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SAFE Banking Act

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SAFE Banking Act
Great Seal of the United States
Long titleAn Act to protections for depository institutions that provide financial services to cannabis-related legitimate businesses and service providers for such businesses, and for other purposes.
Announced inthe 118th United States Congress
Legislative history

The SAFE Banking Act, officially H.R. 1595, full title Secure and Fair Enforcement (SAFE) Act, also referred to as the SAFE Banking Act of 2019, and as of 2023 the Secure and Fair Enforcement Regulation (SAFER) Banking Act, is proposed legislation regarding disposition of funds gained through the cannabis industry in the United States.

History

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116th Congress

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On March 7, 2019, the bill was introduced in U.S. House of Representatives by Ed Perlmutter (D-CO) and was referred to the Judiciary and Financial Services Committees.[1] On March 28, 2019, the Financial Services Committee voted 45 to 15 to advance the bill to the full House.[1][2][3]

The bill had "broad bipartisan support",[4] and there were 152 cosponsors at the time of the committee vote – over a third of the entire House.[5] Perlmutter, along with Washington Representative Denny Heck, "have introduced similar bills every Congress since 2013".[6] On April 11, 2019, Oregon Senator Jeff Merkley introduced a companion bill in the U.S. Senate and the bill was referred to the Senate Banking, Housing, and Urban Affairs Committee.[7] On June 6, 2019, the House bill moved out of committee and was placed on the Union Calendar for a vote.[8]

As of September 18, 2019, the House bill had 206 cosponsors (including U.S. House Judiciary Committee Chair Jerry Nadler and U.S. House Financial Services Committee Chair Maxine Waters),[9] and the Senate bill had 33 cosponsors (including Senate Minority Whip Dick Durbin).[10]

On September 20, 2019, House Majority Leader Steny Hoyer announced the bill was scheduled for a floor vote for the week of September 23 under suspension of the rules. Under suspension of House rules, the bill may not be amended, and must be approved by two thirds of the House of Representatives.[11][12]

The bill was passed by the House on September 25, 2019.[13]

The bill was originally drafted exclusively with banking institutions within its scope. However, the National Association of Professional Insurance Agents and other lobbying organizations achieved the addition of language from the "Clarifying Law Around Insurance of Marijuana" (CLAIM) Act, which existed in similar versions in both the House and the Senate. The added language rules out criminal and civil prosecution for both the entities and their employees or officers for the business of insuring cannabis-related industry when such industry is located in states which have legalized such activity.[14][15]

The SAFE Banking Act provisions were included in the HEROES Act, a COVID-19 relief bill passed in the U.S. House in May 2020.[16] They were again included in a bill approved by the house 214–207 in October.[17][18] A push to include the SAFE Banking Act provisions in the end-of-year COVID-19 stimulus failed, though hope remained it could pass in 2021 if reintroduced.[19]

117th Congress

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The SAFE Banking Act was reintroduced in the 117th Congress in 2021 by a bipartisan group of over 100 members of the House.[20] In late October 2022, Senate Majority Leader Chuck Schumer said a bill in his chamber was "very close".[21] The Senate bill had additional provisions regarding expungements and was being called "SAFE Banking Plus".[21] Industry publication Marijuana Business Daily asserted that SAFE Banking Plus was likely to be on the agenda in the lame-duck session following the November elections,[22] as did Dow Jones' MarketWatch,[23] while Kiplinger's Personal Finance said it had "some probability" of passage.[24] In late November, Beacon Policy Advisors and Cowen Washington Research Group gave it a 70 and 75% chance of passage respectively.[25]

In early December it was reported that Majority Leader Chuck Schumer, with bipartisan support, planned to attach the legislation to a "must pass" bill like the 2023 National Defense Authorization Act during the lame-duck session.[26]

Amendment to National Defense Authorization Act

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The bill's language was added to the National Defense Authorization Act for Fiscal Year 2022 (NDAA) by amendment on September 21, 2021.[27][28] A letter to Congress by a bipartisan group of just one fewer than half of U.S. state governors urged passage through the NDAA.[29] The SAFE Banking provisions were removed from the NDAA prior to its being signed into law on December 27, 2021.[30][31]

The bill was included in the National Defense Authorization Act for fiscal year 2023 passed by the House on July 14, 2022.[32]

Amendment to America COMPETES Act

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Senator Patty Murray advocates for passage of the SAFE Banking Act on April 20, 2022

In January 2022, Perlmutter introduced an amendment to the America COMPETES Act of 2022 that incorporated the SAFE Banking Act.[33] It was passed by the House on February 4.[34] On April 20, 2022, Senator Patty Murray said that the banking amendment was likely to get passed in the America COMPETES Act "in a little over a month" through conference committee negotiations.[35] Murray became the third-ranking member of the party in control of the U.S. Senate in 2016,[36] and is a member of the conference committee.[37]

118th Congress

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The bill was reintroduced during the 118th Congress on April 26, 2023 in both chambers. Senators Jeff Merkley (D) and Steve Daines (R), and Representatives Dave Joyce (R) and Earl Blumenauer (D) were the lead sponsors.[38][39] The Senate Banking Committee chair, Sherrod Brown, said the bill could get a hearing in the first half of May, 2023,[40] and the first Senate hearing was held on May 11.[41][42] The bill was scheduled for markup by the Senate Banking Committee in June.[43] Politico and other sources reported it was scheduled for a Banking Committee vote on September 27, where it was expected to pass.[44][45]

Senators including Majority Leader Chuck Schumer introduced a new version of the bill called Secure and Fair Enforcement Regulation (SAFER) Banking Act on September 20.[46][47] The bill was passed by the committee on September 27, clearing it for a Senate floor vote.[48][49]

Following the apparent intention of the US government to reschedule marijuana from Schedule I to Schedule III in late April, 2024, Majority Leader Schumer reiterated the need for new banking regulations around cannabis and said he "remain[s] strongly committed" to both SAFER Banking and the Cannabis Administration and Opportunity Act.[50]

Provisions

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The following is the bill summary authorized by the Congressional Research Service (CRS) for the SAFE Banking Act, the version which passed the House in 2021:[51]

This bill generally prohibits a federal banking regulator from penalizing a depository institution for providing banking services to a legitimate cannabis-related business. Prohibited penalties include terminating or limiting the deposit insurance or share insurance of a depository institution solely because the institution provides financial services to a legitimate cannabis-related business and prohibiting or otherwise discouraging a depository institution from offering financial services to such a business.

Additionally, proceeds from a transaction involving activities of a legitimate cannabis-related business are not considered proceeds from unlawful activity. Proceeds from unlawful activity are subject to anti-money laundering laws.

Furthermore, a depository institution is not, under federal law, liable or subject to asset forfeiture for providing a loan or other financial services to a legitimate cannabis-related business.

The bill also provides that a federal banking agency may not request or order a depository institution to terminate a customer account unless (1) the agency has a valid reason for doing so, and (2) that reason is not based solely on reputation risk. Valid reasons for terminating an account include threats to national security and involvement in terrorist financing, including state sponsorship of terrorism.

Finally, the bill decreases the cap on the surplus funds of the Federal Reserve banks. (Amounts exceeding this cap are deposited in the general fund of the Treasury.)

Legislative history

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As of August 2, 2024:

Congress Short title Bill number(s) Date introduced Sponsor(s) # of cosponsors Latest status
116th Congress SAFE Banking Act of 2019 H.R. 1595 March 7, 2019 Ed Perlmutter

(D-CO)

206 Passed in the House (321-103) [52]
S.1200 April 19, 2019 Jeff Merkley

(D-OR)

34 Died in Committee
117th Congress SAFE Banking Act of 2021 H.R. 1996 March 18, 2021 Ed Perlmutter

(D-CO)

180 Passed in the House (321-101)[53]
S.910 March 23, 2021 Jeff Merkley

(D-OR)

42 Died in Committee.
118th Congress SAFE Banking Act of 2023 H.R. 2891 April 26, 2023 Dave Joyce

(R-OH)

128 Referred to Committees of Jurisdiction.
S.1323 April 26, 2023 Jeff Merkley

(D-OR)

42 Senate Banking Committee hearings held May 11, 2023
SAFER Banking Act S.2860 September 20, 2023 Jeff Merkley

(D-OR)

36 including Schumer Passed by Senate Banking Committee on September 27, 2023[49]

Polling

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A November 2022 poll of over 1,200 likely U.S. voters by Data for Progress showed strong support for many provisions of the bill. Making banking system accessible to the cannabis industry was supported by a 57-point margin.[54]

See also

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References

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  1. ^ a b "Actions - H.R.1595 - 116th Congress (2019–2020): SAFE Banking Act of 2019". www.congress.gov. Retrieved May 8, 2019.
  2. ^ Bruce Barcott (March 28, 2019). "Enough Talk! Congress Takes Action on Key Cannabis Legislation". Leafly.
  3. ^ Andrew G. Simpson (March 29, 2019). "House Committee Passes Bill to Protect Banks, Insurers Serving Marijuana Businesses". Insurance Journal.
  4. ^ Saksa, Jim (March 26, 2019). "A pot banking bill is headed to House markup with bipartisan support" – via www.rollcall.com.
  5. ^ Perlmutter press release[permanent dead link] March 28, 2019
  6. ^ Jeanne Friedel (February 20, 2019), "Cannabis's Banking Problem", law blog, Scott Candell and Associates Attorneys at Law[permanent dead link]
  7. ^ "Actions - S.1200 - 116th Congress (2019–2020): Secure And Fair Enforcement Banking Act of 2019". www.congress.gov. 11 April 2019. Retrieved May 8, 2019.
  8. ^ Kyle Jaeger (June 6, 2019). "Bipartisan marijuana banking bill quietly advances in House as floor vote approaches". The Boston Globe.
  9. ^ "Cosponsors - H.R.1595 - 116th Congress (2019–2020): SAFE Banking Act of 2019". www.congress.gov. Retrieved May 8, 2019.
  10. ^ "Cosponsors - S.1200 - 116th Congress (2019–2020): Secure And Fair Enforcement Banking Act of 2019". www.congress.gov. 11 April 2019. Retrieved May 8, 2019.
  11. ^ "House marijuana banking vote officially scheduled for next week, leadership announces". Boston Globe. September 20, 2019.
  12. ^ "Bill history – H.R. 1595: SAFE Banking Act of 2019". GovTrack.us. Civic Impulse, LLC. Retrieved 2019-09-21.
  13. ^ Schott, Jason (September 25, 2019). "Marijuana industry scores big win as House passes SAFE Banking Act". Fox Business.
  14. ^ Dusek, Robin (September 18, 2019). "How the CLAIM Act will affect insurers". Property Casualty 360. National Underwriter. Retrieved September 27, 2019.
  15. ^ Jacob, Denny (September 27, 2019). "P&C industry reacts to the passage of marijuana banking bill". Property Casualty 360. National Underwriter. Retrieved September 27, 2019.
  16. ^ "Surprise! There's Cannabis Reform Legislation in the Latest COVID-19 Relief Bill". The Motley Fool. May 17, 2020.
  17. ^ "The most important N.J. cannabis stories this week: Decriminalization bill stuck, new women-led organization, SAFE Act has a chance". nj.com. October 2, 2020.
  18. ^ "House passes updated HEROES Act with CDFI funding, SAFE Banking Act". Credit Union National Association. October 1, 2020.[permanent dead link]
  19. ^ Skinner, K. (24 December 2020). "Exclusion of the Safe Banking Act in Coronavirus Relief Doesn't Mean It Won't Pass in 2021". JD Supra. Retrieved 7 January 2021.
  20. ^ "SAFE Banking Act, Protecting Financial Partners of Cannabis Businesses, Likely to Become Law". JD Supra. Retrieved 2021-04-12.
  21. ^ a b "Cannabis stocks rise amid Senator Schumer's confidence in passing legislation". Yahoo! Finance. October 31, 2022.
  22. ^ Kate Robertson (October 26, 2022). "Marijuana banking among reforms on the table in upcoming lame-duck Congress". Marijuana Business Daily.
  23. ^ "Medical Marijuana and Cannabidiol Research Expansion Act headed to President Biden's desk". MarketWatch. November 17, 2022.[permanent dead link]
  24. ^ Morgan Paxhia (7 October 2022), "This Week in Cannabis Investing: Canopy Growth Slims Down", Kiplinger's Personal Finance, "SAFE Plus," proposed legislation ensuring equitable access to financial services for cannabis businesses, has some probability to pass later this year in the lame duck session. Passing SAFE Plus could open a pathway for US multi-state operators to uplist to major U.S. exchanges. There is a growing consensus amongst industry insiders that real headway is being made regarding amendments to cannabis policies. This commentary comes from parties working in Washington D.C., and reporting directly about what will be different this time.
  25. ^ Victor Reklaitis (November 28, 2022), Cannabis banking bill and retirement package both could actually pass Congress by year's end, analysts say, MarketWatch, Lame-duck session might result in OKs for 'SAFE Banking Plus' and 'Secure Act 2.0'
  26. ^ "Senate aims to attach major marijuana legislation to end-of-year 'must-pass' bills: report". Fox News. December 3, 2022.
  27. ^ "SAFE Banking Act successfully added to House NDAA". CUNA News. Credit Union National Association. September 21, 2021. Archived from the original on September 22, 2021. Retrieved September 22, 2021.
  28. ^ Jonathan D. Salant (September 22, 2021). "Legal cannabis businesses could get credit cards, checking accounts under new defense bill". Stars and Stripes. Archived from the original on 2021-09-23. Retrieved 2021-09-22.
  29. ^ "Governors Call for Cannabis Banking Bill's Inclusion in NDAA". ABA Banking Journal. American Bankers Association. November 10, 2021.
  30. ^ Anna Hrushka (July 18, 2022). "House-passed NDAA includes banking provisions for cannabis". Banking Dive.
  31. ^ Scott, Rick (2021-12-27). "S.1605 - 117th Congress (2021-2022): National Defense Authorization Act for Fiscal Year 2022". www.congress.gov. Retrieved 2022-09-21.
  32. ^ Connor O'brien; Lawrence Ukenye (July 14, 2022). "House passes $839B defense bill, swatting down Biden's military plans". Politico.
  33. ^ Sam Reisman (January 28, 2022). "Cannabis Bill Roundup: SAFE Banking Gets Another Shot". Law360.
  34. ^ Blair Miller (February 4, 2022). "House again passes Perlmutter's SAFE Banking Act in broader measure; Senate passage uncertain". Denver: KMGH-TV.
  35. ^ Rich Smith (April 20, 2022). "Sen. Patty Murray Sees a Path to Finally Letting Pot Shops Use Banks". The Stranger. Seattle.
  36. ^ "Patty Murray elected 3rd-ranking Democrat in Senate". The Seattle Times. November 16, 2016.
  37. ^ Gerald Tracy (April 20, 2022). "Washington senator pushing for SAFE Banking Act to help stop violent pot shop robberies". Seattle: KOMO News.
  38. ^ Julia MUELLER (April 27, 2023). "Senators unveil bipartisan cannabis banking legislation". The Hill.
  39. ^ John Schroyer (April 26, 2023). "With cannabis banking bill revived in Congress, industry leaders predict major changes on the horizon". Crain's Chicago Business.
  40. ^ Julie Tsirkin [@JulieNBCNews] (May 4, 2023). "This is major news. The SAFE banking bill was *just* dropped last week, now the hearing to process it could take place as early as next week" (Tweet) – via Twitter.
  41. ^ Jelena Martinovic (May 9, 2023). "Optimism Runs High As Marijuana Banking Bill Heads To Senate For Consideration". Benzinga.
  42. ^ Stefan Sykes; Chelsey Cox (May 11, 2023). "Senate holds first hearing on bill to help marijuana businesses access financing". CNBC.
  43. ^ Nancy Ognanovich (June 7, 2023). "Bank Executive Pay, Cannabis Bills on Tap in Senate Before July". Bloomberg Law.
  44. ^ Victor Reklaitis (September 15, 2023). "Cannabis banking bill looks poised to get Senate committee's OK on Sept. 27". MarketWatch – via MSN.
  45. ^ Julie Tsirkin; Liz Brown-Kaiser (September 14, 2023). "Republicans soften on federal marijuana reform in a shift that could make it a reality". NBC News. A bill that would let legal marijuana businesses get access to major financial and banking institutions is likely to have the votes to pass the Senate.
  46. ^ "Senators introduce new version of SAFE Act". ABA Banking Journal. American Bankers Association. September 20, 2023.
  47. ^ "Schumer, Merkley, Daines, Sinema, Lummis Announce SAFER Banking Act". Official website. Senate Democrats. 20 September 2023.
  48. ^ Arunima Kumar; Sourasis Bose (September 27, 2023). "Cannabis banking legislation moves forward in US Senate". Reuters.
  49. ^ a b Senate Banking and Housing Democrats [@SenateBanking] (September 27, 2023). "The SAFER Banking Act has passed the Committee with a bipartisan majority" (Tweet) – via Twitter.
  50. ^ Zeke Miller; Joshua Goodman; Jim Mustian; Lindsay Whitehurst (March 22, 2019). "US poised to ease restrictions on marijuana in historic shift, but it'll remain controlled substance". Associated Press.
  51. ^ Perlmutter, Ed (2021-04-20). "H.R.1996 - 117th Congress (2021-2022): SAFE Banking Act of 2021". www.congress.gov. Retrieved 2021-10-04.
  52. ^ Veronica Stracqualursi (2019-09-26). "House passes cannabis banking bill, but it faces uncertainty in Senate - CNN Politics". CNN. Retrieved 2021-04-30.
  53. ^ Arathy S Nair (April 19, 2021). "House passes marijuana banking legislation 321-101". Reuters – via San Jose Mercury News.
  54. ^ Suhan Kacholia (November 28, 2022). "A Majority of Voters Support the Provisions of the SAFE Banking Act". Data for Progress.

Further reading

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