Our Position

Cannabis Banking

Position

  • ICBA does not advocate for the legalization of cannabis.

  • ICBA advocates for federal legislation establishing an effective “safe harbor” from federal sanctions for banks that choose to do business with cannabis-related businesses (CRBs), including businesses that provide products or services to CRBs, in states where cannabis is legal under state law.

  • This safe harbor must extend to banks that serve businesses that may serve CRBs (“ancillary businesses”) such as landlords, accountants, utility providers, and others as ancillary businesses may be paid in funds ultimately derived from cannabis sales.

  • Federal banking regulators should not be able to threaten or limit a bank’s deposit insurance, downgrade a loan made to a CRB, force a depository institution to cease providing banking services to a CRB, or take any other prejudicial action in a state where cannabis is legal, solely because the customer is a CRB.

  • ICBA opposes any effort by a state or municipality to establish a publicly owned bank or credit union to service the cannabis industry. Traditional banks are fully capable of serving this industry with the creation of an effective “safe harbor” to protect them from government or regulatory reprisal.


Background

The 2020 election saw Arizona, Montana, New Jersey, and South Dakota join 12 states and the District of Columbia in fully legalizing adult recreational cannabis use. Cannabis is legal for medical use in 36 states. As more states legalize cannabis for medical and/or recreational use, it is critically important that cannabis-related businesses (CRBs) have access to services provided by the traditional banking system.

At the federal level, cannabis remains illegal under the Controlled Substances Act. As more states legalize cannabis and this segment of the business community continues to mature, the conflict between state and federal law creates increasingly significant legal and compliance concerns for state and federally chartered banks that wish to service CRBs or continue to serve existing customers that may also do business with CRBs. Due to legal and regulatory uncertainty, CRBs have limited access to the traditional banking system, forcing them to operate mostly in cash. Cash-only businesses, especially those with a high volume of revenue, pose a significant risk to public safety.

Given the disparity between federal and state law, community banks should not be placed at a competitive disadvantage with the establishment of a public bank or credit union to service CRBs. Traditional banks, with the protection of a safe harbor, are fully capable of serving the banking needs of CRBs. Moreover, history clearly indicates that financial service providers founded for narrow, specialized purposes inevitably expand beyond their original scope. Tax-subsidized credit unions and the Farm Credit System have expanded well beyond their original limitations and now compete directly with community banks. Once established, a state or public “cannabis bank” would advocate relentlessly for additional powers to assure its longevity and survival, to the detriment of private-sector competitors.

Staff Contacts: Aaron Stetter, Steve Keen, and Rhonda Thomas-Whitley

Articles & Press Releases

ICBA Supports Bill to Establish Cannabis Banking Safe Harbor

ICBA Press Release Banner 2020

Washington, D.C. (March 18, 2021) — The Independent Community Bankers of America (ICBA) today expressed support for bipartisan legislation that would establish a safe harbor from federal sanctions for financial institutions that serve cannabis-related businesses in states where cannabis is legal.

Introduced by House Financial Services Committee Subcommittee on Consumer Protection and Financial Institutions Chairman Ed Perlmutter (D-Colo.), the Secure and Fair Enforcement (SAFE) Banking Act would enhance public safety and address regulatory compliance concerns by opening the traditional banking system to cannabis-related businesses. Similar legislation from Rep. Perlmutter passed the House in 2019 but did not advance in the Senate.

“The conflict between state and federal law has created legal uncertainty for community banks, inhibited access to the banking system for cannabis-related businesses, and created serious public safety concerns,” ICBA President and CEO Rebeca Romero Rainey said. “As the first national banking trade group to support the SAFE Banking Act and to testify before Congress on its behalf, ICBA urges lawmakers to pass this bill to enhance public safety and address regulatory compliance concerns."

Legal uncertainty has forced cannabis-related businesses to operate mostly in cash, which presents a significant public safety risk. The bipartisan SAFE Banking Act would help eliminate this risk in states that have legalized cannabis for medical or recreational use. In these states, federal banking regulators would not be permitted to threaten or limit a bank’s deposit insurance, downgrade a loan, prohibit or discourage the provision of banking services, or take any other prejudicial action on banks solely for serving a cannabis-related business.

“The SAFE Banking Act will allow financial institutions the certainty they need to start banking legitimate cannabis businesses. It is a crucial step forward for the cash-only industry and will help prevent illicit activity, improve transparency and accountability, and reduce the public safety risk in our communities,” said U.S. Rep. Ed Perlmutter (CO-07). “Thank you to ICBA for their longstanding support of the SAFE Banking Act and their partnership through the first-ever congressional hearing on cannabis banking and previous passage in the U.S. House. I look forward to continuing to work with ICBA as we get SAFE Banking passed in the Senate and signed into law.”

About ICBA

The Independent Community Bankers of America creates and promotes an environment where community banks flourish. ICBA is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education, and high-quality products and services.

With nearly 50,000 locations nationwide, community banks constitute 99 percent of all banks, employ more than 700,000 Americans and are the only physical banking presence in one in three U.S. counties. Holding more than $5 trillion in assets, over $4.4 trillion in deposits, and more than $3.4 trillion in loans to consumers, small businesses and the agricultural community, community banks channel local deposits into the Main Streets and neighborhoods they serve, spurring job creation, fostering innovation and fueling their customers’ dreams in communities throughout America. For more information, visit ICBA’s website at www.icba.org.

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Testimony

Title Committee Presenter Date
Senate Banking Committee Written Statement 07/23/19
Senate Banking Committee Written Statement 05/07/19
House Financial Services Committee Subcommittee on Consumer Protection and Financial Institutions Greg Deckard 02/13/19

ICBA Summaries

Title Date
10/09/19
10/09/19