The Safer Banking Act Explained
Did the SafeR Banking Act Pass?
On September 27, 2023, the Senate Banking Committee approved the Secure and Fair Enforcement Regulation (SAFER) Banking Act (S. 2860) with a 14-9 vote. With Democrats and even three Republicans—Sens. Steve Daines, Kevin Cramer, and Cynthia Lummis—backing the legislation, Majority Leader Schumer extolled the bill as “a huge step forward,” promising a floor vote “as quickly as possible.” The bill seeks to provide legal Marijuana dispensaries and other businesses in the Cannabis industry with conventional banking solutions.
What is the Marijuana Banking Bill?
Commonly known as the marijuana banking bill, the SAFER Banking Act aims to permit federally regulated banks to offer financial services to state-legal cannabis businesses without the threat of federal sanctions. In essence, it promises to bring financial legitimacy to legal marijuana dispensaries and other cannabis-related businesses.
risks, real or perceived, in the banking sector
State-legal cannabis operations experience challenges because banks that consider servicing the cannabis industry face an array of risks. The most glaring is the potential for federal enforcement actions. Despite state legality, marijuana remains a Schedule I substance at the federal level. Consequently, banks worry about implicating themselves in aiding and abetting a federal crime if they provide services to cannabis businesses.The result is a hesitancy to offer services to legal marijuana dispensaries for fear of repercussions such as asset seizure or charges of money laundering and the looming issue of reputation risk. Cannabis businesses have long been denied access to conventional banking solutions like credit card acceptance and traditional loans and mortgages. Consequently, these enterprises often resort to operating solely in cash, posing clear security risks and hampering economic growth.
Diverse Opinions and Support from the Senate
Senator Cynthia Lummis (R-WY) states, “[This Act] takes a major step towards ending the banking industry being weaponized. It prevents the federal banking agencies from ordering the closure of bank accounts of persons and businesses for reputation risk reasons. … Again, all legal businesses should have access to bank accounts. And this legislation ensures the federal government cannot pick winners and losers when it comes to providing everyone access to financial services.”
Senator Mastro (D-NV) unequivocally expressed, “Operating as cash-only businesses is cumbersome and dangerous… I’ve heard from business owners who fear for their safety when carrying large amounts of cash to deposit at banks. I’ve talked to employees who struggle to open savings and checking accounts and even qualify for mortgages. And it doesn’t have to be that way…There’s no reason all these businesses shouldn’t be able to access the banking system to keep themselves and their customers safe.”
Addressing concerns about the negative impact of cannabis legalization on society, Senator Mastro said that Nevada had addressed these issues at a state level. She believes that protecting cannabis businesses in legal states is crucial while discussing federal rescheduling.
Senator Merkley (D-OR) sums it up, “It’s the fact that a cash economy is great for organized crime. … Unbanked operations, operating in cash, is the easiest way to engage in all sorts of organized crime activities. Including expanded activities in areas other than cannabis, like fentanyl.”
Opposition and Roadblocks
Senator Hagerty (R-TN) raised concerns, saying, “This is a very real concern. These drug cartels are moving fentanyl and methamphetamine right alongside marijuana sales. And there’s a loophole in this law. I’m shocked this committee is willing to let this go through.” Mastro responded, “This legislation does not open the loophole. It is already illegal to comingle any of those funds.”
Next Steps for the Safer Banking Act
Having cleared the Senate Banking Committee, the bill will be brought to the Senate floor for debate and voting. If passed, it proceeds to the House of Representatives. After clearing both chambers, the final legislation will be sent to the President for signature, officially turning it into law.
The Safer Banking Act represents a transformative step towards normalizing financial interactions for cannabis businesses. Despite varying opinions, its advancement through the Senate Banking Committee indicates a significant shift in federal attitude toward cannabis businesses accessing conventional banking solutions.