CSBS calls for SAFE Banking Act passage

James Cooper

The Conference of State Bank Supervisors is urging Congress to include the SAFE Banking Act in the final version of the America COMPETES Act. 

The SAFE Banking Act would prohibit federal regulators from disciplining depository institutions that provide banking services to government-licensed cannabis-related businesses. The SAFE Banking Act has passed the House six times, but not received Senate approval. Partisan differences have complicated the chances of passing the bill: Senate Banking Committee Chair Sherrod Brown, (D-Ohio), believes the Act is too limited and should include sentencing reforms, a stumbling block for some Republicans.

“By granting a safe harbor for financial institutions, Congress can bring regulatory clarity to the financial services industry, address public safety concerns, and ensure access to financial services for state-compliant marijuana and marijuana-related businesses,” Acting CSBS President and CEO James Cooper wrote in a May 25 letter. He also called for the extension of safe harbor “to all financial services, including money transmission, as the adverse impact of the current inconsistency in state and federal law is not limited to depository institutions.”   

As of April, 37 states had legalized medical marijuana. Eighteen had legalized recreational sales. Only four U.S. states have not decriminalized cannabis. Because cannabis remains illegal federally, cannabis-related businesses are banned under federal law from accessing bank deposits, loans, money transmission, and credit cards for payment, even in states where the drug is legal. 

To Cooper, the industry’s heavy cash reliance is opening itself up for violent crime. He said the SAFE Banking Act would enable economic development in states where cannabis is legalized. “Tax collection, consumers and the financial system will remain at risk until financial institutions can serve the industry without concern of violating federal law,” he said. 

The letter came approximately two weeks after a bipartisan group of two dozen Senators called for the passage of the SAFE Banking Act in a letter to House and Senate leadership after the House of Representatives included the SAFE Banking Act as an amendment to the larger America COMPETES Act it approved in early February.