SAFE Banking Act Providing Access to Banking Services

SAFE Banking Act Providing Access to Banking Services

SAFER Banking Act Providing Access to Banking Services


The legal cannabis business is currently one of the most budding industries in the United States with immense room for growth. In 2017 alone, the marijuana industry recorded a total of $9 billion in sales, and market growth is expected to hit $21 billion by 2021. As at now, over 33 states have legalized the use of the drug for medical and recreational purposes, including California, Maine, Massachusetts, Nevada, and the District of Columbia.

Whereas cannabis is increasingly becoming legal, many states still consider the drug illegal as per federal law. As such, following state laws is imperative if you want to get into the industry. Entrepreneurs who intend to set up a legal marijuana business must comply with the complex, ever-evolving cannabis rules and regulations.

In this article, we will explore the legal considerations involved in setting up cannabis related legitimate businesses, choosing the type of business to engage in, and securing real estate and banking services for the business.

Choosing a Legitimate Cannabis Business

Each state has unique license types, as well as laws and regulations governing the cannabis industry. To operate any cannabis related legitimate businesses, you must secure a license from your respective state. Three main types of marijuana business categories exist; cultivation, retail sales, and infused product manufacturing.

Businesses that are involved in the cultivation of marijuana are heavily regulated compared to their counterparts. Marijuana cultivation encompasses the growing, drying, trimming, curing, and packaging of the drug for sale to dispensaries or retail facilities. These operations require a high level of horticultural expertise and large initial capital.

Infused products business involves the acquisition of edible marijuana, salves, and tinctures from authorized facilities and supplying them to patients and recreational users. This business also involves the process of extracting resin from the drug and creating an infused product for sale, after which the entrepreneur then transfers the infused products in packaged form to retail stores and dispensaries.

Retail sales (also known as collectives or dispensaries) refer to general stores that deal with the sale of cannabis-related products to final authorized users. These facilities source the drug from a licensed marijuana cultivator or processor and supply it to qualifying patients and customers. Setting up this type of business is difficult and expensive, but the rewards are lucrative once it starts rolling.

Before you set up a cannabis business, it is best to reach out to an attorney who specializes in the field of marijuana. A cannabis-focused attorney will discuss with you all states laws and regulations and help you apply for a license as per the law. Some states have an open license application window where several licenses are issued at once, while others restrict the number of license applications and require proof of competency and availability of capital.

A licensed cannabis lawyer will help you speed up license application and approval so that your business can get up and running as soon as possible. Without an attorney, you are bound to make mistakes in the application, which could delay or even nullify the whole process. A lawyer will help you meet all the regulatory requirements to ensure you remain compliant as per the terms of your license application.

Securing Real Estate for a Legitimate Cannabis Business

You need to find a feasible location for your cannabis-oriented business that will be easily accessible to your intended customers. Some factors that affect the location of your facility include real estate costs and proximity to schools, churches, and daycare centers.

Whether or not food traffic is your major concern, you must also comply with your local and county zoning policies when choosing a location for your marijuana business. Most zoning laws stipulate that any cannabis related business must be located about 1,000 ft away from schools, daycare centers, and churches.

You can set up a consultation with industry experts for best practices when securing real estate for your legitimate cannabis business. You will be guided on how to pick the right location so that you can keep your business expenses as low as possible.

Cannabis SAFE Banking Act

Although over half of the U.S states have legalized and regulated marijuana use, many banks have been reluctant to service authorized businesses in the industry for fear of federal penalties. Continued federal bank limitations have forced cannabis business owners to deal primarily in cash because they are not able to open bank accounts with state-chartered financial institutions.

Fortunately, these restrictions are about to come to an end with the approval of the SAFE Banking Act by California Senate and Illinois lawmakers. Under the legislation, credit unions and private banks are allowed to get a limited-purpose state charter to help them provide depository services to state-legal marijuana business entities. The new cannabis banking legislation would block federal officials from imposing penalties on banks that choose to service legitimate cannabis related businesses (CRBs).

This Secure and Fair Enforcement (SAFE) Banking Act intends to provide an effective and safe harbor to federally chartered banking institutions working with cannabis businesses. The legislation, which received the approval of a large and diverse group of lawmakers, would stop state agencies from issuing federal sanctions to banks working with CRBs in states where marijuana is legal under the law.

The SAFER Banking Act, which is sponsored by Ed Perlmutter, Denny Heck, Warren Davidson, and Steve Stivers with the support of the banking sector, seeks to stop federal banking regulators from threatening the traditional banking system solely because their patrons are CRBs. It also seeks to protect bank employees from liability for state prosecution when working with cannabis businesses.

The new legislation also hinders any attempt by a state to force a banking institution to stop providing depository services to a CRB, limit its insurance for servicing a CRB, relegate a credit made to a CRB, or take any other action deemed prejudicial in a state where marijuana is legal.

The creation of this safe harbor will protect traditional banks from any form of regulatory reprisal from the federal banking regulators. The SAFE Banking Act acknowledges the capacity of the traditional banking system to fully service this industry, hence there is no need for a state to establish other credit unions to service the CRBs.

SAFE BANKING ACT UPDATES – September 27, 2023

The Senate Banking Committee passed the Cannabis Banking Bill also known as the “SAFER Banking Act”. The Senate Banking Committee voted 14-9 in favor of passing the SAFER Banking bill to the Senate floor. This is a major victory for the cannabis industry as it would allow state-legal cannabis businesses to access traditional banking services.

Who We Are

We are a full-service law firm based in Peoria, Illinois. My name is Attorney Thomas Howard. I have a team of knowledgeable, talented, and dedicated attorneys who provide comprehensive legal counsel to clients in the cannabis industry. Together with my team, we can help you start, manage, and protect your cannabis business, secure state licenses, and municipal permits, find the perfect location to site your marijuana business, and influence depository institutions to offer banking services for your cannabis-related business.

Why Choose Us?

We understand that setting up a cannabis-related business requires a deep understanding of the intricate legal regulations involved in this sector. Federal policies governing the cultivation, possession, and distribution of marijuana are subject to change. For this reason, our goal is to help entrepreneurs start a thriving business in the medical and recreational cannabis industry.

We take pride in our competent marijuana business lawyers, who possess the utmost familiarity with federal, state, and local laws governing this type of business. We want to help you stay on top of this constantly-evolving industry by remaining 100% compliant with all the regulations available. We are passionate about making sure you understand every law that applies to your situation so that your business succeeds.

Get in touch with our Illinois-based lawyers today to schedule a consultation. We are here to protect your budding marijuana business every step of the way.

Thomas Howard has been in business for years and can help yours navigate toward more profitable waters.

Thomas Howard was on the ball and got things done. Easy to work with, and communicates very well, and I would recommend him anytime.

Our cannabis consultants can help you become a successful cannabis business owner.  We can help you structure your business or help protect it from overly burdensome regulations.

Want to win a license?

Here’s where you can learn how we’ve won before and will again.