On Thursday, the governors from 24 U.S. states and territories wrote to Congress asking them to adopt legislation to allow financial institutions to offer banking services for the cannabis industry. Two dozen bipartisan governors signed a letter requesting passage of Secure and Fair Enforcement (SAFE), Banking Act. This bill was part of a broad defense spending authorization bill that the House of Representatives approved in September.

The letter was addressed to Chuck Schumer, New York’s Senate Majority Leader, and Nancy Pelosi, Speaker of Congress. It includes a request from the 21 governors and representatives of Washington, D.C., Guam, and the U.S Virgin Islands to include provisions of the SAFE Banking Act in the National Defense Authorization Act 2022 Fiscal Year.

For a cash-intensive industry, relief

Federal banking regulators will be forbidden from penalizing banks who choose to service cannabis businesses that do business according to state law if the Senate passes and signs into law. Current regulations make it possible for banks to be penalized under the federal money laundering laws and any other laws that govern servicing these companies. This would leave the cannabis industry operating in an extremely risky financial environment. In 2013, the legislation was introduced by Ed Perlmutter (Democratic Representative of Colorado), who has brought it back each successive congressional cycle.

On Thursday, Democratic Governor Jared Polis of Colorado sent a letter pointing out that legalized recreational and medical marijuana in 37 states and four U.S. Territories. However, businesses involved in the legal cannabis sector are still restricted from accessing traditional banking services such as deposits and payroll.

“Medical and recreational cannabis sales in the U.S. were estimated to total $17.5 billion last year, but because of antiquated federal banking regulations, almost all cannabis transactions are cash-based,” the governors wrote in their letter. “Not only are cash-only businesses targets for crime, cannabis businesses are further disadvantaged compared to other legal businesses by being unable to open bank accounts or obtain loans at reasonable rates.” 

The SAFE Banking Act, which was originally passed in 2019, and the second time last year by Congress as part of a COVID-19 Pandemic Relief Bill, were both approved by the House of Representatives. Although the House approved the bill as separate legislation in April, it was included in the current defense authorization bill. However, the bill has not been passed by either house of Congress. The president has signed the bill into law.

“It’s time for Congress to allow cannabis-related businesses to have better access to the banking system and operate with normal bank accounts,” Polis said in a press release on Thursday. “Thank you to Congressman Ed Perlmutter who has continually pushed for legislation to address this important issue. After years of cannabis being legal in a multitude of states, it is long overdue for cannabis businesses to finally financially operate alongside other businesses in the open national banking system.”

Additionally, they noted in their letter that even though cannabis was legalized by most U.S. States in some way, lack of banking services and cash shortages throughout the supply chain put legal marijuana companies at greater risk for robbery or other crimes. The industry’s growth is also hindered by a lack of loans.

“The SAFE Banking Amendment will remedy these harms and help keep communities in our states and territories safe by allowing legitimate and legal cannabis companies to access banking services,” the letter continues. “Financial institutions will subject the funds and account holders to rigorous anti-money laundering and ‘Know Your Customer’ requirements that will further help states where cannabis has been made legal to keep bad actors out of the system.

“The SAFE Banking Act has more bipartisan support than ever before, and Congress must take steps to ensure that this measure is included in the final version of the NDAA that goes to President Biden’s desk,” the governors concluded.

The letter was also signed by Polis and the leaders from Alaska, California, Connecticut, Guam, Illinois, Maine, Massachusetts, Michigan, Minnesota, Nevada, New Mexico, New Jersey, New York, North Dakota, Oregon, Pennsylvania, Rhode Island, Utah, Virginia, Washington, D.C., and Wisconsin.

After the House approved the measure, 21 governors representing nearly the same list of territories and states called for Congress to adopt the SAFE Banking Act.