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02/21/2019
First Subcommittee Hearing on Banking Services for Cannabis-Related Industries
Cannabis Banking: SAFE Banking Act Gets a Hearing
Last week, Congress held its first-ever hearing on the issue of cannabis banking, entitled “Challenges and Solutions: Access to Banking Services for Cannabis-Related Businesses.” The hearing, which took place before the Subcommittee on Consumer Protection and Financial Institutions, addressed a draft of the Secure and Fair Enforcement Banking Act, or SAFE Banking Act, introduced by Congressman Ed Perlmutter (D-Colo.).
The SAFE Banking Act would:
- Provide a safe harbor for financial institutions to legally provide services to cannabis-related industries in states where cannabis has been legalized in some form
- Allow legal businesses to access financial services in states where cannabis has been legalized
- Address a void in banking that faces cannabis-related businesses and increase the number of banks providing financial services to these businesses
- Help prevent tax evasion, fraud, and public safety issues
Historic Hearing
CohnReznick observed this historic first hearing on banking in the cannabis industry, held five and a half years after the issuance of the Cole Memorandum in August of 2013, which provided U.S. Attorneys guidance on enforcement action against cannabis businesses in states that had legalized marijuana. In 2018, Attorney General Jeff Sessions rescinded the Cole Memo, which created confusion and uncertainty for many cannabis business owners.Impact on the Industry
This act could have a tremendous impact on the cannabis industry. Given the explosive rise of medical and recreational-use cannabis businesses, it is critical that banks and financial institutions be able to provide services and have a presence sufficient to serve such a rapidly growing industry. While there was much debate during the hearing and proposed improvements to the bill, it appears that the bill has the votes necessary to advance out of the committee.Increase Transparency and Accountability
CohnReznick does not take a position on federal cannabis legalization but supports any efforts to enable access to banking through the SAFE Banking Act. Access to the regulated banking industry will increase financial transparency and auditability. This should be of significant benefit to investors, regulators, and taxing authorities.
Michael D. Harlow
CPA, Office Managing Partner – Bethesda and Managing Partner - Cannabis Industry
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This has been prepared for information purposes and general guidance only and does not constitute legal or professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its partners, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.