The SAFE Banking Act 2024: What to Expect

Dieter Sanchez

24 July 2024 / Category: Blog

What is the SAFE Banking Act of 2024?

The SAFE Banking Act of 2024 is a bill designed to create protections for financial institutions that provide services to state-sanctioned marijuana businesses and their service providers. The primary aim of this legislation is to ensure that the cannabis industry can access banking services without fear of penalties or exorbitant fees. This bill acknowledges the need for financial rules to evolve in step with marijuana laws, thereby allowing cannabis businesses to operate on an equal footing with other industries. Workers in the cannabis sector would benefit by no longer needing to conduct business in cash, gaining access to financial services such as mortgages and loans.

As of July 2024, the status of the SAFE Banking Act is that it is pending in the Senate Committee on Banking, Housing, and Urban Affairs. The committee held a hearing on the bill on May 11, 2024, but has not yet voted on whether to report the bill to the full Senate for consideration.

What’s on the horizon for the Cannabis Industry? Photo by David Gabrić from Unsplash.

When will the SAFE Banking Act be Voted on?

A common question is: When will the SAFE Banking Act be voted on in the Senate? As of now, the timing remains uncertain. The bill has not yet been voted on by the committee, and it is unclear if or when it will be signed into law by the President. Some experts suggest that the bill might have a better chance of passing if it is attached to broader cannabis reform legislation, such as the MORE Act or the CAOA, which address federal legalization or decriminalization of marijuana.

How would the SAFE Banking Act Affect the Cannabis Industry?

The bill could have several positive impacts on the cannabis industry:

Reduce Safety Risks: Dealing with cash-only transactions makes cannabis businesses vulnerable to theft, fraud, and violence. Access to banking services would mitigate these risks.
Increase Access to Capital: Legal marijuana businesses would gain access to loans and capital, which is currently difficult without traditional banking. This is particularly beneficial for small and minority-owned enterprises.
Improve Transparency and Accountability: Financial institutions would be able to track, report, and comply with anti-money laundering laws, increasing industry transparency.
Stimulate Growth: The industry and related sectors, such as real estate, could see growth through more opportunities for investment, acquisition, leasing, and expansion of cannabis properties.

Sen. Sherrod Brown, D-Ohio, stated, “Without full access to the banking and payments system, legal cannabis businesses are forced to operate in the shadows.” Similarly, Sen. Tim Scott, R-S.C., emphasized, “Congress has a responsibility to ensure all legal industries have access to financial institutions and services.”

What are Some Drawbacks or Challenges of the Bill?

Despite its potential benefits, the SAFE Banking Act faces several challenges:

Federal Prohibition: The bill does not address the federal prohibition of cannabis, which continues to expose businesses and consumers to legal risks and uncertainties.
Potential Loopholes: Without proper regulation and enforcement, the bill could create opportunities for money laundering and other illicit activities.
Political Opposition: There is significant opposition and delay in the Senate, where some lawmakers prefer a more comprehensive approach to cannabis reform or oppose legalization altogether.

What’s on the Horizon for Cannabis Industry Reform?

A more comprehensive approach to cannabis reform would involve:

De-scheduling Cannabis: Removing cannabis from the federal list of controlled substances and expunging past convictions for nonviolent cannabis offenses.
Federal Regulatory Framework: Establishing federal regulations for cannabis production, distribution, and sale, with oversight from agencies such as the FDA and the Alcohol and Tobacco Tax and Trade Bureau.
Tax System: Creating a federal tax system for cannabis revenues, with provisions for reinvesting in communities harmed by the war on drugs and supporting research, education, and public health programs.
State Rights: Respecting state policies on cannabis legalization and regulation while ensuring compliance with federal standards and preventing interstate trafficking.
Social Equity: Promoting equity in the cannabis industry by providing access to capital, licenses, and opportunities for small businesses, minority-owned businesses, and individuals affected by cannabis prohibition.

The SAFE Banking Act has cleared the House with bipartisan support on six occasions but has stalled in the Senate. With increasing recognition of the need for reform, there is hope that 2024 might finally be the year the legislation makes significant progress.

For more detailed information on the SAFE Banking Act and its potential impacts, send us a message, give us a call or leave a comment below. This is the way.

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