Hopes Rising for SAFE Banking Act with Next Stimulus Bill

The Secure and Fair Enforcement Banking Act (“SAFE Banking Act”) successfully passed the U.S. House of Representatives by a favorable bipartisan vote of 321-103 in September of 2019, but it has since stalled in the U.S. Senate. Due to ongoing COVID-19 concerns, it seems that at least some of the legislation's provisions are being revisited by Congress.

Overview of the SAFE Banking Act

To broadly recap, the SAFE Banking Act proposed to remove some of the current financial restrictions faced by legal cannabis businesses. It would further provide a safe harbor for financial institutions that serve cannabis businesses by removing the risk of criminal prosecution for employees, officers, and directors of commercial and reserve banks.

The bill would allow banks to provide credit cards and checking accounts to state-regulated cannabis businesses, however, it would not allow cannabis companies to be listed on U.S. securities exchanges or give them access to capital markets.

One crucial issue unaddressed by the SAFE Banking Act is the relationship between the Small Business Administration (“SBA”) and cannabis companies. If the industry-agency relationship continues to proceed as-is in the legislation, the cannabis industry may need to consider another push for recognition from the SBA, as the SBA is an essential resource for small businesses across a plethora of markets.

Regardless of any perceived oversights, passing the SAFE Banking Act would be a monumental step in the right direction for the federal legalization movement.

Senate Support for the Bill

Even though the SAFE Banking Act is in limbo in the U.S. Senate, members of Congress, such as Rep. Ed Perlmutter D-Colo, have been encouraging colleagues to add a revised version of the SAFE Banking Act to the next COVID-19 stimulus bill.¹

It is not clear which provisions of the original legislation are being considered for inclusion in the next stimulus bill, but Rep. Perlmutter stated that he has full support from the Democratic leadership, including House Speaker Nancy Pelosi, to continue working on a proposal to incorporate at least a portion of the SAFE Banking Act in the next COVID-19 relief package.²

This support could prove to be the extra push other members of Congress need to ultimately vote in favor of the proposal when the time comes.

COVID's Impact

Lawmakers are not only supporting the inclusion of the provisions in order to ensure fair treatment of all businesses, no matter the industry but also due to the potential impact on medical marijuana patients.

Many medical marijuana patients are among the most vulnerable to COVID-19,³ and forcing this population to deal in cash not only puts patients at a higher risk of contracting the virus, but it also causes the employees handling the cash to have a higher chance of being impacted as well.⁴

This interaction could be a contributing factor to the spread of the virus, a fact that is hard to swallow as lawmakers are working diligently to lower the number of cases across the country.

Despite the progress, Rep. Perlmutter acknowledges that the push for, and hopeful passage of, the revised SAFE Banking Act provisions in the relief package does not automatically allow cannabis businesses to be treated equally to other businesses.

“We want to pass the SAFE Banking Act, but we also know SAFE Banking alone won’t be enough to give cannabis businesses the relief they need like other businesses,” said Rep. Perlmutter.

“I plan to keep pushing to ensure the cannabis industry has the ability to be eligible for SBA relief funds during this COVID-19 crisis. I have spoken to House leadership about this matter and I’m hopeful in one of the next two packages we can get this done.”⁵

Although Congress isn’t expected to return to the Capitol until May 4 at the earliest, it is important for members of Congress to continue pushing the inclusion of cannabis businesses in future legislation.

The Rodman Law Group plans to monitor the movement of the SAFE Banking Act’s provisions in the next federal stimulus package and the cannabis industry’s inclusion in SBA loans and will update you with any passed legislation resulting from this push from members of Congress.

1. https://www.cannabisbusinesstimes.com/article/lawmakers-look-to-include-cannabis-banking-reform-covid-19-stimulus-bill/
2. https://www.marijuanamoment.net/pelosi-wants-marijuana-businesses-included-in-next-coronavirus-relief-bill-congressman-says/
3. https://www.nj.com/marijuana/2020/04/allowing-marijuana-businesses-to-open-bank-accounts-could-be-part-of-coronavirus-stimulus.html
4. Id.
5. Id.

The information in this blog post (the "Blog" or "Post") is provided as news and/or commentary for general informational purposes only. The information herein does not, and shall never, constitute legal advice and therefore cannot be relied upon as a legal opinion. Nothing in this Blog constitutes attorney communication and is not privileged information. Nothing in the Post or on this website creates any kind of attorney-client relationship or privilege of any kind.

Originally published April 21, 2020, at https://therodmanlawgroup.com.