Senator Menendez Introduces Marijuana Banking Bill

U.S. Sen. Bob Menendez (D-NJ), a senior member of the Senate Banking Committee, introduced the Senate version of Secure and Fair Enforcement (SAFE) Banking Act of 2019 to ensure that legal cannabis businesses can access banking services.

The issue was front and center during our Capitol Hill meetings during last month’s CUNA Government Affairs Conference (GAC). The House bill (H.R. 1595) has currently has 160 cosponsors, including five from New Jersey, Reps. Donald Norcross (D-1), Bill Pascrell (D-9), Mikie Sherrill (D-11) Albio Sires (D-8), and Bonnie Watson Coleman (D-12). 

Currently, cannabis businesses operating under state laws that have legalized medicinal or recreational marijuana have been mostly denied access to the banking system because banks and credit unions risk being prosecuted under federal law. Without the ability to access bank accounts, accept credit cards, or write checks, businesses must operate using large amounts of cash. This creates safety risks for businesses and surrounding communities and makes it more difficult for local and state governments to collect taxes.

Sen. Menendez said he also plans to soon introduce separate legislation to allow insurance companies to provide services to legal marijuana businesses.  Currently, those businesses are largely barred from getting property, fire, flood, liability and other insurance products.

At a Senate banking committee hearing, Sen. Menendez asked Federal Reserve Chairman Jerome Powell about the fact that most banks can’t service legal marijuana businesses because the drug remains illegal on the federal level. Powell agreed with Menendez that Congress should consider providing both financial institutions and insurance providers new clarity so that businesses can operate not only legally, but safely, and that local economies can benefit.

The legislation would provide a safe harbor for depository institutions and credit unions by:

  • Preventing banking regulators from terminating or limiting deposit insurance because a depository provides services to a state-sanctioned and regulated cannabis business;
  • Prohibiting, penalizing, or discouraging a depository institution from providing financial services to a legitimate state-sanctioned and regulated cannabis business;
  • Recommending or incentivizing a depository institution to halt or downgrade providing any kind of banking services to these businesses;
  • Taking any action on a loan to an owner or operator of a cannabis-related business; or
  • Creating a safe harbor from liability and asset forfeiture for institutions and their officers and employees who provide financial services to legitimate cannabis businesses pursuant to state or tribal law.

The legislation does not require a depository institution or credit union to provide financial services to a cannabis-related legitimate business nor does it relieve or relax requirements to file Suspicious Activity Reports (SARs) under the Bank Secrecy Act and Financial Crimes Enforcement Network (FinCEN) guidance.