Northern California cannabis industry hopes for success of newly reintroduced banking bill

With a new “sheriff” in Washington, D.C., maybe the second time’s a charm for cannabis banking.

The U.S. House of Representatives reintroduced the Secure and Fair Enforcement Banking Act (SAFE) on March 18, prompting hope from bankers and cannabis leaders that it could have a better chance of passing both arms of the U.S. Congress. It died in the U.S. Senate during the last session.

U.S. Rep. Ed Perlmutter, D-Colorado, introduced the bill titled H.R. 1996, which is intended to provide safe harbor for banks and other financial institutions to work with cannabis operations that are legal in their states. At least 47 total states, and now New York as recently as March 31, have made cannabis legal.

U.S. Rep. Mike Thompson, D-St. Helena, supports the push to make cannabis more acceptable in banking and finance.

“Local small businesses in California that sell cannabis should be able to access the banking services they need. That’s why I support the Secure and Fair Enforcement (SAFE) Banking Act,” Thompson told the Business Journal. “This bipartisan bill would help local cannabis businesses use the financial institutions that will help them survive and thrive, and I hope that the Judiciary Committee will hold a hearing and consider this bill soon.”

His optimism was welcomed by those on the frontline of the industry.

“I’m fairly positive we’ll get passage,” CannaCraft CEO Jim Hourigan told the Business Journal. “I don’t view it as a partisan issue — especially with all the tax dollars it brings forward.”

Like many in his industry, Hourigan said the major pitfalls of cannabis businesses’ being unable to get traditional bank accounts is safety and security. Dispensaries and other businesses are forced to carry around bags of cash — a dangerous proposition. And in the age of the coronavirus threat, there’s another consideration.

“A lot of customers don’t want to deal with cash in light of COVID,” said Hourigan, who runs the multifaceted cannabis operation in Santa Rosa.

Despite a cannabis business lining up a banker receptive to providing a bank account, the company still can’t deal with negotiating capital for a loan.

“We can’t even get financing for a vehicle,” said Perfect Union CEO David Spradlin. The Sacramento-based company is setting up its 10th medicinal cannabis location in Napa.

At issue is a long-held stigma in federal law.

The California Cannabis Industry Association has lobbied for the legislation’s passing for two years.

“We’re happy to see it introduced again. It would give a huge benefit to the legal businesses,” association Executive Director Lindsay Robinson told the Business Journal. “While cannabis is not fully legal (across the nation), these businesses still need banking,” Robinson said. “This is unacceptable.”

Robinson’s advocacy organization, based in Sacramento, has acknowledged North Bay Credit Union in Santa Rosa for its extensive work with cannabis operations.

With the Santa Rosa financial institution as one of the first to openly do business with cannabis producers, it received the California Cannabis Industry Association’s Preferred Banking Partner designation, the credit union announced Jan. 5. The association is also a credit union client.

Chief Compliance Officer Carole McCormick supports the reintroduction of the bill. She remains optimistic the processes would get easier with having a legitimate nod from the federal government, which still views the substance as a Schedule 1 drug.

Nineteen credit union specialists are forced to comb through each of its 150 cannabis clients’ transactions to ensure they aren’t affiliated with any illegal operation.

“The big thing for us is we’re required to check for all suspicious activity. These reports are pretty comprehensive, and we have to do a narrative around each transaction,” McCormick said. “It’s that kind of oversight that makes it so labor intensive.”

Will banking processes change?

Todd Sheffield, CEO of Community First Credit Union, said if the legislation passes, life as cannabis business operators know it may be up in the air.

“It’s an enormous amount of paperwork,” Sheffield said.

It takes one credit union employee to manage 24 cannabis businesses, in contrast to one staffer being able to handle 400 commercial accounts.

Yes, the Santa Rosa credit union chief believes banking would become safer — if anything because a legitimate company wouldn’t be forced to carry around cash and pay its employees in greenbacks.

Sheffield wonders whether the credit card companies such as Visa and Mastercard will come around to doing business with the industry.

North Bay banks have shied away from opening up their doors to the industry.

“We’re not going there right now, but if things change, we may look at it. It’s just really risky,” Exchange Bank spokeswoman Carolyn Cole-Schweizer said.

The SAFE Banking Act provides protections from money laundering laws for any proceeds derived from state-legal marijuana businesses.

The U.S. cannabis industry is growing at a rapid rate, valued at $17.7 billion annually.

“With new Senate leadership now firmly in favor of cannabis policy reform, we are optimistic that this narrowly tailored – but absolutely necessary – legislation will be allowed to progress through the hearing process without delay,” National Cannabis Industry Association Co-founder and CEO Aaron Smith said in a statement. “This bill is a meaningful first step that will have immediate benefits in terms of safety, transparency, fairness, and much-needed economic opportunities, while Congress continues working toward more comprehensive solutions to end prohibition and sensibly regulate cannabis.”

Keys to the SAFE Banking Act

The SAFE (Secure and Fair Enforcement) Banking Act of 2019 is intended to ensure access to financial services for cannabis-related legitimate businesses and reduce the amount of cash at such service providers. The bill also declares a federal banking regulator may not:

• Terminate or limit the deposit insurance or take any other adverse action against a depository institution because it has provided financial services to the business.

• Prohibit or penalize this financial institution from providing these services.

• Recommend or urge the institution to offer services to an account holder.


Susan Wood covers law, cannabis, production, agriculture, energy and transportation as well as banking and finance. For 25 years, Susan has worked for a variety of publications including the North County Times in San Diego County, Tahoe Daily Tribune and Lake Tahoe News. She graduated from Fullerton College. Reach her at 530-545-8662 or

Show Comment