SAFE Banking Act of 2021 Passed by House of Representatives

On the eve of 4/20, members of Congress offered up a gift to the budding cannabis industry.

The House of Representatives on Monday passed the SAFE Banking Act of 2021, which clears the way for financial institutions and banks to work with cannabis companies.

The SAFE Banking Act of 2021 “generally prohibits a federal banking regulator from penalizing a depository institution for providing banking services to a legitimate cannabis-related business,” according to a summary of the legislation.

“Prohibited penalties include terminating or limiting the deposit insurance or share insurance of a depository institution solely because the institution provides financial services to a legitimate cannabis-related business and prohibiting or otherwise discouraging a depository institution from offering financial services to such a business,” the summary read. 

“Additionally, proceeds from a transaction involving activities of a legitimate cannabis-related business are not considered proceeds from unlawful activity. Proceeds from unlawful activity are subject to anti-money laundering laws. Furthermore, a depository institution is not, under federal law, liable or subject to asset forfeiture for providing a loan or other financial services to a legitimate cannabis-related business.” 

It continued: “The bill also provides that a federal banking agency may not request or order a depository institution to terminate a customer account unless (1) the agency has a valid reason for doing so, and (2) that reason is not based solely on reputation risk. Valid reasons for terminating an account include threats to national security and involvement in terrorist financing, including state sponsorship of terrorism.”

Where Does The SAFE Banking Act of 2021 Go Next?

The SAFE Banking Act of 2021, which was introduced last month by Democratic Rep. Ed Perlmutter, easily passed the chamber on Monday by a vote of 321-101. 

It will now head to the Democratic-controlled Senate, where Majority Leader Chuck Schumer “has said it will receive a vote,” according to The Hill.

Schumer has sounded bullish notes on cannabis reform in general as of late. Earlier this month, the New York Democrat said he is ready to bring a pot legalization to the floor— whether President Joe Biden is on board or not.

“We will move forward,” Schumer said at the time. “[Biden] said he’s studying the issue, so [I] obviously want to give him a little time to study it. I want to make my arguments to him, as many other advocates will. But at some point we’re going to move forward, period.”

Nearly 40 states have legalized medical marijuana, and a growing number of states and cities have embraced recreational cannabis in recent years as well. Despite that, pot remains illegal on the federal level under the Controlled Substances Act. Schumer said seeing how well legalization worked on the state level contributed to him coming around on legalization.

“In 2018, I was the first member of the Democratic leadership to come out in support of ending the federal prohibition. I’m sure you ask, “Well what changed?” Well, my thinking evolved. When a few of the early states—Oregon and Colorado—wanted to legalize, all the opponents talked about the parade of horribles: Crime would go up. Drug use would go up. Everything bad would happen,” Schumer said.

“The legalization of states worked out remarkably well. They were a great success. The parade of horribles never came about, and people got more freedom. And people in those states seem very happy.”

Polls show that Schumer’s views put him in the majority with the American public, but Biden has thus far resisted calls to end pot prohibition.

As a candidate last year, Biden at times sounded awkward as he tried to thread the needle on the issue, saying in one interview that although “ it “makes no sense for people to go to jail” for pot, he still didn’t quite support full legalization.