April 19, 2021
The SAFE Banking Act has (again) passed the US House of Representatives with a wide margin of support (vote count: 321-101). At PayQwick, we’re excited to see the progress at the federal level because it highlights the compliance and operational services, we perform for cannabis businesses. The legislation also supports our entry into providing programs to banks and credit unions seeking to offer deposit and payment services to cannabis and ancillary businesses in their communities.
The SAFE Banking Act provides two main protections for financial institutions:
• Freedom from asset seizure by the federal government due to the Tier I status of cannabis as an illegal drug
• Deposit insurance for member banks and credit unions for the cannabis deposits.
As the SAFE Banking Act makes its way to the Senate, we applaud the uptick in conversations with banks and credit unions that may have been sitting on the sidelines fearful that their assets could be seized. The act has momentum and states are not holding back on new cannabis legalization legislation. While the new protections are important, only financial institutions can determine if they are adequately prepared to evaluate individual entity risk and implement the enhanced due diligence required by FinCEN to process deposits and transactions.
Cannabis banking is not for the faint of heart, nor for those that eschew a lot of hard work to build out comprehensive state, federal and cannabis compliance programs and technology platforms to serve the industry. There are many considerations recently highlighted by the NCUA in a cease-and-desist order to a credit union that are not covered in the SAFE Banking Act.