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What Is The SAFE Banking Act and What Does It Look Like in 2021

To date, 47 states, 4 U.S. territories and the District of Columbia have legalized or decriminalized marijuana in some way. The cannabis industry is here to stay, and it’s been growing exponentially as proof.

Still, compared to all the other industries, starting a legitimate licensed cannabis business is difficult, especially regarding finances. Because marijuana is still considered illegal under the Controlled Substances Act (CSA), CBD shops and dispensaries are considered high-risk businesses.

Since banks or payment processors are so hesitant when it comes to working with cannabis-related businesses, the owners of such businesses have trouble raising capital, getting better loan rates and approvals or processing their payments.

With over 7,500 dispensaries and CBD shops across the country, it only makes sense that the legal system needs to catch up and pass a few bills that federally approve cannabis-banking activities, like the SAFE Banking Act.

What Is the SAFE Banking Act of 2021?

This year, the long-awaited Secure and Fair Enforcement (SAFE) Banking Act and the related Clarifying Law Around Insurance of Marijuana (CLAIM) Act were reintroduced in Congress.

Together these pieces of legislation offer a legal safe harbor for financial and insurance services provided to cannabis companies that operate legally under state laws.

This bill generally prohibits federal regulators from penalizing financial institutions for providing banking services to legitimate cannabis-related businesses. The bill also specifies that a federal banking agency may not request or order a financial institution to close a customer account without a valid reason, unless:

  1. The agency has a valid reason for doing so.

  2. The reason is not based only on reputation risk.

The impact of this bill, if passed, will be an overhaul on how banks work with cannabis businesses. It would change the way they interact and do business, including those outside their industry norms, such as carriers or brokers associated in supporting marijuana markets.

When Did the SAFE Banking Act Originate?

This bill is nothing new, as the act was first introduced to the U.S. Congress in May 2017 under the sponsorship of House Representative Ed Perlmutter and Senator Jeff Merkley. Since then, there have been attempts to pass the bill – most notably in 2019. The bill passed in the House of Representatives (321-103), but died in the Senate.

This year’s SAFE Banking Act is under the sponsorship of Perlmutter in the House and Steve Daines and Merkley and in the Senate. The core provisions of the 2021 bill remain the same as that of the 2019 bill.

Both bills include protection for hemp businesses and minimal technical changes to the language, as well as a slightly expanded definition of financial services, which have been described as additional incentives for bipartisan support.

Understanding the Intentions Behind the SAFE Banking Act

If SAFE Banking does become a law, many financial institutions that are concerned about punishment on a federal level are going to be relieved, which would make it easier for them to work with cannabis-related businesses. More specifically, it prohibits:

  1. Restricting, penalizing, discouraging directed towards a financial institution that provides services to cannabis-related businesses from the federal banking regulators

  2. Assuming that transactions from a lawful cannabis-related business are inherently unlawful and, therefore, are a subject to anti-money laundering regulations

  3. Requesting or ordering a depository institution to terminate its customer relationship with cannabis-related business unless the federal banking regulator has good reason

  4. Establishing that deposition institutions are liable or subject to asset forfeiture for providing loans or other financial services to legitimate cannabis-related businesses under federal law

The SAFE Banking Act will bridge the gap between cannabis companies’ legal standing, the legal status of marijuana sales and usage on a federal level.

Who supports the SAFE Banking Act?

There’s a lot of support for the 2021 SAFE Banking Act, both from financial institutions and political figures around the country.

In fact, the bill has support from the National Association of State Treasurers and Governors from 21 States and Territories. Others include Wells Fargo, HSBC North America, Paypal, Prudentia and the American Bankers Association, a vital lobbying group representing the $17 trillion U.S. banking industry.

Among other organizations that expressed their support are:

  1. The State Banking Associations in every state

  2. Americans for Tax Reform

  3. Credit Union National Association (CUNA)

  4. Law Enforcement Action Partnership (LEAP)

  5. Independent Community Bankers of America (ICBA)

The support from the financial industry is quite understandable, as the bill would provide a safe harbor for depository institutions looking to serve legitimate cannabis-related businesses in states where cannabis is partially or fully legal.

Some governors who are also supporting the bill believe that this banking issue has, in fact, become a public safety concern. In one year alone, 135 robberies and armed burglaries occurred at dispensaries in Oregon. With nearly $18 billion worth of legal cannabis sales yearly in the US, which are only projected to grow, the public safety issue will only continue to grow as well.

Will the SAFE Act Pass in 2021?

With Democrats in control of the White House and Congress, many hope that this will be the year that the bill passes the Senate and is signed by President Joe Biden to become law.

After being introduced in the House of Representatives on March 18, 2021 and passing (321-101) just 30 days later, the SAFE Act is currently still under review in the senate.

After being reintroduced in 2021, SAFE was embedded within the Defense Spending Budget and approved by the U.S House of Representatives, unlike the previous stand-alone act, which got stuck within the Senate and never made it to the floor.

More importantly, the senate must pass and approve the budget bill, which is typically voted on in early December.

The odds seem to be in the Bill’s favor. The legislation has bipartisan support, meaning that both Democrats and Republicans are pushing this cannabis reform change.

It doesn’t mean that there’s no opposition for the bill, as some view it as not progressive enough in social justice, but with all the support that the bill gathered in recent years, the timing seems right.


Most financial institutions, including federally insured banks, are still hesitant to work with cannabis-related businesses because they fear punishment from federal banking regulators.

The SAFE Banking Act 2021 will pave a way ahead for cannabis-related businesses and financial institutions, allowing for cannabis-related business owners to grow their businesses with larger financial support.

At Merrco, we help cannabis-related companies in the US by keeping customers complaint in regulated industries, while giving you an edge over your competition with intelligent, simple payments that are tailor-made just for your business.

To learn how Merrco can help with your needs, get started here to speak with one of our experts.

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