A specific provision in the bipartisan marijuana banking bill is raising concerns among a Democratic senator, key federal officials, and consumer advocacy groups. They argue that this provision could inadvertently limit regulators’ ability to take action against individuals exploiting banking services.
As reported by Marijuana Moment, during a recent Senate Banking Committee hearing, Senator Jack Reed (D-RI) highlighted his reservations about Section 10 of the Secure and Fair Enforcement (SAFE) Banking Act. He expressed that the provision’s language could make it more difficult for federal regulators to raise concerns about risky customer relationships, not only within the cannabis industry but also in other sectors. Reed also contended that the section would require banks to notify customers suspected of engaging in illegal activity, potentially alerting criminals and allowing them to evade consequences.
The provision in question states that regulators may not formally or informally request or order a depository institution to terminate specific customer accounts, including those of state-sanctioned marijuana businesses or service providers. While exceptions are made for unsafe or unsound practices, critics argue that the provision is overly broad and restricts regulators’ oversight of financial activities unrelated to cannabis. It also requires depository institutions to inform customers of the justification for account terminations if ordered by an appropriate federal banking agency.
Senator Reed reiterated his concerns about the provision during another Banking Committee hearing, seeking input from Federal Reserve Vice Chair For Supervision Michael Barr and Acting Comptroller of the Currency Michael Hsu. Barr acknowledged the importance of addressing conflicts between state and federal laws regarding cannabis financial services but recognized the potential problems that the provision could create.
The concerns raised by Senator Reed and others highlight the potential implications for the continuing banking challenges faces by the cannabis industry. The provision in question could impact their operations and the ability of regulators to oversee financial activities. It is crucial for smoke shops and dispensaries to stay informed about the progress of the SAFE Banking Act and consider how these developments could affect their compliance with financial regulations and overall business operations.