House passes bill protecting banking services for legal cannabis

By Ken Tysiac

Federal prosecution of a depository institution providing banking services to a legitimate cannabis business would be prohibited under a bill that passed the U.S. House of Representatives on Monday by a 321–101 vote.

H.R. 1996, the SAFE Banking Act of 2021, also includes protections from prosecution for “ancillary services” to legitimate cannabis businesses that is expected to be interpreted to include CPA services.

The bill will be sent to the Senate, which may take it up but also may pursue broader legalization of cannabis.

Also under the bill, federal banking regulators would not be permitted to terminate or limit the deposit insurance or share insurance of a depository institution solely because it provides financial services to a legitimate cannabis-related business.

Should the bill become law, a depository institution would not, under federal law, be liable or subject to asset forfeiture for providing a loan or other financial services to a legitimate cannabis-related business.

Regulators also would not be allowed to prohibit or discourage a depository institution from offering financial services to such a business.

The bill also states that proceeds from a transaction involving activities of a legitimate cannabis-related business would not be considered proceeds from unlawful activity.

Under the bill, a federal banking agency would not be permitted to request or order a depository institution to terminate a customer account unless the agency has a valid reason for doing so and that reason is not based solely on reputational risk.

Valid reasons for terminating an account would include threats to national security and involvement in terrorist financing, including state sponsorship of terrorism.

Ken Tysiac ( is the JofA’s editorial director.

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