Laws continue to conflict over cannabis regulation, with a majority of states legalizing the substance in some form, while the federal government strictly regulates cannabis through the Controlled Substances Act. This has caused banks and credit unions to avoid providing financial services to cannabis dispensaries. Without bank services, including electronic banking, debit/credit card services, and payroll services, these businesses are stuck with cash-only operations. In fact, some estimate 70% of all cannabis dispensaries are cash-only. The vulnerability of only using cash opens these businesses up to more risks than businesses with electronic-based transactions.

The most obvious consequence of such operations involves having much more cash on site than the average store. As a result, cannabis dispensaries experience higher frequencies of theft. Theft can occur both externally by unknown parties, and internally by employees. It is general knowledge that cash-only operations have more cash on site than other businesses, making them more likely to be targets for robberies. Further, requiring employees to handle large amounts of cash increases the risk of cash going missing, or even being stolen by employees. Cannabis dispensaries have even had to hire armored vehicles to transport large amounts of cash to offsite locations.

Cash-based businesses also face issues involving business disputes from accounting errors. As the amount of cash increases, the risk of clerical error increases, and this has led to contract disputes with other businesses and sometimes litigation.

Additionally, cash-only operations have more issues when paying employees and taxes. Many cannabis dispensary employees are not able to use direct deposit or accept payments by check. Documenting pay becomes more complicated without paycheck stubs. Businesses must also withhold payroll taxes from employees and report them to the IRS. Further, paying taxes in cash creates its own security and efficiency issues, and even the IRS agrees this issue needs to be resolved. The increased risk of accounting errors and the decreased documentation makes payment very difficult.

The SAFE Banking Act

In March, 2021, the Secure and Fair Enforcement (SAFE) Banking Act was reintroduced to Congress. The Bill aims to give cannabis dispensaries access to banking services, and banks would be protected from federal penalties for providing services to cannabis dispensaries.

The Bill has been introduced to Congress in the past, and indeed the House voted in favor of the Bill, but it did not survive the Senate. In 2021 it was reintroduced to the House, and soon thereafter it was also introduced to the Senate. Its reintroduction has garnered more optimism due to Democratic control of the House and Senate. But there is doubt as to support from the Biden Administration, since President Biden’s support of cannabis regulation reform remains unclear.

Status and Content

The problems resulting from cash-only operations has caught the attention of congress. The negative effect has impacted more than just cannabis dispensaries. In early 2021, Internal Revenue Service (IRS) Commissioner Charles Rettig told Congress the IRS would prefer cannabis dispensaries pay taxes electronically. The cash payments create security and efficiency issues for the agency. The SAFE Banking Act seeks to change that.

In 2021 the House showed substantial bipartisan support for its reintroduction, with 102 initial cosponsors. While one would assume the Bill to be entirely the work of Democratic leaders, this is not the case. Republican representatives from several different states supported the Bill’s reintroduction, including Steve Stivers and Warren Davidson from Ohio, Don Young from Alaska, and Dan Newhouse from Washington.

Shortly thereafter, a bipartisan group of 30 Senators introduced to the Bill to the Senate. Similar to the House, the Senate showed bipartisan support for the Bill. Republican Senators such as Steve Daines from Montana, Kevin Cramer from North Dakota, Dan Sullivan from Alaska, and Bill Cassidy from Louisiana supported the introduction.

Along with support from the IRS and Congress, the American Bankers Association stated the SAFE Banking Act would be an “important step” in providing banking services to cannabis dispensaries and would clarify many issues for the banking industry.

The SAFE Banking Act would create a safe harbor for depository institutions, including banks and credit unions, that provide services to cannabis dispensaries. It prohibits federal regulators from:

  • Terminating or limiting the deposit insurance or share insurance of banks and credit unions solely because they provide services to cannabis dispensaries;
  • Prohibiting or discouraging a bank or credit union from offering services to cannabis dispensaries;
  • Recommending or otherwise encouraging banks or credit unions not to offer services to anyone affiliated with a cannabis dispensary;
  • Taking any adverse or corrective action on a loan made to a person solely because the person is affiliated with a cannabis dispensary.

Further, the Bill has expanded to include hemp and CBD businesses, and provides protections for banks giving loans directly to cannabis dispensaries. Finally, the bill directs the Secretary of Treasury to ensure Financial Crimes Enforcement Network (FinCEN) guidance is consistent with the bill. If the SAFE Banking Act becomes law, federal guidelines for banks and credit unions will change and if they become inconsistent with federal law a host of issues will arise in the banking industry.


The SAFE Banking Act had already passed the House last year, and is expected to do so again. It is important to note that when a bill is introduced to Congress, its content can change many times. Also, there is less optimism when considering the 50-50 split in the Senate.

Even though the Senate is controlled by the Democratic party, and Democrats largely support the Bill, success is still questionable. The Democrats control the senate due to Vice President Harris’ tie-breaking vote. Otherwise, the Senate is split 50-50 between Democrats and Republicans. This will require more bipartisan agreement, which will difficult since there is not even a consensus on cannabis reform among democrats.

President Biden has been unclear on his support for laws that reform the current regulation of cannabis. Indeed, the Biden Administration caught much attention for firing or reassigning staffers who had used cannabis in states with legalized cannabis. Biden has stated he wants to see more research on cannabis before he would support reform, and it remains uncertain that he will change this position. However, that will not stop the progress of the SAFE Banking Act by itself.

Senate Majority Leader Chuck Schumer stated he will move forward on cannabis reform regardless of President Biden’s position. After the decade-long pattern of state legalization worked out well due to responsible business practices, Schumer is enthusiastic about cannabis reform.

Nonetheless, there is much optimism from the bipartisan support in Congress. This is easy to understand, because the Bill is not merely about cannabis, but is rather about helping small businesses, paying taxes, and resolving nation-wide financial issues. Whether or not the SAFE Banking Act becomes law, an increasing number of constituents are calling for resolution.