By Benjamin L. Rackliffe

February 9, 2022

Lawful cannabis businesses in the United States have historically and predominately relied on private funding to establish and prop up their operations until they can sustain themselves as revenue-driven enterprises. This is because cannabis remains illegal under federal law and, by extension, FDIC-insured banking institutions face substantial risk accepting cannabis funds and/or offering financial services to cannabis companies. As a result, only those with access to private capital have generally been able to enter the marketplace.

The Secure and Fair Enforcement Act, more commonly known as the “SAFE Banking Act” may soon aid in levelling the playing field among marijuana upstarts. At its essence, the Act prevents the United States’ banking regulator from “penalizing a depository institution for providing banking services to a legitimate cannabis-related business.” Passing in the house of representatives in 2019 and 2021 with bipartisan support, the Act is steadily gaining momentum in Congress. Most recently, the Act was introduced as an amendment to the National Defense Authorization Act for Fiscal Year 2022 in the Fall of 2021 with political endorsement from approximately half of the State Governors at that time. As more states legalize and regulate marijuana for adult use, thereby recognizing the economic benefit of this multi-billion dollar industry, it is increasingly likely that the SAFE Banking Act becomes a reality.

To summarize, the SAFE Banking Act’s intended effect would be to: (i) prohibit a federal banking regulator from terminating or limiting a bank’s FDIC insurance because the institution provides financial services to a legitimate cannabis-related business, (ii) legalize bank proceeds from banking transactions with cannabis-related businesses, and (iii) permit banking institutions to lend monies to legitimate cannabis-related business. The foregoing are each critical to the equitable growth of cannabis businesses throughout the country. All eyes will be on D.C. this year and cannabis businesses should begin to prepare for possible federal legislation that would open the door on interstate commerce, commercial banking access, and federal tax deductions. If you have questions pertaining to the SAFE Act or any other cannabis business matters, please contact PLDO Partner Benjamin L. Rackliffe at

Disclaimer: This blog post is for informational purposes only. This blog is not legal advice and you should not use or rely on it as such. By reading this blog or our website, no attorney-client relationship is created. We do not provide legal advice to anyone except clients of the firm who have formally engaged us in writing to do so. This blog post may be considered attorney advertising in certain jurisdictions. The jurisdictions in which we practice license lawyers in the general practice of law, but do not license or certify any lawyer as an expert or specialist in any field of practice.

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