This bill generally prohibits a federal banking regulator from penalizing a depository institution for providing banking services to a legitimate cannabis-related business. Prohibited penalties include terminating or limiting the deposit insurance or share insurance of a depository institution solely because the institution provides financial services to a legitimate cannabis-related business and prohibiting or otherwise discouraging a depository institution from offering financial services to such a business.
Additionally, proceeds from a transaction involving activities of a legitimate cannabis-related business are not considered proceeds from unlawful activity. Proceeds from unlawful activity are subject to anti-money laundering laws.
Furthermore, a depository institution is not, under federal law, liable or subject to asset forfeiture for providing a loan or other financial services to a legitimate cannabis-related business.
The bill also provides that a federal banking agency may not request or order a depository institution to terminate a customer account unless (1) the agency has a valid reason for doing so, and (2) that reason is not based solely on reputation risk. Valid reasons for terminating an account include threats to national security and involvement in terrorist financing, including state sponsorship of terrorism.
Cash-only businesses sometimes have tens of thousands of dollars, legally obtained but unbankable, on hand, presenting a tremendous risk to both the financial security of cannabis companies and the health and well-being of owners and workers.
The U.S. government’s ability to seize or take corrective action against institutions that do business with cannabis companies does not affect only American cannabis operators. The impact of this potential liability ripples out to numerous financial institutions in countries all around the legal cannabis-producing world.
Canada, for example, which has had a federally legalized and protected cannabis program since 2018, still has difficulty providing basic financial services to the industry, as every major Canadian bank either has some connection to an American bank or direct U.S. operations.
Given the ability of the U.S. government to prohibit, seize or take corrective action on these institutions, the liability is often too much to risk and they choose to not do business with the cannabis industry.
Passage of SAFE is huge for TGIF and all legitimate companies in the industry globally, this will most definitely have an enormously positive affect on TGIFs SP and company operations...protection for all legal cannabis companies from federal interference, provides security for large institutional investors who may be waiting to buy millions of shares of the company, cut huge security costs, create a safer environment for employees, proper insurance...etc
jmo