The SAFE Banking Act passed the House in late 2019, but stalled in the Senate. (miralex/iStock)
House Speaker Nancy Pelosi unveiled a new $3 trillion coronavirus relief package on Tuesday that includes long-sought banking reform for the legal cannabis industry.
The 1,800-page bill, named the Health and Economic Recovery Omnibus Emergency Solutions Act, or HEROES Act, represents the next phase of COVID-19 relief aimed at helping Americans struggling through the current public health and economic shock.
The bill would:
- Offer hazard pay to health care workers fighting the pandemic
- Send a second $1,200 payment to most taxpayers
- Extend the weekly $600 boost to unemployed workers through January 2021.
- Provide relief to students burdened with college debt
- Bolster state budgets hammered by COVID-19 costs
- Provide safe harbor for banks that serve state-legal cannabis companies
This is why cannabis is a cash-only business
House Democrats folded the language of the SAFE Banking Act within the HEROES Act. The SAFE Banking Act would allow banks and other financial institutions to work with state-legal cannabis companies without fear of federal reprimand. The SAFE Banking Act passed the House in September 2019, but remains stalled in the Senate.
Ever since the beginnings of the legal cannabis in 1996, this has been a cash-only industry. That’s due to outdated federal banking laws that were intended to curb money laundering by illegal drug cartels. Those laws didn’t foresee the coming of state-legal cannabis, so a grower or retailer licensed by a legal state today is still seen as an illegal drug runner within the context of federal banking laws.
As a consequence, customers can’t use credit cards or debit cards at most legal stores. Many cannabis companies have had their accounts closed without notice. Some workers in the industry can’t get home or car loans.
Safe harbor in the bill
The cannabis banking language in the HEROES Act would offer what’s known as “safe harbor” to depository institutions that work with cannabis companies. That means the FDIC and the NCUA, the two federal banking guarantors, may not cancel or limit a bank or credit union’s depository insurance solely based on the fact that the bank provides financial services to a cannabis business or service provider.
The bill also specifies that federal regulators can’t penalize “or otherwise discourage” a bank from providing services to a cannabis company, or to state and local authorities who regulate the cannabis industry.
There are protections for individual workers, too. The bill prohibits federal regulators from recommending or encouraging banks to refuse or cancel the personal accounts of clients who work for legitimate cannabis companies.
The full bill is available here: BILLS-116hr6800ih
Leafly will continue to report and expand this article throughout the day.