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Financial Services Law Insights and Observations

State AGs support safe harbor for marijuana banking

Federal Issues State Issues Safe Harbor Federal Legislation Medical Marijuana

Federal Issues

On May 8, a bipartisan group of 38 state and territorial Attorneys General wrote to congressional leaders to urge the advancement of legislation that would allow banks to do business with marijuana-related businesses in states and territories that have legalized certain uses of marijuana. Specifically, the letter expresses support for the SAFE Banking Act (HR 1595), which “would provide a safe harbor for depository institutions that provide a financial product or service to a covered business in a state that has implemented laws and regulations that ensure accountability in the marijuana industry.” The letter notes that banks providing services to state-licensed cannabis businesses, or even to their vendors, could find themselves subject to criminal and civil liability under the federal Controlled Substances Act and certain federal banking statutes because the federal government classifies marijuana as an illegal substance. Because the revenues of the legalized marijuana industry are currently handled outside of the banking system, the letter argues that it is difficult to track revenues for taxation and regulatory compliance purposes, and further contributes to potential public safety issues as “cash-intensive businesses are often targets for criminal activity.” Emphasizing that the support of the SAFE Banking Act is not an endorsement for the legalization of marijuana-related transactions, the letter notes that allowing banks the safe harbor provided in the legislation would bring billions of dollars into the banking industry and would render state and federal regulatory bodies more effective in monitoring and taxing marijuana businesses.

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