C SAFER Banking for Colorado Cannabis Businesses WHAT BANKS NEED TO KNOW By Mark Bell, Partner, Stinson LLP Colorado’s billion-dollar cannabis industry could access bank accounts, payroll services, credit card processing and other basic financial services if Congress passes the Secure and Fair Enforcement Regulation (SAFER) Banking Act. The bill, which the Senate banking committee passed with a bipartisan vote in September 2023, represents a significant step forward for both the cannabis industry and the banking and financial services industry. Seven versions of the SAFER Banking Act have passed the House in the last decade, but this is the first time a version of the bill has made it out of a Senate committee. U.S. Sens. John Hickenlooper and Michael Bennet are co‑sponsors of the bill. “Forcing legal cannabis businesses into cash-only operations creates more opportunity for crime,” Hickenlooper said in a statement issued when the SAFER Banking Act passed out of committee. “This vote brings us one step closer to the entire nation following Colorado’s lead.” Colorado cannabis businesses celebrated the 10th anniversary of legal recreation sales earlier this year. Although medical and retail marijuana sales decreased slightly in 2023, according to the Colorado Department of Revenue, Colorado sales still exceeded $1.5 billion in 2023. Thirty-eight states and the District of Columbia now allow the medical use of cannabis products, while 24 states and D.C. also allow some form of recreational use. But marijuana businesses still cannot access basic financial services because cannabis remains a Schedule I drug under the Controlled Substances Act (CSA). Banks risk violating federal money laundering and forfeiture laws by lending to state-legal cannabis businesses. Beyond the obvious benefits for growers, retailers and others directly involved with the cannabis industry, the SAFER Banking Act would help financial institutions navigate the precarious issues related to banking marijuana-related businesses for the first time. Perils Addressed In Denver, cannabis businesses are as common as coffee shops, but the current all-cash model makes them targets for theft, tax evasion and organized crime. The problem is so prevalent that in 2021, the marijuana lobbying group, Americans for Safe Access, put out a “Robbery Preparedness Guide” for cannabis businesses. In 2022, burglary or attempted burglary constituted 96% of all cannabis industry-related offenses in Denver. For banks, the risks are also significant. According to the American Bankers Association, banks do not have to provide services directly to the cannabis industry to run afoul of federal drug laws. There are also attendant risks to providing banking services to vendors, landlords and employees indirectly related to the cannabis industry 9 Colorado Banker
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