SAFE Banking Act comes to the House floor today. If it passes, then on to the Senate.

The Secure and Fair Enforcement Banking Act of 2019 is the House Bill cannabis advocates and banking institutions too nervous about cannabis’s status as a Schedule 1 drug have been waiting for. And it is more than just a banking bill, the SAFE Banking Act as its deemed has several provisions relevant to the cannabis industry and related industries providing it services that would provide exemption and safety for related transactions for all service providers, not just banks.

Importantly the SAFE Banking Act gives safe harbor to financial institutions potentially removing many barriers that traditional lenders and depository institutions may have cited in refusing to do business with cannabis enterprises. These provisions come at Section 2 of the proposed SAFE Banking Act which currently reads:

SEC. 2. Safe harbor for depository institutions.

(a) In general.—A Federal banking regulator may not—

(1) terminate or limit the deposit insurance or share insurance of a depository institution under the Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.), the Federal Credit Union Act (12 U.S.C. 1751 et seq.), or take any other adverse action against a depository institution under section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818) solely because the depository institution provides or has provided financial services to a cannabis-related legitimate business or service provider;

(2) prohibit, penalize, or otherwise discourage a depository institution from providing financial services to a cannabis-related legitimate business or service provider or to a State, political subdivision of a State, or Indian Tribe that exercises jurisdiction over cannabis-related legitimate businesses;

(3) recommend, incentivize, or encourage a depository institution not to offer financial services to an account holder, or to downgrade or cancel the financial services offered to an account holder solely because—

(A) the account holder is a cannabis-related legitimate business or service provider, or is an employee, owner, or operator of a cannabis-related legitimate business or service provider;

(B) the account holder later becomes an employee, owner, or operator of a cannabis-related legitimate business or service provider; or

(C) the depository institution was not aware that the account holder is an employee, owner, or operator of a cannabis-related legitimate business or service provider;

(4) take any adverse or corrective supervisory action on a loan made to—

(A) a cannabis-related legitimate business or service provider, solely because the business is a cannabis-related legitimate business or service provider;

(B) an employee, owner, or operator of a cannabis-related legitimate business or service provider, solely because the employee, owner, or operator is employed by, owns, or operates a cannabis-related legitimate business or service provider, as applicable; or

(C) an owner or operator of real estate or equipment that is leased to a cannabis-related legitimate business or service provider, solely because the owner or operator of the real estate or equipment leased the equipment or real estate to a cannabis-related legitimate business or service provider, as applicable; or

(5) prohibit or penalize a depository institution (or entity performing a financial service for or in association with a depository institution) for, or otherwise discourage a depository institution (or entity performing a financial service for or in association with a depository institution) from, engaging in a financial service for a cannabis-related legitimate business or service provider.

Another, somewhat overlooked, but potentially more impactful portion of the bill gives safety to those service providers and others dealing with cannabis and cannabis-related businesses by providing safe harbor for the proceeds from those transactions. As we’ve seen with a few recent cases, depending on the source and purpose of proceeds, courts are still free to interpret contracts involving cannabis-related transactions as involving illegal purposes and voiding them. This language would help put an end to that practice:

SEC. 3. Protections for ancillary businesses.

For purposes of sections 1956 and 1957 of title 18, United States Code, and all other provisions of Federal law, the proceeds from a transaction conducted by a cannabis-related legitimate business or service provider shall not be considered as proceeds from an unlawful activity solely because the transaction was conducted by a cannabis-related legitimate business or service provider, as applicable.

Presently, the SAFE Banking Act has 206 co-sponsors, 180 Democrats and 26 Republicans.