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House-passed act includes banking provisions for cannabis

Written on Jul 22, 2022

Two banking-related bills, including legislation that would protect banks that service legal cannabis businesses, and another that would allow individuals with a conviction history to work in the financial sector, were included in the House version of the defense spending bill that was passed July 14. 

The Secure and Fair Enforcement (SAFE) Banking Act’s inclusion in the House’s 2023 National Defense Authorization Act (NDAA) marks the seventh time the legislation has passed in the House, both as a stand-alone bill and as text attached to larger legislation. 

Lawmakers also used the NDAA as a vehicle for the Fair Hiring in Banking Act, a measure that would loosen restrictions for ex-offenders seeking employment at banks. 

Key lawmakers in the Senate have turned their focus to the Cannabis Administration and Opportunity Act (CAOA), draft legislation that would remove cannabis from the federal list of controlled substances and expunge federal nonviolent pot-related crimes. 

In a letter sent to House leaders July 15, the American Bankers Association (ABA), the Credit Union National Association (CUNA), the Independent Community Bankers of America (ICBA) and the National Association of Federally-Insured Credit Unions (NAFCU), said their support of SAFE Banking is largely due to the safety issues surrounding the cash-heavy nature of the cannabis industry. 

In recent years, SAFE Banking has emerged as a unifying issue for credit unions and banks, which have found themselves at odds with one another over merger- and tax-related issues.  

“[F]inancial institutions operating in states where it is legal have business and individuals involved in the cannabis market who need access to traditional depository and lending services, the absence of which creates a significant public safety issue,” the groups wrote.  

The groups said SAFE Banking would also protect financial institutions that may unknowingly serve cannabis businesses in states where the drug is legal.  

“Indirect connections are often difficult to identify and avoid because, like any other industry, those offering cannabis-related services work with vendors and suppliers,” the groups wrote. “Under current law, a financial institution that does business with any one of these indirectly affiliated entities could unknowingly violate federal law.” 

In addition to SAFE Banking, the Fair Hiring in Banking Act, another banking-related bill, found its way into the House-passed NDAA.  

Under the bill, which was introduced in the House last year and passed as stand-alone legislation in May, a bank would not need prior written consent from the Federal Deposit Insurance Corp. (FDIC) to hire an individual convicted of a criminal offense under the following conditions:  

  • The person served a seven-year waiting period 

  • The individual committed the offense while under the age of 21 

  • The conviction was pardoned, sealed or expunged