SAFE Act: Tired of needing a briefcase of cash for the dispensary? Congress is, too.

On Wednesday September 25, 2019 the US House of Representatives passed legislation allowing banks to service legal cannabis companies. Obviously, the bill will take effect in states where medical and/or recreational cannabis is legal.

The bill passed with a vote of 321-103—all House Democrats except Rep. Terri Sewell of Alabama, and almost half of the House Republicans. Now the measure heads to the Senate. There it’s not clear what will happen.

[Find the text of H.R. 1595, the Secure and Fair Enforcement Act of 2019 (SAFE Banking Act) here.]

Senate Banking Chairman Mike Crapo (R-Idaho) has indicated that he will take up some kind of cannabis banking legislation this year. However, it may include some notable changes from the current version. For example, according to Newsy, Crapo may want to add language addressing THC levels to the bill.

Additionally, whatever legislation emerges from committee may never see a full Senate vote.

The SAFE Act Cannabis Banking Bill

The SAFE Act helps legitimate cannabis businesses in states with medical marijuana or recreational cannabis by clarifying that their proceeds are not illegal. It also instructs federal regulators to create banking rules to supervise activity in the vertical.

Part of the issue in the vertical is that banks are worried about working with cannabis businesses. They see it as a risk, because marijuana is still illegal at the federal level, no matter what the 33 states that allow for some type of cannabis use do in the courts. The SAFE Act’s guidance could help with that problem.

“Our members are committed to serving the financial needs of their communities—including those that have voted to legalize cannabis,” the American Bankers Association wrote in a letter to lawmakers on behalf of the Act.

Specifically, banks are concerned that taking deposits from cannabis businesses might violate federal anti-money laundering laws. If the feds see any money from even a legitimate cannabis business as ill-gotten, then anyone who “touches” it, including a bank, could put their federal charters and reputations at risk.

That means businesses in the cannabis industry have limited options, and we consumers feel it. We use high-rate ATMs and other inconvenient means of doing business in cash.

Cannabis Banking in Focus

Right now, some banks do choose to work with legal cannabis businesses. Those that do typically follow regulatory guidance from the Financial Crimes and Enforcement Network of the US Treasury Department.

But that is guidance, not law, and it doesn’t protect banks from criminal liability under federal drug laws. It can also change from administration to administration.

Costs for cannabis businesses are indisputably higher as well. Fees are higher for everything from armored vehicles to transport cash to simple account services—because banks are absorbing risk. And cannabis consumers, including patients, absorb those costs in turn.

All of these are great arguments for the Senate to pass the SAFE Banking Act, which has been six years in the planning. Additionally, even for more conservative members of Congress, the elimination of large stocks of cash at dispensaries is a public safety win.

However, many conservative Republican members of the Senate may be unwilling to support any kind of cannabis-friendly legislation. And whether President Trump would sign the SAFE Act remains a mystery.

Is the SAFE Act just the start?

Despite this victory, House leadership has signaled that they’re not through with the issue. In a statement, Majority Leader Steny Hoyer said, “I am proud to bring this legislation to the Floor, but I believe it does not go far enough.”

Politico reports that Hoyer will work on comprehensive cannabis reform and legislation introduced by Reps. Hakeem Jeffries, Barbara Lee, and Jerry Nadler.

Rep. Ed Perlmutter (D-CO), the Act’s co-author, told Yahoo Finance’s YFi PM, “This is a bill that really is the icebreaker. [Since marijuana was made illegal back in 1970] there hasn’t been a single bill through an authorizing committee or brought to the floor that actually breaks the ice to do something like gain access to banking services, or allow for research, or taxes.”

Democratic support for the Act has not been uniform. Both Rep. Alexandria Ocasio-Cortez (D-NY) and Senator Cory Booker (D-NJ) have pushed for criminal justice reform to be attached to any cannabis banking legislation.

Ocasio-Cortez ultimately voted for the SAFE Act. Booker has instead pushed his Marijuana Justice Act, which would legalize cannabis federally and automatically expunge all federal marijuana convictions. Although Senators Kamala Harris and Elizabeth Warren as well as other co-sponsors also support the bill, the Marijuana Justice Act would have an even more difficult battle in the Senate.