Financial services ensured for legal cannabis businesses with new legislation

In the United States, most state legal medicinal or recreational cannabis businesses are denied access to traditional and secure banking systems and financial services.

Banks do not want to be prosecuted under federal law with the current federal restrictions on cannabis use. Legal state cannabis businesses are forced to operate solely on cash, and risk tax evasion and increase the potential for criminal activity.

The Secure and Fair Enforcement (SAFE) Banking Act of 2023 would ensure that legal cannabis businesses have access to critical banking and financial services. Sens. Mark R. Warner and Tim Kaine of Virginia joined a group of colleagues to introduce the legislation.

“No business operating legally and safely should feel the need to conduct their business in all-cash out of fear of unfair penalization from the federal government,” Warner and Kaine said. “It is about time we pass the SAFE Banking Act and ensure that all legal cannabis businesses have access to the financial services they deserve to support their businesses and keep their communities safe.”

Banks and their officers and employees who provide financial services to legitimate, state-sanctioned cannabis businesses would be safe from criminal prosecution and liability and asset forfeiture. Protections would be allowed for hemp and hemp-derived cannabidiol (CBD) related businesses.

The SAFE Banking Act of 2023 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 providing services to a legal cannabis business);
• Terminating or limiting a bank’s federal deposit insurance primarily because the bank is providing services to a state-sanctioned cannabis business or associated business;
• Recommending or incentivizing a bank to halt or downgrade providing any kind of banking services to these businesses; or
• Taking any action on a loan to an owner or operator of a cannabis-related business.