Senate Committee Approves SAFE Banking Act
Issue Date: September 28, 2023
On Wednesday, September 27, S. 2860, the Secure and Fair Enforcement Regulation (SAFER) Banking Act passed the Senate Banking Committee by a bipartisan majority of 14-9. This bipartisan legislation, cosponsored by Senators Merkley (D-OR) and Daines (R-MT), is an updated version of previous bills (known as the SAFE Banking Act) which creates a safe harbor for financial institutions in states that have legalized cannabis to accept funds derived from cannabis businesses. Currently cannabis is legal in 47 states, 4 territories, and the District of Columbia; however, its categorization as a schedule one controlled substance means that banks are prohibited from accepting clients’ funds whose income is tied to its sale. This includes real estate professionals – property managers may manage shopping centers that have cannabis businesses, a REALTOR® may sell a plot of land or a warehouse to a production facility, and so on. This restriction creates difficult burdens to both cannabis businesses and the ancillary businesses that work with them, and results in cash-only businesses, which are targets for crime.
The SAFER Banking Act does not just create a safe harbor for financial institutions; it also takes steps to address inequities in the system by extending that safe harbor to Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs). Additionally, it provides that income from cannabis businesses (in states that have legalized it) should receive equal treat to other types of legal income for purposes of securing a federally-backed mortgage. Finally, it speaks to the issue of fraud and criminal activity by including monitoring and reporting requirements, which will also assist in tracking this fast-growing business sector.
Similar bills have been introduced in Congress for many years, and NAR has supported them since its policy on the issue was approved in 2019. This is the first time this bill has passed the Committee in the Senate. Its next steps are a Senate floor vote, and then being sent to the House for consideration there. NAR will continue to support this legislation and encourage its passage in this Congress.