• Emil Ovbiagele

The SAFE Banking Act: What it is and what it’s been up to?

There’s been a lot of progress in the legalization of cannabis effort across the country. However, Federal banking regulations remains a formidable obstacle for businesses in the space. Access to bank accounts and traditional sources of capital don’t come easy for cannabis businesses. The SAFE Banking Act of 2019 is intended to fix these issues.


SAFE Banking Act- CBD Industry waits.

The Problem

Currently, banks that provide financial services to companies that are involved in the cannabis industry are potentially subject to fines under federal money laundering and various other banking regulations. Aside from the actual financial penalties themselves, the current state of the law has had several ancillary effects on the banking and cannabis industries.

For example, cannabis companies or companies servicing the cannabis industry are subject to incredibly high monthly fees by banks to offset the penalties they themselves incur or could potentially incur. These fees can be as much as $3,000 per month for a checking account!


These concerns have left many cannabis companies sitting on large amounts of cash. Despite legalization efforts, the stigma attached to the cannabis industry is still pervasive within the banking industry. Thus, making it difficult for cannabis companies to secure loans and to gain access to traditional sources of capital.

Lastly, while large cannabis companies may be able to absorb the high cost of banking fees, start-ups and smaller business are often unable to sacrifice their already thin margins to pay such exorbitant banking fees. This potentially stifles entrepreneurship in the industry and squeezes out smaller players.

The SAFE Banking Act

To combat these issues, legislators have introduced the SAFE Banking Act of 2019 (the “Act”). The Act is intended to revamp antiquated banking regulations that negatively impeded on banks and their ability to deal with cannabis companies.


The Act would accomplish this by allowing banks to do business with cannabis companies without running afoul of federal banking regulations, meaning cannabis companies would be free to open accounts or take out loans the same as any other business.


Recently, the Senate Banking Committee held a hearing during which several industry leaders testified regarding the merits of the SAFE Banking Act of 2019. Individuals that testified included SAFE Banking Act sponsors Senators Cory Gardner (R-CO) and Jeff Merkley (D-OR); MAPS Credit Union Chief Risk Officer, Rachel Pross (representing CUNA), Citywide Banks’ President and CEO, Joanne Sherwood (representing ABA); Smart Approaches to Marijuana (SAM) Vice President of Government Affairs, Garth Van Meter; and LivWell Enlightened Health CEO, John Lord.


The testimonies were overwhelmingly positive regarding the bill. That said, it is still unclear whether the bill will actually pass. Colorado Republican Senator Cory Gardner (one of the bill’s sponsors) testified to the bipartisan support the bill has in both the House and Senate. Sen. Gardner also cited high public support for the legalization of marijuana as a reason to pass this bill.

According to Sen. Gardner, 65% of Americans support legalization of marijuana, while 93% support medical marijuana.


Other witnesses, such as Livwell Enlightened Health CEO John Lord, stressed the importance of passing this bill to ensure that the cannabis industry has a place for small businesses and entrepreneurs. The hearing last Tuesday marked the sixth congressional hearing on marijuana policy this term.


The SAFE Banking Act involves two identical bills. The first was introduced in the House of Representatives (H.R. 1595) by Democratic Rep. Ed Perlmutter. The House bill was recently approved by the Financial Services Committee and is expected to be considered on the House floor following the August recess. The second bill was introduced in April at the Senate (S. 1200). Regardless, the earliest we can expect to see any further movement regarding the SAFE Banking Act will be sometime in early September, 2019.

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© 2018-2019  by Wiscanabiz Law Blog, published by OVB Law & Consulting, S.C.

  • OVB Law & Consulting, S.C.