The Secure And Fair Enforcement (SAFE) Banking Act was first introduced to Congress in May of 2017 under the sponsorship of Sen. Jeff Merkley (D-OR) and Rep. Ed Perlmutter (D-CO). It was reintroduced in April 2019 by Merkley and Sen. Cory Gardner (R-CO), with a House companion bill sponsored by Perlmutter. This bipartisan legislation would impact the ability of federal banking regulators to intervene in the actions of a depository institution dealing with a legal cannabis business. Specifically, the act would prohibit regulators from terminating or limiting either deposit or share insurance of such a financial institution for the sole reason that it does business with a cannabis company. It would also prohibit regulators from barring such institutions from offering financial services to these companies, as it would stop regulators from encouraging financial institutions to not do business with those companies.

This Act did not receive a full vote or hearing in either chamber of Congress after it was first introduced in May of 2017. It was passed by the Democratic-controlled House of Representatives by a 321-103 vote in September 2019. It will now need to pass in the Republican-controlled Senate, where it will likely face more opposition.

Origins of the SAFE Banking Act

The SAFE Banking Act is a direct response to issues faced by legal cannabis companies operating in the United States. Specifically, the Act is designed to bridge a gap between those companies' legal standing in particular states and the current non-legal status of marijuana sales and usage on a federal level. A company conducting legitimate operations within a state that has moved to legalize marijuana may nonetheless face problems interacting with financial institutions like banks and lenders on account of concern among those institutions about punishment on the federal level. Practically, this may make it difficult for these companies to seek loans to help grow their businesses or launch new ones, to recover from burglaries or other negative events, and so on.

The SAFE Banking Act is designed to prohibit federal regulators from punishing financial institutions for the sole reason that they choose to provide such services to cannabis companies, their owners and their employees.

"Forcing legal businesses to operate in all-cash is dangerous for our communities," Senator Merkley said in a statement. "It’s absurd that cannabis business owners have to shuttle around gym bags full of cash to take care of their taxes or pay their employees. Operating in cash is an invitation to robbery, money laundering and organized crime. This is a public safety issue, and I hope that this will be the Congress when we build a bipartisan consensus to put this common-sense fix into law."

The re-introduced bill is slightly different from the earlier bill. The National Cannabis Industry Association has indicated that the revised version "adds protections for ancillary businesses providing products or services to a cannabis-related legitimate business; specifies how businesses on tribal land could qualify; and requires the Federal Financial Institution Examination Council to develop guidance to help financial institutions lawfully serve cannabis-related legitimate businesses." Ian Katz, an analyst at Capital Alpha Partners, said in a note that it has been "sweetened" for Republicans with provisions that protect banks.


In the Spring of 2019, banking lobbyists and financial institutions were pushing for the bill's approval, according to reports. The American Bankers Association, which is a key lobby representing the $17 trillion U.S. banking industry, has testified to Congress in support of the bill, and banks including Wells Fargo, HSBC North America, Key Bank, M&T Corporation, PayPal, Prudential and Nationwide, are also reportedly supporting its passage. The National Association of Attorneys General (NAAG) sent a letter to congressional leadership in May 2019, urging them to pass the SAFE Banking Act.

Other organizations that have expressed their support include state banking associations in every state in the country, Americans for Tax Reform, Credit Union National Association (CUNA), Independent Community Bankers of America (ICBA), Law Enforcement Action Partnership (LEAP), the Electronic Transactions Association (ETA), the Cannabis Trade Federation (CTF), the National Cannabis Roundtable, Mid-Size Bank Coalition of America (MBCA), The Real Estate Roundtable, the National Association of Realtors, and various U.S. trade associations such as the American Land Title Association (ALTA), American Property Casualty Insurance Association (APCIA) and the Reinsurance Association of America (RAA), among others.

The bill's sponsors are hopeful that changes in the political landscape could prove favorable for the bill in its second round of consideration. Notably, vocal anti-marijuana advocate Attorney General Jeff Sessions has been replaced by William Barr. Barr has previously indicated his unwillingness to punish companies in states where marijuana is legal, even though the Cole Memorandum was rescinded by Sessions.