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Medical Marijuana Banking Laws: What You Need to Know

With all of the medical marijuana banking laws, cannabis banking is in a strange position. On the one hand, it’s 100% legal at the state level (and indeed, medical marijuana has been legal in Colorado since 2000). On the other hand, however, the Federal government views cannabis as an illegal substance.

Somewhere in the middle, medical marijuana banking laws exist. It’s a confusing minefield of legalities and technicalities. Nevertheless, as of June 2020, 695 banks and credit unions were servicing marijuana-related businesses. So banking is possible under the various medical marijuana banking laws.

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Medical Marijuana Banking Laws

In this article, we’ll go through each of the most prominent medical marijuana banking laws – and we’ll discuss a potential breakthrough set to change everything.

Federal Medical Marijuana Banking laws

Federal Criminal Law Enforcement Policy

Not so much written law, as the ad hoc policy different administrations have taken toward medical marijuana banking. Under the Cole Memorandum, the emphasis was shifted away from legal marijuana businesses (and banking practices) towards illegal marijuana trafficking masquerading under the guise of legal businesses.

But this memo wasn’t a change in federal law, merely a statement of priorities. Indeed, in 2018, Attorney General Jeff Sessions rescinded the Cole Memorandum and went after all marijuana businesses. Under the current Attorney General William Barr, the Cole Memorandum appears to be back.

Official Federal Laws

Because of this schizophrenic approach to federal enforcement, few major banks and financial institutions are willing to offer marijuana businesses banking services. The relevant federal law is the Bank Secrecy Act of 1970. All US financial institutions must detect and prevent money laundering, tax evasion, and other criminal activity. As marijuana is illegal at the federal level, it is covered under the anti-money laundering aspects of the act.

Nevertheless, local marijuana banking services, like Safe Harbor, have filled in the void, delivering high-quality banking services to these risky businesses.

Local Medical Marijuana Banking Laws

Federal authorities may be clear about the legality of marijuana banking (albeit being a little foggy about enforcement). The waters are muddied, however, by contradictory legislation at the state level.

California Assembly Bill 1525

Medical marijuana was first legalized in California way back in 1996, with recreational use legalized in late 2016. Understanding the difficulties marijuana-related businesses found in using financial services, Governor Gavin Newsom signed Assembly Bill 1525 to clear up any confusion.

The bill achieves two objectives:

  1. Confirms that no banks or other entities are committing a crime under California law by providing services to legal cannabis clients. It also removes state penalties for banks and other financial institutions working with marijuana-related businesses.
  2. Improves the ability of marijuana-related businesses to access loans and financial services. It allows licensed cannabis businesses to sign a waiver permitting state or local licensing and regulatory authorities to share pertinent information. It thereby eases the banks’ burden of federal requirements. It’s hoped it will make medical marijuana banking more attractive.

Still, AB 1525 does not exempt banks from federal laws, and the California Assembly lacks the power to do so.

Proposed Medical Marijuana Banking Laws

Federal lawmakers aren’t happy with the current state of legalization. The likelihood of complete federal decriminalization remains some way off. However, there are significant efforts to remove the fear of federal prosecution or fines for banking or financial institutions providing services to a marijuana-related business.

As of 2022, three such acts are being evaluated:

The SAFE Act

The Secure and Fair Enforcement Banking (SAFE) Act passed the House of Representatives on April 19, 2021. However, to say the bill has a complicated history would be an understatement. Proposed by Ed Perlmutter (D-CO) back in 2019, the bill has bounced back and forwards in the House of Representatives despite broad bipartisan support.

The bill prohibits federal banking regulators from penalizing banking service providers associated with legitimate cannabis-related businesses. Moreover, proceeds from transactions involving legitimate marijuana businesses will not be considered as originating from unlawful activities and so will no longer be subject to anti-money laundering laws.

To get it enacted, Perlmutter has attached the bill to multiple pieces of legislation, including the National Defense Authorization Act 2022 and, most recently, the America COMPETES Act 2022. Perlmutter, who plans to retire soon, vowed to attach the bill to every major act until it passes.


The Strengthening the Tenth Amendment Through Entrusting States (STATES) Act was first introduced by Senators Cory Gardner and Elizabeth Warren (a Republican and Democrat, respectively). The legislation was a reaction to then-Attorney General Jeff Sessions move against the Cole Memorandum. It aimed to limit federal interference with states that had legalized marijuana.

The bill passed the House of Representatives with ease but struggled to break through the Republican-led Senate; instead, it gave way to the SAFE Act.

The MORE Act

The Marijuana Opportunity Reinvestment and Expungement (MORE) Act is the boldest of the three proposed acts. It aims to deschedule cannabis from the Controlled Substances Act and retroactively expunge all cannabis arrests, charges, and convictions.

This would fully allow banking authorities to provide services to a marijuana-related business. Little wonder then that the Cannabis Trade Federation shifted its support to the MORE Act from the STATES At in October 2020. The act passed the House of Representatives in December 2020. It was reintroduced in May 2021 and won the support of Amazon’s consumer CEO. As of September 30, 2021, the House Committee of the Judiciary referred the bill to the House for a vote.

If passed, it would represent a watershed moment, not just for medical marijuana banking laws but also for the entire industry’s legality. No longer would marijuana be an illicit substance. With more states likely to legalize, it would create many opportunities for existing marijuana businesses – with the banking support in place to support their growth.

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Do you own a hemp, CBD, dispensary, marijuana, or cannabis business and need a business bank account? We’ve validated over $8 billion dollars in cannabis-related funds since 2015. Bank with confidence. Bank with Safe Harbor Financial today.

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