The Secure and Fair Enforcement (SAFE) Banking Act is still on the table, and US Department of Justice (DOJ) is weighing in.
DOJ Comments
Because current federal law allows federal regulators to penalize banks for transacting with cannabis-touching businesses, such businesses have largely been excluded from the opportunities and benefits of banking with a federally insured financial institution. The SAFE Banking Act would curb these penalties and prohibit federal banking regulators from penalizing banks for providing services to state-legal marijuana businesses. For example, federal regulators would no longer be able to terminate or limit a bank’s deposit insurance or share insurance solely because the bank serves state-legal marijuana businesses.
Last week, DOJ published a memo from spring 2022 that includes (relatively few) notes and suggestions pertaining to the language of the SAFE Banking Act. Of particular concern to DOJ, the memo highlighted certain textual ambiguities that, in DOJ’s view, could “significantly complicate law enforcement investigations and prosecutions” of money laundering and illicit drug sales. DOJ also pushed Congress to alter its use of the phrase “cannabis-related legitimate business” to clarify that the Act deals exclusively with state-legal marijuana businesses and does not (1) address hemp or (2) seek to legalize marijuana under federal law. Significantly, while DOJ had some substantive concerns about the Act’s content — such as its provision on forfeiture-related exemptions — most of its issues dealt with ambiguous language. The department reportedly “‘believes it can effectively implement the legislation’ if some minor changes are made.”
Legislative Viability
And time is of the essence. Reflective of widespread concern in the industry that the SAFE Banking Act will no longer be a priority when Republicans take control of the House next year, US Senate Majority Leader Chuck Schumer (D-NY) has reportedly brought together a bipartisan group to support the SAFE Banking Act. Namely, he is working closely with Republican Senators Steve Daines (R-MT), Rand Paul (R-KY), and Dan Sullivan (R-AK). And to attract progressive Democrats, the Senators are pairing the SAFE Banking Act with the Harnessing Opportunities by Pursuing Expungement (HOPE) Act. The bipartisan group plans to push these bills through the Senate by the end of the year by attaching them to “must-pass” legislation—hopefully with the textual ambiguities resolved. Senate Republican leader Mitch McConnell, however, recently threw cold water on the plan to attach the SAFE Banking and HOPE Acts to the “must-pass” national defense bill, describing the strategy as a form of hostage taking. And in the wake of his comments, on December 6, 2022, House Democrats published the text of the proposed National Defense Authorization Act for Fiscal Year 2023 without SAFE Banking or the HOPE Act. So, as Senator Joe Manchin said of his permitting reform bill, which is also waiting to be attached to a must-pass bill, we will have to wait and see.
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