WASHINGTON, D.C. — U.S. Senator Bob Menendez (D-NJ), a senior member of the Senate Banking Committee, applauded passage of the Secure and Fair Enforcement (SAFE) Banking Act of 2019 in the House of Representatives that contains key provisions authored by the senator to ensure cannabis businesses operating in states that have legalized marijuana can access the banking system and purchase insurance coverage.
“Not only will the SAFE Banking Act ensure that marijuana businesses operating legally are treated like any other legal small business when it comes to accessing essential banking products—including in New Jersey, which has taken bold steps to expand medical marijuana—I am pleased that the House-passed bill also includes key provisions of my CLAIM Act to allow these business owners to obtain insurance coverage so they can protect their property, employees and customers,” said Sen. Menendez. “I would urge the full Senate to pass this common sense legislation that levels the playing field in the banking space by ensuring more equal access to capital.”
Sen. Menendez introduced the SAFE Banking Act in March, which ensures that legal cannabis businesses can access banking services. In July, he separately introduced the bipartisan Clarifying Law Around Insurance of Marijuana (CLAIM) Act, which ensures legal marijuana and related businesses have access to comprehensive and affordable insurance coverage. Key elements of the CLAIM Act have been folded into the final SAFE Banking Act legislation.
Currently, cannabis businesses operating under state laws that have legalized medicinal or recreational marijuana have been mostly denied access to the banking system and are often denied access to the insurance market because banks and insurance providers could be prosecuted or face penalties under federal law. Without the ability to access bank accounts, accept credit cards, or write checks, businesses must operate using large amounts of cash, which creates safety risks for businesses and surrounding communities, and makes it more difficult for local and state governments to collect taxes. Similarly, without access to insurance products such as property, casualty and title insurance, businesses remain vulnerable, and employees, customers, and the community face safety risks. Businesses can also be denied bank financing if they do not have the proper insurance.
Sen. Menendez’s SAFE Banking Act of 2019:
· Provides safe harbor for depository institutions and credit unions by preventing Federal banking regulators from:
· Terminating or limiting depository institutions’ Deposit Insurance Fund or credit unions’ share insurance under the National Credit Union Share Insurance Fund for providing services to a state-sanctioned and regulated cannabis business, or to a tribe that has cannabis-related businesses, solely because that institution is providing services to a legitimate state-sanctioned and regulated cannabis business;
· Prohibiting, penalizing, or discouraging a depository institutions from providing financial services to a legitimate state-sanctioned and regulated cannabis business;
· Recommending or incentivizing a depository institution to halt or downgrade providing any kind of banking services to these businesses; or
· Taking any action on a loan to an owner or operator of a cannabis-related business.
· Creates safe harbor from liability and asset forfeiture for institutions and their officers and employees who provide financial services to legitimate cannabis businesses pursuant to state or tribal law.
· Does not require depository institutions or credit unions to provide financial services to a cannabis-related legitimate business.
· Requires depository institutions and credit unions to file Suspicious Activity Reports (SARs) under the Bank Secrecy Act pursuant to relevant Financial Crimes Enforcement Network (FinCEN) guidance.