The marijuana/cannabis industry recently saw a meaningful and positive step towards getting access to banking services. Very few banks and credit unions will provide financing to the cannabis industry since marijuana is not legal on a national basis. This legal uncertainty typically deprives cannabis businesses of access to critical banking services, such as the ability to write checks, receive electronic payments, and accept credit and debit cards.
The federal cannabis banking reform proposal, also known as the Secure and Fair Enforcement (“SAFE”) Banking Act of 2021, was passed by the House of Representatives on April 20, 2021 for the fourth time (H.R. 1996). Among other items, the bill would generally clarify that proceeds from approved cannabis businesses would not be illegal.
This development came after 21 Governors, including New York Governor Andrew Cuomo, signed a letter calling on the Congress to pass the SAFE Banking Act. The full text of the letter is available here. The American Bankers Association and the State Bankers Associations also sent letters to the House stressing the importance of the bill and urging the members of the House to pass it.
The Act, if passed by Congress and signed into law, is aimed at allowing banks and other financial institutions to provide services to businesses that are licensed to operate in the cannabis industry. It is seen as a response to address the risks faced by existing businesses in getting access to banking services as detailed above.
The lobbying efforts by the stakeholders will be instrumental in helping to bridge the gap between federal and state law. Not only is the Act aimed at helping businesses operate in the cannabis industry, but it is also expected to make things easier for banks and other financial institutions that, right now, face risks and uncertainty when it comes to catering to cannabis businesses. Easing the restrictions for the banks will allow licensed cannabis businesses to use banking services that right now mostly operate on a cash basis. As also highlighted in the letter issued by the Governors, this will further remove burdens on state governments for tax and fee collections purposes.
We are keeping a close look at the Senate’s consideration of the bill. While uncertainty remains regarding the Senate’s response to the bill, stakeholders are hopeful it will be passed by the Senate and eventually signed into law by President Biden.
Our Firm has experience handling issues for businesses in the cannabis industry. If you have any questions related to this Legal Briefing or questions related to COVID-19 reopening rules and procedures, please contact any member of our Firm at 585-730-4773.
This Legal Briefing is intended for general informational and educational purposes only and should not be considered legal advice or counsel. The substance of this Legal Briefing is not intended to cover all legal issues or developments regarding the matter. Please consult with an attorney to ascertain how these new developments may relate to you or your business. © 2021 Law Offices of Pullano & Farrow PLLC