If you attended ePayConnect 2021, you got the opportunity to hear two great speakers from Integrated Compliance Solutions (ICS) present “Clearing the Smoke on Cannabis Banking.” Angela Lucas, Director of Cannabis Banking, and Cody Hershey, Founder, President, and CEO, provided an up-to-the minute look at where state-by-state legality stands and what regulators are considering nationwide.
There have been noteworthy developments since our conference on March 1 - 3. In April, my home state of Virginia became the 16th state in the nation and first in the South to legalize the drug, with legislation taking effect July 1, 2021 and retail sales effective July 2024.
Most significantly, as reported in ePay’s Washington Update newsletter, on April 19 the U.S. House of Representatives passed the Secure and Fair Enforcement (SAFE) Banking Act of 2021 with significant bipartisan support on a 321 - 101 vote.
This legislation bridges a gap between federal and state laws by creating a safe harbor for financial institutions so they cannot be held liable or subject to federal forfeiture action for providing financial services to a cannabis-related legitimate business (CLB). Under the Act, federal banking regulators cannot:
- Terminate or limit the deposit or share insurance of a depository institution solely because the institution provides financial services to a CLB or service provider;
- Prohibit, penalize, or discourage an institution from offering financial services to a CLB or service provider;
- Recommend, incentivize, or encourage an institution not to offer financial services to an account holder solely because the account holder is affiliated with a CLB; and
- Take any adverse or corrective supervisory action on a loan made to a CLB or service provider (or their employees, owners, and operators), or to the owner or operator of real estate leased to a CLB or service provider.
The bill also protects businesses that perform payments facilitation services for financial institutions.
The Financial Crimes Enforcement Network (FinCEN) would be obligated under this legislation to update guidance regarding mandatory suspicious activity reports, and the Federal Financial Institutions Examination Council (FFIEC) would be required to issue guidance and examination procedures for such depository institutions.
Despite the current Senate Majority Leader having a friendlier stance on cannabis legalization than his predecessor, the Senate’s position on the bill is unclear. Senator Schumer is an advocate of federal legalization but has indicated he feels the SAFE Banking Act is not broad enough and may suggest that this Act be combined with a federal legalization bill.
New information and resources related to cannabis banking for financial institutions become available almost daily. Let us know your answers to these questions in the comments and the poll below:
What is your greatest areas of concern with cannabis banking?
How can ePay provide the most valuable assistance in sorting through the details of this significant development in financial services and payments?
POLL QUESTION: As we embark on redesigning our website, should ePay create an online Cannabis Banking Resource Center to consolidate related industry resources, similar to our COVID Resource Center, Faster Payments Resource Center, and Payments and Data Security Resource Center?