While the legalization of medical and recreational marijuana continues to build momentum across the U.S., access to banking and other financial services has remained a consistent barrier to the legal marijuana industry. As we discussed back in October, there was major optimism when the Secure and Fair Enforcement Banking Act (the “SAFE Banking Act”) was finally passed by the U.S. House of Representatives in September 2019. However, this has remained idle in the hands of the Senate Banking Committee since September without any notable advancement.
The legislation, which does not address the decriminalization or legalization of marijuana, would provide a much needed safe harbor for banks and other financial institutions offering financial services to cannabis-related businesses. In addition to providing peace of mind to banks and credit unions that wish to service legal marijuana businesses, the legislation would also allow cannabis companies to move away from operating primarily on a cash basis, which has been a growing public safety concern for many of the affected businesses.
In December, the Chair of the Senate Banking Committee, Mike Crapo, proposed certain changes to the bill and requested public comment to assist with the Committee’s decision-making. Some of these proposals have been met with concern – for instance, it was suggested that financial services only be made available to cannabis-related business that sell products which contain less than 2% THC. It goes without saying that this type of limitation would virtually eliminate banking access for many of the state-licensed cannabis businesses.
In an effort to progress the bill, a group of more than thirty organizations sent a letter to Mr. Crapo earlier this week urging the Committee to work on a legislative solution that aligns with the original intent of the SAFE Banking Act, which had been endorsed by more than thirty state attorneys general and received extensive bipartisan support. Some states have even gone as far as to announce their own initiatives aimed at increasing access to financial services while the Senate continues reviewing the bill.
On February 3, the Colorado Department of Regulatory Agencies (“DORA”) announced that it was releasing a plan to provide support and guidance to state-chartered financial institutions that wish to serve legal cannabis companies. This initiative is being headed by DORA’s division of banking and financial services and includes a variety of strategies for financial institutions that are interested in serving cannabis-related businesses.
While the state-regulated marijuana industry continues to take baby steps towards having access to basic financial services, the passage of the SAFE Banking Act would be a giant leap forward and a new milestone for this burgeoning industry. Hopefully, 2020 is the year this will finally happen.