The SAFE Banking Act of 2019

A Bill introduced to Congress and dubbed the Secure and Fair Enforcement (SAFE) Banking Act of 2019 includes big changes to federal marijuana policy.  The SAFE Act does the following:

  • Safe harbor for Depsository Institutions
    • Federal Bank regulators cannot prohibit “cannabis-related legitimate businesses” (CRLB)
    • no bad acts against employees of CRLB
    • real estate related to CRLB
  • Protect Ancillary Businesses from:
  • Protections Under Federal Law
    • Generally protected under federal law if state law-compliant
    • Forefieture Protections for CLRBs
  • Not Required to Lend to CLRBs
  • Clarity on Suspicious Activity Reports (SAR)
    • Generally Follow FINcen Guidance
    • Guidance must follow SAFE Act

There – that is the brief and general outline of the SAFE Act.  Let’s discuss what it means & how it became the first marijuana law to make it out of Committed.  But if you need to, by all means, please…

Contact our Cannabis Banking Lawyers

If your financial institution has a question about banking cannabis, our founding cannabis lawyer practiced exclusively for banks in complex commercial litigation – and frequently still publishes on the areas of banking and cannabis – so give our cannabis lawyers today at (309) 740-4033 to discuss the SAFE Banking Act.

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For the first time ever in the history of marijuana legalization, a federal bill to limit the criminal penalties for marijuana has made it out of committee.  The Safe and Fair Enforcement Act of the 116th Congress included dozes of sponsors, including Illinois’ own Raja Krishnamoorthi.

The SAFE Banking Act stops bank regulators from shutting out “cannabis-related legitimate businesses” from financial services.

SAFE Banking Act Vote in Congress

Because the SAFE Banking Act made it out of committee, it moves forward to floor action – the next stage in the legislative process.  We will recap the seven major steps in the legislative process in a moment, but if you want to review the text of the law.  Feel free to click the link below – or scroll down for our analysis.

Full Text of the SAFE Banking Act Here.

The Legislative process has seven major steps.  Until 2019, each and every marijuana legalization bill never made it past step two – the committee process.  Let’s recap all seven steps of making a law.

  1. The Bill is introduced
  2. The Bill goes to committee
  3. Floor Action
  4. Vote
  5. Conference Committee
  6. Presidential Signature
  7. Law becomes effective

So there is still a lot that can go wrong before the SAFE Banking Act becomes law.  The Bill now has to get Floor Action, where amendments to the bill are proposed and discussed.

When the vote will be held on it depends on how much discussion the bill gets, which then also must wind its way through the Senate – where it could still die.

TL;DR Version of the SAFE Banking Act

There is a long way to go, but it is the most successful marijuana legalization bill ever – and it effectively legalizes marijuana in states that allow it – and allows banking to Cannabis-related Legitimate Businesses (CRLB)

What’s a Cannabis-related Legitimate Business

The short, glib answer is what the SAFE Banking Act defined it is.  Basically, it is a cannabis business that is operating in compliance with its state laws. The protections under the SAFE Banking Act extend beyond CRLBs and go into their employees, and even real estate owned.

Safe Harbor for Banks

Regulators for federally insured banks will not be able to terminate the FDIC insurance for CRLB business.  Further, the federal regulators cannot punish a bank for providing services to not only CRLBs, but also their employees and any leases for equipment or real estate that the CRLB has.

Protections for Ancillary Businesses

Not only are the CRLBs protected, but also the Money Laundering laws and the transactions involving unlawful activities (like trafficking in marijuana – a Schedule I substance under the CSA).

More Federal Protections for CRLBs

Banks cannot be “held liable to any Federal law or regulation” for providing financial services to CRLBs, or for further investing any income derived from those banking services.

But wait – there’s more!

The asset forfeiture laws will also not apply to CRLBs that have a loan with a bank that includes collateral – meaning that CRLBs can have bank loans for real estate or equipment without worry that the Federal asset forfeiture laws for trafficking in Schedule I substances won’t apply.

Banks are Not Required to Lend to CRLBs

Banks that do not want to lend to CRLBs do not have to under the SAFE Banking Act – but those that want to make money can.

Clarity on Suspicious Activity Reports

The FinCEN guidance from the Obama administration for Suspicious Activity Reports (SARs) is reaffirmed and strengthened by the SAFE Banking Act.  The FinCEN guidance from the Obama administration set the policy for three different levels of SARs for banks lending to CRLBs.

The SAFE Banking Act goes further by requiring future FinCEN guidance to expressly comply with the SAFE Banking Act.

 Conclusion: 116th Congress Votes on SAFE Banking Act

It’s not as eloquent as it should be, much like America’s cannabis laws.  But the SAFE Banking Act is the best marijuana law to ever make it out of committee in the history of the federal government – which to be fair is a very low bar.

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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.

April 20, 2020

We’ve written before about the “SAFE Banking Act”, a bipartisan bill to help the burgeoning cannabis industry get access to basic financial services. The basic premise of the Act is to provide a safe harbor to credit unions and private banks to get a limited-purpose state charter, in order to provide services to state-legal cannabis businesses. Back in September 2019, the bill passed the House of Representatives last September by a bipartisan 321-103 vote. The Senate companion bill, S.1200, has 33 sponsors, five of whom are Republican Senators, including Cory Gardner of Colorado, possibly the most vulnerable Republican Senator up for reelection this year. Senator Gardner’s reelection concerns may play a disproportionate role in the Senate’s legislative schedule for the rest of the year. Additionally, Senator Rand Paul of Kentucky is also a co-sponsor of the bill, which may be persuasive to Senate Majority Leader and fellow Kentuckian, Mitch McConnell.

COVID-19 Relief for Small Business May Include Cannabis SAFE Banking

Unfortunately, the ongoing COVID-19 pandemic has put a halt to nearly all legislative efforts in DC and across the states. The first round of COVID-19 relief, the CARES Act, contained a host of programs designed to help small and not-so-small businesses across the country. The cornerstone of the CARES Act is the “Paycheck Protection Program”, or PPP. While the program is currently out of funding, The basics of the program is fairly straightforward. The Small Business Administration (SBA) provides loans to small businesses to keep employees on payroll. As long as all employees are kept on the payroll for eight weeks, and the money is used for payroll, rent, mortgage interest, or utilities, the SBA will forgive all loans. Even in states like Illinois where cannabis has been declared an “essential” business, cannabis businesses have been struggling during the quarantine and could benefit massively from the program.

In all likelihood, the PPP will be replenished in the coming days. The struggle seems to be whether PPP will get a straight injection of funds through a “clean” bill, or whether it will pass as part of some kind of greater relief package. In the likely event that there is no “clean” bill, lawmakers are already discussing other programs to finance as part of a greater COVID-19 relief effort. Ed Perlmutter (D-CO), the original sponsor of the SAFE Banking Act, is reportedly hoping to get some form of the SAFE Banking Act into a COVID-19 relief package. It’s hard to say how likely this is, but banks could find themselves with a breadth of new cannabis opportunities much sooner than expected.



Licensed to practice since 2008, Thomas Howard has represented numerous financial institutions in litigation to enforce their security interests.
Homegrown Cannabis Co's Cannabis Seeds


Licensed to practice since 2008, Thomas Howard has represented numerous financial institutions in litigation to enforce their security interests.

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