Newer federal legislation, if signed into law, would make it easier for depository institutions (banks, credit unions, and similar financial institutions) to provide banking services to legitimate cannabis-related businesses.
The Safe (Secure and Fair Enforcement) Banking Act of 2021, which recently passed the House of Representatives, is now in the hands of the Senate, where it is reported to have support.
Schedule 1 Controlled Substance
Since cannabis is currently classified on the federal level as a Schedule 1 Controlled Substance (similar to heroin) it is a violation of federal law to manufacture, distribute, or possess marijuana in any form. Banks are regulated by federal law, so financial institutions who work with cannabis-based business owners risk facing charges of money laundering and aiding and abetting a federal crime.
In Michigan and a handful of other states, the use of marijuana for adult recreational and medicinal use is legal. However, because the federal prohibition of marijuana is still in place, most national and state chartered banks and credit unions refuse to do business with legitimate cannabis and cannabis-related enterprises. As a result, cannabis-related business owners are left without banking services and must handle large sums of cash.
The Safe Banking Act of 2021
This bill generally prohibits federal banking regulators from penalizing financial institutions for providing banking services to legitimate cannabis-related businesses.
Additionally, the bill states that proceeds from a transaction involving activities of legitimate cannabis-related business are not considered proceeds from unlawful activity.
Furthermore, if passed into law, a depository institution would not, under federal law, be liable or subject to asset forfeiture for providing a loan or other financial services to a legitimate cannabis-related business.
Help is available
The attorneys at O’Reilly Rancilio are available to answer your questions regarding banking and business law. To speak with an attorney, call 586-726-1000 or visit our website.