The Senate Committee on Banking, Housing and Urban Affairs approved a bill on a bipartisan basis that creates protections for financial institutions that provide financial services to State-sanctioned marijuana businesses. The bill does not change marijuana’s classification or legal status under federal law or address the regulatory questions facing aging services providers. Because the committee’s action is drawing national media attention, however, we wanted to share a high-level description of the bill in case questions arise.

Background

While the majority of states have legalized marijuana for medical and/or recreational use, the possession, distribution or sale of marijuana remains illegal under federal law, which means contact with money that can be traced back to state marijuana operations could be considered money laundering and expose federally-insured banks to legal, operational and regulatory risk, according to an explanation by the American Bankers’ Association. While some financial institutions and state-chartered credit unions provide banking and financial services to this industry, many do not. As a result, many marijuana businesses operate on a cash basis (creating security concerns) and lack access to bank financing.

Senate Bill

The Secure and Fair Enforcement Regulation Banking Act (or the “SAFER Banking Act”) would create a federal regulatory safe harbor for financial institutions that provide services to state-sanctioned marijuana businesses, such as deposit accounts, payroll, processing credit card transactions, or loans.

Next Steps

Prospects for the Act’s ultimate passage are quite uncertain. The bill now moves from the Banking Committee to the Senate floor, where intense debate is expected, both on the bill’s provisions—including details of when federal regulators could and could not intervene—and on related policy issues such as marijuana decriminalization and legalization.  In recent years the House of Representatives has several times passed its own version of legislation affirmatively allowing financial institutions to serve the marijuana industry, but some key House leaders have signaled opposition to aspects of the Senate bill. LeadingAge will track the progress of this bill, watching closely for issues that affect aging services providers or the individuals you serve.