA-10) and cosponsored by Reps. Warren Davidson (R-OH-08) and Steve Stivers (R-OH-15), the bill allows marijuana-related businesses in states with existing regulatory structures to access the banking system.
Today, 47 states plus the District of Columbia – representing 97.7% of the population – have legalized some form of adult recreational, medical or limited-medical use of marijuana.
“The majority of American voters have spoken and it’s happening whether we act or not,” said Perlmutter. “The SAFE Banking Act is focused solely on taking cash off the streets and making our communities safer. Only Congress can provide the certainty financial institutions need to start banking legitimate marijuana businesses – just like any other legal business – and reduce risks for employees, businesses and communities across the country.”
“Modern banking services and existing federal laws on financial disclosures allow law enforcement to keep records and track potential criminal activity,” said Heck. “We know based on the Treasury guidance that the federal government prioritizes keeping this product out of the hands of children and organized crime. The most effective way to do that is to not only allow, but encourage these businesses to use traditional banking methods to track their sales, deposits, expenses, tax payments, and other business transactions. If Congress fails to act, we are discouraging responsible, regulated markets and allowing a serious public safety threat to go unaddressed.”
“The SAFE Banking Act is an answer to the very real problem facing these businesses as they are forced to operate exclusively with cash. It makes them prime targets for violent robberies and money laundering schemes,” Stivers said. “This isn’t about condoning marijuana businesses, it’s about creating an auditable trail and keeping our neighborhoods safe.”
“Government Regulators have deemed cannabis business owners to have certain reputational risks. From a civil liberties standpoint, I believe this is something we need to move away from. There are reputational risks associated with any small business, and barring legally recognized small businesses from our financial institutions threatens the very pillars of liberty and freedom our country was founded on,” said Congressman Warren Davidson (OH08).
Because cannabis is considered illegal under the federal Controlled Substances Act, financial institutions providing banking services to legitimate and licensed marijuana businesses are subject to criminal prosecution. Since state and federal law are not aligned on the issue, legal and legitimate businesses are forced to operate on a cash-only basis creating a serious public safety risk for employees, businesses and communities, as well as providing an opportunity for tax evasion, money laundering and other white-collar crimes.
Compared to H.R. 2215 in the 115th Congress, the SAFE Banking Act of 2019 adds protection for ancillary businesses like real estate owners, accountants, and other vendors from money laundering and other laws as well as adjusts the tribal language and the definition of “cannabis-related legitimate business.” While other legislation has been introduced to address different problems faced by businesses in these states, the SAFE Banking Act is the only legislation that prohibits federal banking regulators from taking adverse actions against financial institutions which protects banks and credit unions so these legitimate businesses can access the banking system. The Independent Community Bankers of America, the Credit Union National Association and 19 Attorneys General endorsed the SAFE Banking Act in the last Congress.
Perlmutter and Heck have introduced similar bills every Congress since 2013. A draft version of the SAFE Banking Act was discussed during a hearing about cannabis banking on February 13, 2019.
H.R. 1595 enjoys broad bipartisan support with 108 cosponsors at the time of introduction.