House of Representatives Validates SAFE Banking Act 2019: Updated Banking Synopsis for Legit Marijuana Businesses

In 2013, James M Cole, the then United States Deputy Attorney General, issued the breathtaking Cole Memorandum summarizing how financial organizations can operate and service accounts for marijuana-linked trades. In effect, the memo permitted banks and credit unions the federal authorization to serve Cannabis businesses, contrary to the federal banking jurisdictions.

On March 7, 2019, the Secure and Fair Enforcement (SAFE) Banking Act 2019 was introduced in the U.S. House of Representatives by Ed Perlmutter and was referred to the Judiciary and Financial Services Committees. The SAFE Banking Act 2019 is a proposed ordinance concerning the disposition of funds acquired through the Cannabis industry in the USA.

The bill was passed by the House on September 25, 2019, following the approval by two-thirds of the House of Representatives. This legislation typically prohibits a federal banking authority from penalizing a depository federation for rendering banking services to a legit marijuana-related business. As specified by the bill, a depository institution shall not, under federal law, be culpable or subject to forfeiture for offering a mortgage or other financial services to a legitimate Marijuana-associated business.

Oregon Senator Jeff Merkley introduced a similar companion bill in the U.S. Senate on April 11 which was referred to the Senate Banking, Housing, and Urban Affairs Committee. The Senate bill has 33 cosponsors as of now and has moved out of the committee and placed on the Union Calendar for a vote.

In spite of the worldwide social, political and federal acceptance of Cannabis, opening an account at a reputed financial institution or cooperative union persists one of the most strenuous challenges of orchestrating a Marijuana business.

Understanding the stratagem one must accomplish for the monetary management of Cannabis-related business is the first step in establishing a rigid banking alliance.

Banks that offer their services to the industry must abide by a complex conglomeration of government guidelines and overpriced agreement laws, or risk losing their license. Holding an account at one of these banks or credit unions relies on the internal monetary and compliance controls the firm has and how detailed and systematic its documentations are.

But setting up an account is only half the scuffle. There are so many complications in supervising and managing the account. Monthly tariffs imposed on the account are catastrophic and the firms need to layout detailed reporting of their transactions.

While the Marijuana industry interludes to witness what the federal government decides about banking; an undersized but noteworthy subsector of agencies has emanated in recent years, focusing on linking Marijuana-related businesses with bank accounts and associated services, such as the ability to receive electronic remittance.