SAFE Banking Act Might Enable Cannabis Banking And Payments

Dec 23, 2019

On September 25, 2019, the US House of Representatives passed, with a vote of 321 to 103, the Secure and Fair Enforcement Banking Act (SAFE), which is a legislation that has been created to secure and regulate the banking services within the cannabis industry in the US. 

The SAFE Banking Act will prohibit federal regulators and prosecutors from penalizing banks and credit union for providing banking services to cannabis-related businesses (CRBs) and ancillary businesses. 

This is a major and positive step in the fair treatment of the US Cannabis industry at state and federal levels. 

Despite this major move in the right direction, it is unknown if this bill will be passed as law. It still needs to be voted by the Senate so the future of this bill remains unclear.

Historically, banks and credit unions have been hesitant to provide cannabis banking and payments to CRBs for fear of the potential risks. Most notably, criminal liability, adverse supervisory reaction by regulators of federal banks, and ultimately, the seizure of all cannabis-related funds.

Although these fears will be eradicated if the law passes, the SAFE Banking Act does little to address all the legal risks financial institutions can face when providing services to CRB’s. Even under the SAFE Banking Act, cannabis will remain Schedule I controlled substance. Therefore, its production, sale, or distribution can still carry a significant criminal offense.  

Although federal prosecutors will no longer hold the power to charge a bank with money laundering for providing banking services to CRBs, aiding and abetting charges will still be in effect. 

As a result, it is up to the banks and credit unions to ensure that the cannabis customer they are dealing with are operating a legal business. The business must be conducting its operations in full compliance with all relevant state laws.

This bill also demands FinCen to create a uniform guidance and examination procedures for banks and credit unions who service CRBs.

The SAFE Banking Act also requires a Suspicious Activity Report (SAR) to file for every cannabis-related transaction that is related to an actual or suspected violation of any law or regulation.

Currently, due to the hostility towards the cannabis industry in the US, most cannabis shops are known to be “cash-heavy” organizations. This has brought its fair share of woes as they are frequent targets for robberies, not to mention their cash-carrying employees. 

Another danger they currently face is that, just to conduct basic functions like paying their taxes or electric bill, they are forced to carry cash to its recipient. The possibility of simply sending a digital payment or writing a check is elusive to them when they can’t open a bank account.

In Conclusion

The course that the SAFE Banking Act will take still remains to be seen. There are those in the Senate who don’t have positive things to say about this move, while others remain hopeful. Still, more questions have been posed about reforming the marijuana laws. 

If this bill passes, CRBs will finally have access to traditional financial services most businesses take for granted. 

Let us help you get a high risk merchant account today!

Get Started

Award winning.

  • 2012
  • 2013
  • 2014
  • 2015
  • 2016

Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

Live Chat