How the SAFE Banking Act could ignite global cannabis reform

Did you miss the webinar “Women Leaders in Cannabis: Shattering the Grass Ceiling?” Head to MJBiz YouTube to watch it now!

Image depicting a generic bank
Image of Jason Warnock
Jason Warnock

(Editor’s note: This column is part of a recurring series of commentaries from professionals focused on the cannabis industry. Jason Warnock is a cannabis consultant for Applied DNA Sciences, based in Calgary, Alberta, Canada.)

First proposed and passed by the U.S. House of Representatives in 2019 and then passed again by the House on April 19 of this year, the Secure and Fair Enforcement (SAFE) Banking Act is intended to protect financial institutions that provide services to cannabis companies.

The SAFE Banking Act and the related CLAIM Act (Clarifying Law Around Insurance of Marijuana) would protect financial institutions from any liability or forfeiture action by the federal government for providing accounts, loans or insurance to businesses related to the rapidly expanding cannabis sector.

Originally proposed, in part, to protect the first cannabis companies in the early phase of legalization by states, the SAFE Act was meant to protect the cash-dependent storekeepers, dispensaries and growers.

Cash-only businesses sometimes had 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.

Catalyst for change

As the bills now languish in the politics of committees, the need to protect the smaller cannabis business owner has not changed. And these acts represent a real catalyst for change on a global scale.

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.

Path forward

As the Senate begins the process of reviewing the SAFE Banking Act, it appears that with bipartisan support and the endorsement of financial groups such as the American Bankers Association and Credit Union National Association, the prospects for passage of the measure are as good this time as they will ever be.

With the potential passage of the two measures, the safe harbor that will be created for banks, insurance companies and credit institutions would allow them to fully engage in the global market.

Credit and insurance access alone create clear pathways for larger international transactions, intellectual property claims, enforcement and protection.

Large public entities such as pharmaceutical, tobacco and cosmetics companies might then take active and larger participation in these marijuana enterprises, and the kindling laid down by these first startups becomes the inferno of global trade.

The industry has also rallied to the cause, from small grassroots programs to formal advocacy organizations.

Lessening stigma

Complicating the process from the perspective of lawmakers has always been the larger moral issues surrounding the war on drugs and the impact on communities disproportionately affected.

Morality on this issue has shifted considerably. What 20 years ago was a debate on the medical use of cannabis, moved to the right for an adult consumer to access safe cannabis and, now, the need to expunge criminal records from those previously charged and impacted by what is now a legal industry.

The Marijuana Opportunity Reinvestment and Expungement Act, or MORE Act, is an example of government attempting to chart a path to reschedule cannabis and create a vehicle for criminal and social justice reform.

In comparison, safe banking reform seems almost quaint when compared to large social justice overhauls, but the path to global change still needs a place to start while society works to manage the larger, more serious concerns.

Local level

While the cannabis banking issue has had multiple fits and starts at the federal level, the largest state markets have begun to explore novel banking concepts to move the market forward at the local level.

Both California and New York have considered the idea of a public bank, run by the state, that would provide credit and safe banking to marijuana companies.

The public banking concept has been met with resistance. The cost and management of these institutions would only burden state coffers already exhausted by COVID-19 and present numerous legal challenges. Yet the issue continues to be pressed by the industry.

The road to global cannabis reform is a series of small battles fought by the pioneers of cannabis efficacy, the science of cannabinoids and agriculture and, finally, the fundamental right of legal access to the plant itself.

No matter the jurisdiction, marijuana reform has required a steady process of removing the stigmatization, creating the legal infrastructure for safety and traceability as well as building a safe and fair system for commerce.

What began with the very real need to protect both the lives and livelihoods of small marijuana businesses now sits poised to provide the final piece for global institutions ready to accelerate international reform.

Jason Warnock can be reached at

The previous installment of this series is available here.

To be considered for publication as a guest columnist, please submit your request here by filling out our form.