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-backed cannabis banking safe harbor reintroduced

ICBA expressed support for newly reintroduced bipartisan legislation to establish a safe harbor for financial institutions that serve cannabis-related businesses in states where cannabis is legal.

The Bill: Introduced by House Subcommittee on Consumer Protection and Financial Institutions Chairman Ed Perlmutter (D-Colo.), the Secure and Fair Enforcement (SAFE) Banking Act would open the traditional banking system to cannabis-related businesses. Similar legislation passed the House in 2019 but did not advance in the Senate.

Background: The conflict between state and federal law has created legal uncertainty for banks and forced cannabis-related businesses to operate mostly in cash, presenting a public safety risk.

Details: The SAFE Banking Act would apply to 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.

Letters to Congress

Title Recipient Date
U.S. House of Representatives 04/16/21
117th Congress 03/24/21
U.S. House of Representatives 03/18/21
Committee on Banking, Housing, and Urban Affairs 01/13/20
House of Representatives 09/24/19
House of Representatives 09/19/19
U.S. House of Representatives 09/16/19
Sens. Jeff Merkley and Cory Gardner 04/12/19
House Financial Services Committee 03/26/19
Reps. Perlmutter, Heck, Davidson, Stivers 03/08/19

Letters to Regulators

Title Recipient Date
USDA 10/08/20
U.S. Domestic Hemp Production Program 01/29/20

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
Title Content Type Date
ICBA Summaries 10/9/2019
ICBA Summaries 10/9/2019