The Importance of the SAFE Banking Act Introduced in Congress
Ever wonder why your favorite dispensary doesn’t accept credit cards online or at checkout like all other retailers do?
The issue of providing marijuana businesses with access to financial services is complex and largely preempted by federal constraints. However, the Justice Department and the Treasury Department’s Financial Crimes Enforcement Network have issued guidance intended to enhance the availability of financial services for marijuana businesses.
Unfortunately, most banks view this guidance as either insufficient safe harbor or as imposing too heavy of a compliance burden on their organizations and refuse to provide cannabis business with access to bank accounts and other financial services. MasterCard and Visa take a similar stance and refuse to provide cannabis businesses with access to merchant accounts necessary to facilitate credit card transactions.
As a result, many cannabis businesses run cash-only businesses or pay high fees to local banks willing to take on the regulatory risk. For banks that do take the risk, there is no shortage of red tape. The federal government has put an additional burden on local banks with limited resources and requires they file regular “Suspicious Activity Reports” for each cannabis business they bank.
Just last month, bankers’ associations for 50 states and Puerto Rico signed a letter that requests the Senate consider letting financial institutions legally work with state-legal marijuana businesses.
There is some light at the end of the tunnel. Recently, the Secure and Fair Enforcement (SAFE) Banking Act of 2019 was introduced in both the Senate and the House of Representatives with bi-partisan support. If enacted, the bill would protect banks and credit unions that hold funds from cannabis companies from prosecution. Specifically, it would prevent federal regulators from terminating a bank’s FDIC deposit insurance or taking any action on a loan to an owner or operator of a cannabis business. The bill was recently referred to the House Judiciary Subcommittee on Crime, Terrorism and Homeland Security.
The legislation would provide reassurance to the cannabis companies in the 34 states that have legalized medical and the 10 states where adult-use cannabis is allowed.
The legislation is also gaining traction outside of the nation’s capital, as 38 state attorneys general, including the office holders in New York and Minnesota, have already signed a letter urging Congress to move the bill forward.
Vireo Health supports the SAFE Banking Act because this legislation removes existing barriers for cannabis companies operating legally and makes the lives of patients and adult-use consumers they serve easier. Hopefully, in the near future, dispensaries will be able to serve customers in the same way other businesses do and accept credit cards and other form of payments – even Apple Pay!