U.S. senators and House representatives have once again introduced the SAFE Banking Act to improve banking and lending to cannabis-related businesses (CRB).
Similar legislation has been passed by the House of Representatives seven times, but not the Senate. In 2023, the Senate Committee on Banking, Housing and Urban Affairs approved the SAFER Banking Act, but it was not taken up on the Senate floor or in the House.
What gives the industry more hope this time around is the support of President Donald Trump, who issued an executive order in December pushing to move marijuana down to a Schedule III controlled substance. The bills dropped days before a formal Drug Enforcement Agency administrative hearing. The DEA already issued a final rescheduling order April 23, including state medical-marijuana programs, under the authority of an international treaty. The hearing began Monday, June 29.
On June 25, a bipartisan group of lawmakers announced the filing of the latest SAFE Banking bills in both the House and Senate.
S 4942 is sponsored by Sen. Jeff Merkley, D-Ore. Cosponsors include Lisa Murkowski, R-Ark., Steve Daines, R-Mont., and Elizabeth Warren, D-Mass.
“Legal cannabis businesses operating in all-cash is dangerous for our communities — encouraging criminal activity like robberies, money laundering, and organized crime,” Merkley said in a statement. “It’s past time we ensure legal businesses can access the financial services they need to help keep their employees, their businesses, and their communities safe.”
In the House, HR 9471 is sponsored by Rep. David Joyce, R-Ohio. He is joined by James Himes, D-Conn., Warren Davidson, R-Ohio, Nydia Velazquez, D-N.Y., Brian Mast, R-Fla., Lou Correa, D-Calif., Guy Reschenthaler, R-Penn., and Dina Titus, D-Nev. Bill text was not available as of June 30.
“State-licensed cannabis businesses employ thousands of Americans and generate significant tax revenue, yet many remain effectively shut out of the traditional banking system,” Joyce said in a statement. “This legislation would provide access to capital and the necessary financial services to operate a successful business and keep communities safe. By introducing the SAFE Banking Act, Congress is showing its commitment to supporting small businesses and implementing commonsense cannabis policies that respect states’ rights to regulate the industry.”
Protecting financial institutions from federal regulators
Currently, banks and other financial institutions are legally allowed to provide banking services to cannabis businesses, as long as they follow guidance issued by the Financial Crimes Enforcement Network (FinCEN) in 2014. However, not many banks actively serve CRBs because of the costly and onerous compliance requirements to file Suspicious Activity Reports (SARs). In the fourth quarter 2024, the latest federal data available, there were 816 “active filer” financial institutions.
Those that do serve CRBs typically pass the costs down to the customer, making cannabis banking expensive. Even ancillary business owners, including news publishers, run the risk of having their business and personal accounts shut down at any time.
For over a decade, federal lawmakers have attempted to make cannabis banking easier and more widely available. This latest legislation is similar to past bills in that it would prevent federal banking regulators from:
- Prohibiting, penalizing or discouraging a bank from providing financial services to a legitimate state-sanctioned and regulated cannabis business, or an associated business, such as a lawyer or landlord
- Prosecuting and seizing assets from banks and their officers and employees who provide financial services to legitimate CRBs
- Terminating or limiting a bank’s federal deposit insurance primarily because it’s providing services to a state-sanctioned cannabis business or associated business
- Recommending or incentivizing a bank to halt or downgrade any kind of banking services to these businesses
- Taking any action on a loan to an owner or operator of a CRB
The Senate bill would also protect hemp and hemp-derived cannabidiol (CBD) related businesses. This has become more important because some banks are looking to get out of serving hemp companies as a federal ban on hemp-derived THC products is scheduled to take effect in November.
Changes in the latest SAFE Banking Act bill
S 4942 is very similar to the bill passed by the Senate Banking Committee in 2023, S 2860. The biggest change is in Section 10, “Requirements for Deposit Accounts.”
In 2023, the bill received partisan support because some anti-marijuana senators saw it as a way to cut down on banks shutting accounts for legal industries such as cryptocurrency and firearms. S 2860 had a longer “Sense of Congress” subsection that stated that regulatory enforcement should rest on “laws and regulations, not on personal beliefs or political motivations.”
Since then, a new law opened up banking specifically for digital assets.
The new Section 10 cuts the Sense of Congress subsection and streamlines the language to require a federal banking agency to make a written determination that the depository institution is engaging in an “unsafe or unsound practice” or violating laws before requiring or recommending an institution terminate an account. The bill also states justification for termination “may not be based solely on the reputational risk to the depository institution.”
Financial institutions would still have the right to decline servicing cannabis businesses.
Other differences include the amount of time regulatory agencies have to issue reports and update guidance. The Federal Financial Institutions Examination Council and Department of the Treasury would have to develop uniform guidance and examination procedures for depository institutions within 180 days, as opposed to one year in the last bill.
Banking regulators would also have to update hemp banking guidance within 90 days instead of 180 days in S 2860. FinCEN would still have 180 days to update marijuana banking guidance.
Merkley said the bill would allow FinCEN guidance to be “streamlined over time.”
This bill also cut sections requiring regulators to create rules to increase access to deposit accounts and a biennial FDIC survey on access to deposit accounts by small and medium-sized businesses.
It also reverts back to “diversity and inclusion” language for reports on banking access for minority-owned, veteran-owned and women-owned CRBs.
A new section in S 4942 would require the comptroller general, in consultation with the attorney general, to complete a study on the effectiveness of SARs within two years.
Banking reform welcome, but industry still cautious
The American Bankers Association applauded the reintroduction of the SAFE Banking Act.
“The SAFE Banking Act would provide banks with a clear federal safe harbor, allowing them to serve state-legal businesses while increasing transparency for law enforcement and reducing risks to the public, said Rob Nichols, president and CEO of the American Bankers Association.
Yet, the cannabis industry has seen this legislation fail before. “So while the cannabis industry should welcome the bipartisan reintroduction, no one should confuse introduction with completion,” said Adam Stettner, CEO of FundCanna, in an emailed statement.
But this time feels different, he said, because there’s “real momentum” for cannabis reform, including the rescheduling effort and Senate Banking Committee Chairman Tim Scott being more publicly engaged about solving the cannabis banking problem.
“That matters. But I believe this industry has learned not to celebrate until policy actually changes,” Stettner said. “For operators, this is not just about opening bank accounts. It is about steps toward normalized financial infrastructure, safer payments, lower friction, better credit access and a capital environment that looks more like every other American industry.”
