Woman standing at ATM of bank

The SAFE Banking Act and the future of cannabis banking in the U.S.

Armored cars. Ex-military guards. Automatic pistols. Black cash boxes. These are all necessary components to transfer money throughout a number of states. It’s not the black market. It’s the cannabis industry. An industry with perfectly legal operations (in some states) and yet barred from access to federally-regulated and insured centralized banking systems, leaving them with limited alternative means to safely and properly store and move funds.

The fact of the matter is that the purchase and sale of marijuana for recreational use by individuals over the age of 21 is legal in 15 U.S. states (and counting) and Washington D.C., while over a two-thirds of the states allow medicinal marijuana. In addition, other states have decriminalized recreational marijuana.  However, illegality on the United States federal level has made it impossible for legitimate cannabis-related businesses to store their money in federally chartered and insured banks. By simply doing business with cannabis companies, banks put themselves at risk of severe federal censure by regulators. Thus, with no federal banks to turn to and very few credit unions offering their services to a market that far outnumbers them, many state-legal cannabis businesses are left with little alternative but to resort to private security transport by bulletproof vehicles and armed guards moving their cash from place to place, assuming they’ve been able to secure an alternative banking solution or vault. Even with an alternative banking solution, the lack of a viable legal method of transferring funds electronically has resulted in all cash businesses. And there is a lot of cash at play.

Not only is the current system unsafe for those involved, but it hinders the states’ and localities’ ability to collect taxes and license fees from these companies, not to mention the challenges of paying employee wages and federal employment taxes. So where does that leave the cannabis industry as a whole? Some states have initiated legislation to help solve the banking problem, but what about the federal government? Where does it stand on the issue?

Until the new Federal Administration makes efforts to reform federal marijuana policy, one of the most intriguing bills in play is the SAFE Banking Act.

What is the SAFE Banking Act?

The Secure and Fair Enforcement (SAFE) Banking Act, also known more formally as H.R. 1595, aims to prevent federal regulators from intervening in the actions of a depository institution dealing with a legal cannabis business. More plainly, it protects financial institutions that elect to do business with cannabis companies in states where marijuana is legal. The bill, if passed, would prohibit federal regulators from interfering or punishing financial institutions for the sole reason of working with legitimate cannabis-related businesses.

Origins of the SAFE Banking Act

The SAFE Banking Act is a direct response to financial service issues plaguing state-legal cannabis companies operating in the United States. More specifically, the legislation intends to bridge one of the gaps between the companies’ legal standing in particular states and the current federal prohibition of marijuana sales and usage. There are clear and obvious problems tying the hands of the legal cannabis companies and forcing them to go all cash. Banks and other federal service institutions also have their hands tied, as working with cannabis businesses either straps them with severe compliance regulations and/or puts them at risk of federal punishment. As a result, cannabis companies performing legal operations are themselves at risk, not just from a business perspective, but also from the risk to their employees from potential robbery targeting cash on-premises.

A solution – at the federal or state level – is vital.

Where does the bill stand today?

Starting the Process

Originally, the SAFE Banking Act made its way to Congress in May of 2017 under the sponsorship of Sen. Jeff Merkley (D-OR) and Rep. Ed Perlmutter (D-CO). However it never received a full vote or hearing in either chamber of Congress.

Following the 2018 election year, the SAFE Banking Act was again introduced to the House of Representatives by Rep. Perlmutter and Rep. Denny Heck (D-WA) on March 7, 2019. The bill was referred to the Judiciary and Financial Services Committees of the House. Promptly on March 28, 2019 the Financial Services Committee, led by Rep. Maxine Waters (D-CA), voted 45-15 to advance the bill to a full House vote. At the time, the bill had garnered wide spread bipartisan support and collected 152 cosponsors.

However, after success in the Financial Services Committee, the bill stalled in the House. In response, a bipartisan group of attorneys general from 33 states and five territories pushed Congress to advance the bill to the House at large. Subsequently, on June 6, 2019 the bill transferred out of the committee and landed on the calendar for a future House vote.

The House Vote

On September 25, 2019, the House of Representatives passed the SAFE Banking Act – marking the first time in history that a chamber of U.S. Congress passed a standalone marijuana reform bill. The bill received an overwhelming majority vote, 321-103.

Up Next: The U.S. Senate

Despite a strong bipartisan victory in the House, the bill has stalled in the U.S. Senate where it is yet to even be brought to the floor. However, with the balance of Congressional power – particularly in the Senate – shifting under the new Biden Administration, we await to see if the SAFE Banking Act will finally be brought to a vote.

Supporters are hopeful, noting the remarkably strong bipartisan support in the House and the explicit pledges by new Congressional leaders to deliver federal marijuana policy reform.

What do supporters and the opposition have to say?


Following the historic committee vote in March, a number of different lobbyists and cannabis groups became actively involved in the push to pass the bill. Notably, some of the largest financial institutions in the country included the SAFE Banking Act in their first quarter lobbying reports.

The involvement and support from banks comes as little surprise as the American Bankers Association (ABA) has been a vocal supporter of the SAFE Banking Act and even testified on its behalf during the House Financial Services Committee hearing. Joining the ABA in support of the bill are other national banking groups like the Credit Union Association and the Independent Community Bankers of America. The National Association of State Treasurers and the National Organization for the Reform of Marijuana Laws (NORML) are both in favor of the SAFE Banking Act.

Among the arguments put forth by the ABA is that the inconsistent marijuana laws on the federal and state level have yielded far broader issues for financial institutions. It is about more than whether they can open checking accounts for cannabis businesses. In their written testimony, the ABA explains, “The impact of the divide between state and federal taxes extends to any person or business that derives revenue from a cannabis firm – including real estate owners, security firms, utilities, vendors and employees of the cannabis business.”

In an open letter to Congressional leaders, 38 state and attorneys general wrote that the current cannabis banking situation, “makes it more difficult to track revenues for taxation and regulatory compliance purposes, contributes to a public safety threat as cash-intensive businesses are often targets for criminal activity, and prevents proper backing of billions in finances across the nation.”


On the other side of the coin are those opposed to this particular banking bill.

The American Civil Liberties Union (ACLU), the Center for American Progress, The Drug Policy Alliance and Human Rights Watch are among the high-profile organizations urging Congressional leaders to stall the bill. The Drug Policy Alliance explained, “We are concerned that if the House approves this bill, it will undermine broader and more inclusive efforts to reform our country’s marijuana laws…The banking bill does not solve the underlying problems of marijuana prohibition – namely, that many people of color have been saddled with criminal records for a substance that is now legal in many states, and that communities have been shut out of the emerging and booming marijuana industry.”

Instead, the Drug Policy Alliance supported another piece of legislation, the Marijuana Opportunity Reinvestment and Expungement (MORE) Act. The measure aims to end federal cannabis prohibition by descheduling marijuana from the Controlled Substances Act, expunging marijuana convictions and creating programs to help communities reap the financial benefits of legalization. Essentially, it promises to address more than the banking concerns. The MORE Act was reintroduced on November 27, 2020, and passed in the House on December 4, 2020, marking the first time a chamber of the United States Congress approved legislation to end the US federal prohibition on marijuana.

Why is the SAFE Act so important?

Marijuana prohibition took hold 80 years ago when the federal government banned the sale, cultivation and use of the cannabis plant. However, since then 15 states and Washington D.C. have legalized the growth, sale and distribution of cannabis for recreational adult use. An even greater number of states now permit cannabis use for medical purposes and have decriminalized recreational marijuana use. The federal government is behind the times. Our fellow North American countries each legalized marijuana at the federal level. In October 2018, it was Canada – becoming the first G7 country to do so - and Mexico soon followed suit once the Mexican Supreme Court ruled that marijuana prohibition was unconstitutional.

The rise in the number of states choosing to legalize the product reflects the changing beliefs about marijuana use in general. In a Pew Research Center poll in 2018, 62% of Americans were in favor of legalizing marijuana. This was not new information, in fact this poll number reflects a steady increase in favorability. Of the poll respondents, 74% of Millennials, 63% of Gen Xers, and 54% of Baby Boomers were in favor of marijuana legalization.

While it is unclear how the federal government will address cannabis in the near future, the reality is that a growing number of individual states are on board with decriminalization. Allowing banks and other financial institutions with federal ties to legally and safely do business with the burgeoning cannabis industry is critical.

As it stands right now, the US federal banking ban on doing business with cannabis-related businesses is impacting more than just those directly involved. For example, Green Bits, a company that helps cannabis retailers and dispensaries manage their businesses and stay compliant with state laws, experienced this firsthand. The company had one of their financial service providers terminate their relationship with the company due to their cannabis connection. No work that Green Bits does touches marijuana; however, the tangential link was enough to push the financial institution away. The lack of federal legislation protecting banks doing business with cannabis companies is adversely affecting other companies and industries as well.

What can I do while we wait?

Even as legislation continues to hit roadblocks, life goes on for cannabis companies. The change in power at the federal level – particularly to a party and leader more in favor of passing policy reform for the cannabis industry – may serve as a beacon of hope for the future. But until that day comes, if it ever does, Baker Tilly has the expertise and background to help cannabis businesses safely do business and stay compliant with their respective US federal, state and local accounting, financial, and tax compliance, reporting, and payment obligations.

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