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SAFE Banking Act

The Secure and Fair Enforcement (SAFE) Banking Act of 2019

The SAFE Banking Act of 2019 prevents a federal banking regulator from:

  • terminating or limiting a depository institution’s share or deposit insurance because it provides the financial services to a legitimate marijuana-related business;
  • prohibiting or discouraging a depository institution from offering financial services to a legitimate marijuana-related business;
  • recommending or encouraging depository institutions against providing services for a business or individual because they are affiliated with legitimate marijuana-related business; or
  • taking any adverse or corrective supervisory action on a loan made to a person solely because the person either owns such a business or owns real estate or equipment leased or sold to such a business.

The SAFE Banking Act also:

  • Creates federal legal protections for depository institutions and their officers and employees for providing loans or other financial services to a legitimate marijuana-related business.
  • Does not require depository institutions to provide services to legitimate marijuana businesses.
  • Allows financial institutions and their agents to report suspicious activity related to legitimate cannabis-related businesses if those businesses are suspected of violating the laws in that jurisdiction; but, in accordance with this Act, that would not include activities that are authorized within the jurisdiction where the business is operating.
  • Clarifies that proceeds resulting from a cannabis-related legitimate business shall not be considered unlawful activity.
  • Defines cannabis-related businesses to include ancillary businesses such as financial, legal, property, and other licensed services.
  • Requires the FFIEC and federal banking regulators to develop guidance and examination procedures for institutions that work with cannabis-related legitimate businesses.

The House Financial Services Subcommittee on Consumer Protections and Financial Institutions held a hearing, “Challenges and Solutions: Access to Banking Services for Cannabis-Related Businesses”, on February 13. The bill was reported favorably by the Committee on March 28 on a bipartisan vote of 45-15.


The Strengthening the Tenth Amendment Through Entrusting States (STATES) Act (S. 1028, H.R. 2093) was introduced on April 4, 2019 by Sen. Cory Gardner (R-CO) and Rep. Earl Blumenauer (D-OR-03).

The bill would amend Part G of the Controlled Substances Act (21 U.S.C. 801) so that actions in compliance with state marijuana laws:

  • will not be unlawful;
  • will not constitute trafficking in a controlled substance; and
  • will not constitute the basis for forfeiture of property.

No hearings or markups have been scheduled by the House or Senate Judiciary Committees.

Appropriations Strategy

Appropriations amendments that would address banking access have been proposed every year since 2014; each year the amendments have been stripped out in conference committee or blocked by the Chairman of the House Rules Committee.  

Rider Language

None of the funds made available in this Act may be used to penalize a financial institution solely because the institution provides financial services to an entity that is a manufacturer, producer, or a person that participates in any business or organized activity that involves handling marijuana, marijuana products, or marijuana proceeds, and engages in such activity pursuant to a law established by a State or a unit of local government.

It's possible that the amendment could advance as part of the FY20 appropriations process. 



Cole Memorandum (2013)

A Department of Justice (DOJ) directive on cannabis enforcement priorities

A financial institution banking cannabis-related business should conduct enhanced due diligence on those customers:

  • Verify with state authorities whether the business is licensed and registered;
  • Review the license application submitted by the business for obtaining a state license to operate its cannabis-related business;
  • Request from state licensing and enforcement authorities available information about the business;
  • Develop an understanding of the normal and expected activity for the business, including the types of products to be sold and the type of customers to be served;
  • Monitor publicly available sources for adverse information about the business;
  • Monitor for suspicious activity, including any of the red flags described in the FinCEN guidance; and
  • Refresh information obtained as part of customer due diligence on a periodic basis and commensurate with the risk. 

Former Attorney General Jeff Sessions rescinded the Cole memo on January 4, 2018.

During his January 2019 confirmation hearings, Attorney General nominee William Barr stated:

“I’m not going to go after companies that have relied on the Cole memorandum... My approach to this would be not to upset settled expectations and the reliance interest that have arisen as a result of the Cole memorandum and investments have been made.”

2014 FinCen Guidance

  • Clarifies federal expectations regarding BSA compliance
  • Reiterates that the manufacture, distribution, and dispensation of marijuana remains a federal crime
  • Any financial institution that chooses to bank a marijuana-related business must ensure its BSA/AML policy is commensurate with the increased risk and must submit the required SARs.
  • Requires an initial analysis that the business at issue does not implicate one of the identified priorities of the Cole Memo and that it does not violate state law.

Additional Information

Despite 47 states acknowledging its medical benefits, cannabis is still considered an illegal substance under federal law.  

Under the Controlled Substances Act, marijuana is categorized as Schedule I, making any activity related to marijuana illegal under federal law, regardless of state laws.

Schedule I designation requires:

  • no currently accepted medicinal purpose;
  • no accepted safe use under medical supervision; and 
  • a high potential for abuse.

An appropriate type of Suspicious Activity Report (SAR) must be filed if a customer's actions suggest that he is laundering money or otherwise violating federal criminal laws and committing wire transfer fraud, check fraud, or mysterious disappearances. Funds derived and/or deposited from marijuana-related businesses are derived from an illegal activity under federal law.

The Federal Reserve, the OCC, and the FDIC have not issued any specific guidance on banking cannabis-related businesses, though there has been some indication over the last few years that such guidance is being considered.