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House Passes the SAFE Act

06/25/2021 Politics & Law

Support has been building for the legalization of marijuana at the federal level. Many branches of the federal government are led by republicans, who traditionally haven’t supported the legalization or decriminalization of marijuana. Still, legislation has been gaining traction, slowly, in congress. The COVID-19 crisis slowed the rate of progress. But now, there is a real chance for changes to how cannabis-based businesses can handle their financial dealings, enabling them to be more secure and stable. This opportunity could be combined with movements toward full federal legalization.

The Madness

Marijuana was first criminalized back in 1937. Prohibition had ended, but the federal government decided to classify marijuana as a schedule 1 drug – the level above cocaine and opioids. Other Schedule 1 drugs include heroin, LSD, ecstasy and magic mushrooms. According to the Drug Enforcement Agency (DEA), schedule 1 narcotics have a high potential for abuse and carry absolutely no medicinal value.  (We’ll just leave that last sentence with one, huge eye roll.)

Reefer Madness movie poster 1936 courtesy of

Many are familiar with the movie “Reefer Madness,” which spread lies about marijuana, dramatizing a narrative of addiction and destructiveness. “Reefer Madness” was a portrayal of official U.S. policies. These policies continued until very recently when state after state passed laws legalizing medical marijuana. Finally, the federal government is showing that it may be possible for change to come to cannabis policy.

The Money

A lot of the current problems for those in the cannabis industry involve money. Because banks are federally insured, the current federal prohibitions on marijuana mean cannabis businesses can’t open checking accounts, gain credit or use electronic or online payment options. This restriction creates difficulty for every part of the cannabis business. Rent has to be paid in cash. Large pieces of equipment are purchased with cash. Local and state taxes (which are more and more plentiful) are frequently paid with money orders. Carrying so much cash presents a clear and present danger to marijuana-based businesses.

The federal government is finally getting the picture and understanding the dilemma – not to mention seeing how much federal tax revenue they’re missing out on.

The SAFE Banking Act could provide a solution to these financial problems.

House passes the SAFE act

The Secure and Fair Enforcement (SAFE) Banking Act of 2021 was recently passed by the U.S. House of Representatives. The law creates the possibility for banks to do business with companies that deal with cannabis in states where cannabis is allowed, either for medical use, recreational use, or both.

The bill is seen by some in Congress, like Rep. Earl Blumenauer (D-OR), co-chair of the Congressional Cannabis Caucus, as “a critical first step along the path to full legalization.”

The SAFE Banking Act would allow banks to provide services to cannabis clients without fear of federal penalties. It would establish a “safe harbor” for depository institutions to do business with marijuana-based entities.

The bill benefitted from bipartisan support. It was co-sponsored by a large group of both Democrats and Republicans. Only one representative, Rep. Patrick McHenry of North Carolina, spoke out in opposition to the bill during the House debate.

The House of Representatives passed the bill with a 321-101 vote.

What Comes Next?

Now the SAFE Banking Act will move to the Senate.

Senate Majority Leader Chuck Schumer has shown support for the SAFE Banking Act and other policy reforms. Schumer has said that he expects Congress to move forward with cannabis reform whether President Biden is supportive or not. (Biden has indicated that cannabis reform is not a top priority for his administration.  Thank you, Mr. President. [insert sarcasm])

Schumer stated in an interview that he wants a bill that’s more comprehensive than the SAFE Banking Act, one that makes “sure that the communities that have been most affected by these draconian laws get the benefits here, and we want to make sure that there are reinvestment initiatives and it doesn’t all go to the big shots, that smaller businesses and minority businesses get a chance to be involved once marijuana is legalized.”

Schumer is in favor of the federal legalization of marijuana. He and Senators Ron Wyden and Cory Booker are planning to introduce a federal legalization bill in the Senate soon. Schumer has said that he might suggest that the SAFE Banking Act be combined with a federal legalization bill. He feels that this will give the SAFE Banking Act a better chance of getting to the Senate floor for a vote.

The Senators Speak

Some senators have spoken out with concerns about the bill, like Senate Banking Committee Chairman Sherrod Brown. He has said the Banking Committee has “been too much about Wall Street and not enough about housing, not enough about rural and urban affairs and people’s everyday economic lives.” Others have said that decriminalization and commuting sentences should take higher priority. If the SAFE Banking Act passes without full legalization, it could be an extraordinarily complex prospect for enforcement of the new law.

A Thorny Path Ahead

Congressional leadership has shown support for legalization, and now others feel safe to come out and voice their support as well.

Many legislators realize this is the path that voters want them to take, and not to consider the issue would create real problems with constituents at home. It looks like the bill might not move without other reforms to accompany it, such as changing how cannabis is scheduled.

Restorative justice, decriminalization, and pardons will need to be considered. It will be a thorny and complex process, requiring involvement from voters and activists and political savvy on the part of lawmakers. Congress’ next step will be more important than ever.

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