Breaking down the Safe Banking Act: Why it Matters for Cannabis Businesses and Financial Institutions and Consumers
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Breaking down the Safe Banking Act: Why it Matters for Cannabis Businesses and Financial Institutions and Consumers

The Safe Banking Act, also known by the Secure and Fair Enforcement Banking Act (SAFE Banking Act), was a crucial piece of legislation that addresses the critical issue that financial services are being denied to marijuana-related businesses. Over the past few years, we’ve written extensively on the SAFE Banking Act. You can find more information about the SAFE Banking Act here, here and here. Let’s take a look at the SAFE Banking Act and its implications for marijuana businesses, financial institutions, consumers, and others.
Since 2013, the SAFE Banking Act has been under discussion. It provides a legal framework that allows financial institutions to offer banking services to cannabis-related companies, even though marijuana is still illegal in the federal government. Despite the state-wide legalization wave, financial institutions are still cautious about providing banking services to cannabis-related businesses due to the conflict between state and federal law and their inherent risk-avoidant nature.
This has led to a situation in which cannabis-related businesses have difficulty accessing banking services. This has resulted in predatory arrangements where services are possible, inability to raise capital and many licensed businesses operating entirely in cash. This has created significant safety and security issues for both the customers and line-level retail workers of cannabis businesses.
The SAFE Banking Act would shield financial institutions that provide services to marijuana businesses from federal prosecutions and regulatory backlash. It should also eliminate the risk of civil RICO lawsuits in which a plaintiff seeks out a bank with deep pockets. The SAFE Banking Act would make it much easier for cannabis-related companies to access banking services, reduce their dependence on cash, and provide greater transparency for investors and taxing authorities as well as regulators.
Implications for cannabis industry
The SAFE Banking Act would be a huge boon to the cannabis industry. These businesses are more likely to be robbed or burglarized because they are cash-only. It also creates accounting issues and tax problems and reduces transparency essential when looking for new capital investors or selling (or buying!) a marijuana business. This legislation is essential for the United States to reduce the illegal cannabis market and create a healthy, regulated market. These goals can only be achieved if the tax code is changed – i.e. The burdensome effects of IRC 280e.
Financial institutions should be aware of the implications
Two important things would be done by the SAFE Banking Act for financial institutions. The first is that financial institutions can make money by offering services to marijuana-related businesses. To do this without fear of regulatory or criminal backlash. It is unlikely that financial institutions will ever be able to provide legal protections for this industry – and the moldering FinCEN memo won’t cut it – unless they are given such protections.
Consumer implications
Consumers see safety as the main benefit. These businesses are able to target criminals because they operate in cash. Customers being able to use debit and credit cards to purchase goods would decrease the risk and increase safety. Another implication could be lower prices as cannabis businesses may be eligible to receive traditional business financing to purchase equipment, and so forth. This is in addition to relying on private financiers and lenders.
What’s next for SAFE Banking Act?
The Senate has not yet acted on the SAFE Banking Act. It has passed the House six times with bipartisan support. This could be the year that legislation finally moves forward. It is urgently needed.


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