The U.S. House of Representatives on Wednesday passed legislation that allows marijuana-related businesses in states with legal cannabis to access the banking system, lawmakers in support of the bill said.
The Secure and Fair Enforcement Banking Act of 2019—otherwise known as the SAFE Banking Act—also incorporated language specific to the hemp industry, including a directive for federal banking regulators.
Within 90 days of the bill’s enactment, regulators must “jointly issue guidance to financial institutions,” verifying hemp and hemp-derived cannabinoid products are legal; and confirming it is legal to engage in financial services with such businesses.
"Final passage of this bill would serve as a tremendous boost to the hemp industry," Jonathan Miller, general counsel to the U.S. Hemp Roundtable, a coalition of hemp companies, said in an email. "Too many hemp and CBD companies have been struggling finding banks and credit card companies willing to do business with them. The SAFE Banking Act will encourage many financial institutions to support the hemp industry by removing their fears that such commerce would be illegal."
The SAFE Banking Act passed the House by a vote of 321 to 103, but the bill—H.R. 1595—still must clear the Senate.
The legislation bars federal regulators from taking punitive measures against depository institutions that provide banking services to legitimate cannabis-related businesses and ancillary businesses, such as electricians and landlords who serve marijuana dispensaries.
Lawmakers in support of the bill hailed its passage as a milestone for the cannabis industry. Though many states have legalized marijuana for medical and/or recreational use, marijuana businesses often encounter difficulties accessing banking services and must deal in mountains of cash due to federal law’s continued prohibition of marijuana.
“Thousands of employees, businesses and communities across this country have been forced to deal in piles of cash because of the conflict between state and federal law,” Rep. Ed Perlmutter, a Democrat from Colorado and one of the bill’s co-authors, said in a statement. “After six years of working on this bill, the SAFE Banking Act will go a long way in getting cash off our streets, and providing certainty so financial institutions can work with cannabis businesses and employees.”
In 2018, Congress removed from the Controlled Substances Act (CSA) hemp and hemp-based derivatives, including CBD. The hemp industry, nonetheless, has continued to face obstacles accessing financial services.
“Difficulty in finding banks and credit card companies to handle financial transactions has been plaguing the hemp industry for many months,” the U.S. Hemp Roundtable noted in a Sept. 22 update, commenting on hemp language introduced to the SAFE Banking Act by Rep. Andy Barr (R-Kentucky). “Too many financial institutions refuse to do business with hemp and CBD companies, worried about the risk that they will be sanctioned by federal agencies.”
The SAFE Banking Act will go to the Senate where it could face obstacles. Ian Katz, an analyst at Capital Alpha Partners, estimated the bill has a 1 in 3 chance of being enacted this year, MarketWatch reported.
Sen. Majority Leader Mitch McConnell (R-Kentucky) has been an avid supporter of hemp, though he has a different view on marijuana.
As the Hill reported, McConnell told reporters last year he had no plans to support the legalization of marijuana. “It is a different plant,” the newspaper quoted the senator in a May 8, 2018 article. “It has an illicit cousin, which I choose not to embrace.”