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Cannabis banking: SAFE Banking Act

| Mar 29, 2022 | Cannabis Law |

The grey line between legality and illegality of cannabis has created a dilemma for many cannabis companies that are conducting business within the limits of the law. The issue is putting their proceeds in the bank. While they are legal businesses per California law, the sale of cannabis is still illegal federally. This problem means that money deposited in the bank by illegal dealers is technically laundered money, which exposes their deposits for potential confiscation by the federal government. State legislators have now taken this situation into account and established the SAFE Banking Act specifically for the cannabis industry.

How the legislation works

The SAFE Banking Act is a major upgrade in cannabis law. Valid cannabis business managers can now deposit their cash flow intake in a standard business bank account without fear of having it taken by the DEA if recognized or cited for a legal violation. Until now, this has been a major concern for licensed distributors and wholesalers.

What the law ensures

The act is a result of the 2018 Farming Act that allows industrial hemp to be grown in the United States. While the legislation fell short of legalizing cannabis fully, it did establish that cannabis products with low-grade THC content could be sold legally. This additional altering of the banking law per cannabis legalization allows valid licensed dealers to protect their profits from seizure by legally claiming them as personal property.

The SAFE Banking Act is a step in the right direction as cannabis use becomes more acceptable and legal across the United States. All state governments are interested in the financial growth that can be brought in through taxation, but the financial proceeds must first be valid for the industry in general and authorized outlets in particular.