House Makes Another Push For SAFE Banking Act – Finance and Banking

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Congress is making another run at providing a safe harbor to the
banking industry and companies that provide services to cannabis
businesses. On September 21, 2021, the House voted to include the
Secure and Fair Enforcement Banking Act of 2021 (SAFE Banking
Act)1 in the annual National Defense Authorization Act
for Fiscal Year 2022 (NDAA).2  Two days later, the
House passed the NDAA by a vote of 316 to 113. The NDAA is now
before the Senate for consideration and is highly likely to be
passed this year—in some form—in order to set annual
defense policy priorities and authorize Defense agency spending for

Members of Congress have introduced the SAFE Banking Act or
similar legislation in prior Congresses. Despite bipartisan support
and broad support by the business community, these efforts have
never resulted in the bill becoming law. Prior to passing it as
part of the NDAA, the House also passed the SAFE Banking Act on
three prior occasions.3 The Senate has yet to act on the
NDAA, but it may be the SAFE Banking Act’s vehicle for

The text of the SAFE Banking Act has changed little since it was
first introduced in 2019.4 As we noted in our Advisory at the time, the Act would
provide a safe harbor from anti-money laundering laws to depository
institutions and insurers, as well as to service providers that
receive money generated by cannabis businesses. Although not
without its limitations, the SAFE Banking Act would be a
significant stride toward legal reform for the cannabis industry,
intended to bring the industry out of a cash economy and allow it
to access necessary financial and other services more easily.

As summarized in our prior advisory, the SAFE Banking Act

  • Prohibit federal banking regulators from taking certain actions
    against depository institutions that provide services to a
    “cannabis-related legitimate business”—generally
    defined as a person or business that handles cannabis products in
    compliance with applicable state law.5 The
    prohibitions include taking adverse or corrective supervisory
    action on a loan or terminating the institution’s deposit
    insurance or share insurance.

  • Prohibit federal banking regulators from prohibiting,
    penalizing or otherwise discouraging a depository institution from
    providing financial services to a cannabis-related legitimate
    business or service provider (e.g., credit card companies).

  • Protect all service providers (e.g., insurance companies), as
    well as their officers, directors and employees, from prosecution
    under federal law solely on the basis of providing financial
    services to a cannabis-related legitimate business or further
    investing any income derived from such services.

Notwithstanding the SAFE Banking Act’s safe harbor
provisions, the financial institutions would of course remain
subject to prescriptive regulatory requirements when banking
cannabis-related customers, including updated guidance from the
Financial Crimes Enforcement Network (FinCEN) and new guidance and
examination procedures from the Federal Financial Institutions
Examination Council (FFIEC), as required under Sections 5406 and
5407, respectively. Financial institutions relying on the safe
harbor provisions of the SAFE Banking Act would also need to stay
informed on state cannabis laws applicable to the businesses they
serve in order to determine whether a customer qualifies as a
“cannabis-related legitimate business.” This can be
difficult, considering that state laws are detailed, evolving and
vary from state to state. Monitoring for compliance may also
require periodic confirmation that a cannabis business has renewed
its required state license or registration.

The Senate will act soon on the NDAA, with key procedural and
amendment votes scheduled for the week of November 29. Final
passage of a conferenced House-Senate defense package will occur
shortly thereafter. While much remains uncertain about the overall
defense bill, key senators have made clear their opposition to the
inclusion of the SAFE Banking Act. For instance, when asked about
the inclusion of the SAFE Act to NDAA, Sen. Cory Booker (D-NJ)
stated, “It would be a setback for expunging the records of
all of the people who are waiting for some kind of justice. And
unfortunately, if you do that, the pressure won’t be there to
get it done.” Senator Booker, together with Senate Majority
Leader Chuck Schumer (D-NY) and Senate Finance Chairman Ron Wyden
(D-OR) have argued instead for a more comprehensive reform of
cannabis laws. The House of Representatives passed a comprehensive
reform measure in 2020. In this Congress, a substantially similar
measure passed the House Judiciary Committee and is awaiting floor
action. It remains unclear, however, if a comprehensive reform
measure can pass the Senate.

Financial institutions and other businesses that may benefit
from the SAFE Banking Act’s enactment are encouraged to review
its provisions to understand its effect on their businesses and
consider what actions may be required to comply with the new law,
including amending policies and addressing operational changes to
ensure compliance with the requirements for the Act’s safe


1 Safe Banking Act of 2021, HR 1996, 117th Congress
(April 19, 2021).

2 National Defense Authorization Act for Fiscal Year
2022, HR 4350, 117th Congress (Sept. 23, 2021), at Div. D, Title
LIV, §§ 5401-5415. The full text of the NDAA, including
the SAFE Banking Act under Title LIV, can be found here.

3 The SAFE Banking Act also had predecessors under
different names, such as the Marijuana Businesses Access to Banking
Act (HR 2076, 114th Congress), available here.

4 See, e.g., Safe Banking Act of 2019, HR 1595,
116th Cong. (Mar. 7, 2019).

5 As of the date of this Advisory, 19 states and the
District of Columbia have legalized marijuana for recreational use,
and 43 states and the District of Columbia have legalized it for at
least some form medical use.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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