The marijuana industry is one of the fastest-growing industries in America. As the legalization and decriminalization of both medicinal and recreational cannabis usage continue to expand into new territories, the landscape must evolve to reflect those changes. Perhaps the most important development of 2021 is the recent passing of the SAFE Banking Act, which is set to influence the future of the market for registered retailers, dispensaries, and consumers alike.

If you own, manage, or run a business in the cannabis sector, you’ve probably heard a little about the SAFE Banking Act. Nonetheless, familiarizing yourself with the finer details and how they will impact your company is essential. By the end of this guide, you will know;

  • What is the SAFE Banking Act for Cannabis?
  • When does the SAFE Banking Act for Cannabis come into play?
  • What can your business do to prepare for its introduction?
  • How can the SAFE Banking Act for Cannabis boost your sales?
  • And more.

Sound good to you? Then you should probably keep reading…

What is the SAFE Banking Act?

The SAFE Banking Act, also known as the Secure and Fair Enforcement Act, is a legislation that aims to provide protections for depository institutions that provide financial services to cannabis-related legitimate businesses and service providers for such businesses, and other purposes. It will affect the industry in all 17 states where recreational use is permitted, as well as the further 18 that allow medicinal usage.

Initially proposed in 2019 at the 116th Congress, the SAFE Banking Act for Cannabis 2021 was approved by the US House of Representatives on April, 19 with a vote of 321-101. Unlike in 2019, though, the act has subsequently been referred to the Committees of Jurisdiction. So, the wheels are in motion for it to take effect ASAP.

The act itself is designed primarily to support banks by fully removing the threat of penalizations or other repercussions that previously loomed overhead when working cannabis businesses. Until now, legal frailties meant banks and financial institutions were often hesitant – or in some cases unable – to deal with licensed vendors. The SAFE Banking Act reflects the changing landscape of America’s relationship with licensed cannabis.

In short, any transactions between banks and licensed cannabis businesses will no longer be viewed as illegal at a federal level. While this was already the case for a large percentage of financial activities, the blanket coverage provides reassurances for all parties involved.

Rep. Earl Blumenauer, co-chair of the CCC (Congressional Cannabis Caucus) said: “It’s time for us to address this inconsistency, it’s time for us to pass, again, the SAFE Banking Act and it’s time for us to move forward with legalization on the federal level. I appreciate us being at this point—a critical first step along the path to full legalization, which I’m confident will happen this Congress, and not a moment too soon.”

By allowing banks to deal with licensed cannabis dispensaries in a safe and legal manner, the SAFE Banking Act 2021 serves to support businesses within the industry by tearing down many of the barriers that previously surrounded transactions.

Why has the SAFE Banking Act occurred in 2021?

While the State of California legalized medicinal cannabis back in 1996, any growth over the next two decades was a very slow process. This is underlined by the fact it wasn’t until 2012 that the first two states (Washington and Colorado) legalized recreational marijuana sale. In many ways, then, the industry is still in its infancy.

The rate of acceleration has been noticeably quicker in the past 5-10 years. Some of the most telling stats surrounding America’s marijuana industries include;

It is also worth noting that every cannabis-related ballot, for both medicinal and recreational changes, passed. Cannabis sales additionally show that sales have reached everyone from Gen Z to Boomers, with even 1% of the Silent Generation using legal marijuana. The market’s generational patterns for both medicinal and recreational usage look very similar too.

Due to those progressions, federal laws and governing bodies have been forced to respond. The introduction and passing of the SAFE Banking Act is just one of several key developments that will ultimately support businesses working in the related fields – as well as consumers ranging from experienced medicinal users to first-time recreational consumers.

Other progressions include the creation of the USCC (U.S. Cannabis Council), which serves to “align and unify its members’ collective voices to advance cannabis reform” and “focus on securing federal reforms that advance social equity and promote fair, safe, and well-regulated markets nationwide as states continue legalizing cannabis at a rapid rate.”

The cannabis industry has additionally created thousands of new jobs across America while dozens of new businesses are launched within this space each month. Therefore, the pressure on authorities to create a fairer environment for licensed vendors and professionals has been huge.

Further developments are widely anticipated across the industry over the years to come. In the current landscape, though, the SAFE Banking Act is the hottest talking point by far.

How badly do legitimate cannabis businesses need financial help?

The SAFE Banking Act 2021 is a significant watershed moment for the legal and license cannabis industry. It will finally provide companies with much-needed access to financial support from banks and financial institutes.

An opportunity to access funds is crucial for growth in any business sector but carries even greater importance when the face of the industry is changing at such a rapid pace. Aside from the impacts that growing legalization brings, businesses have also faced the impacts of Covid-19.

Despite the fact that dispensaries saw an initial sales increase of over 30%, many businesses have struggled with both online and offline matters. Common situations have included an inability to expand companies at the originally projected speeds, enforced employee loss, and even business closures.

While far from being a situation limited to one industry, the lack of financial support has exacerbated the problem for the worst affected companies. Similarly, it has caused a lot of hesitation for startups, despite the clear indications that the industry as a whole has a very bright future.

The full provisions of the SAFE Banking Act

The core function of the SAFE Banking Act is to support financial services that work with cannabis businesses while simultaneously enabling the companies to accept credit cards and deliver better payment processing possibilities to the consumer.

In short, cannabis businesses will be viewed as legitimate companies, which subsequently brings protection in the form of several provisions;

  • Federal banking regulators are unable to terminate or limit deposits or share insurances against a depository institution based solely on the fact that it provides financial services to cannabis businesses.
  • Regulators will be prohibited from penalizing or fining depository institutions for providing financial services to cannabis businesses. They must also avoid threatening institutions over proposed transactions with marijuana brands.
  • Federal banking regulations cannot penalize service providers (employees, owners, etc.) or real estate owners who deal with cannabis businesses in any form. This includes putting pressure on them to break their agreements.
  • Regulators must not engage in any activity that incentivizes or encourages a depository institution to refrain from offering financial services to an account holder because of their cannabis business activities.

By protecting the financial service providers, the SAFE Banking Act subsequently has a huge influence on the future of all companies working in the cannabis industry, including dispensaries, manufacturers, online retailers, and more.

What are the key differences from 2019?

The 2021 Bill is fundamentally the same as the original SAFE Banking Act of 2019. At least in principle. However, some updates and modifications were made in the two-year gap. Many of the modifications relate to the definitions used for “financial institutions” and “CLBs (cannabis-related legitimate businesses)”.

  • While the 2019 Act defined financial services in alignment with Section 1002 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the 2021 update added federal credit unions acting under the Federal Credit Union Act as well as financial products national banks can offer under either 12 U.S.C. § 24 (Seventh) and 12 U.S.C. § 24a.
  • The 2021 SAFE Banking Act enforces federal banking regulators to update hemp banking guidance in line with the appropriate Bank Secrecy Act and federal obligations. This protects hemp-related legitimate businesses with the same provisions as cannabis businesses. This builds upon the directions that were already in place for 2019.
  • The political makeup of the co-sponsors changed significantly. A list of 33 in 2019 became 31 in 2021. More importantly, four Republicans became seven, with two Republican senators, including Senator Pat Toomey (R-PA). It has influenced the enactment, thus making a difference to legitimate cannabis and hemp businesses as well as financial institutes.
SAFE Banking Act Passed

What does the SAFE Banking Act 2021 mean for businesses?

Every business working in the industry of legal marijuana production and sales must pay close attention to the SAFE Banking Act and try to understand how it relates to their own ventures. 

Whether working in territories like Maine and Oregon that have a two-decade history with legal medicinal sales or a state like Virginia, where recreational usage has only been permitted since this year, doesn’t matter. The SAFE Banking Act will bring a host of direct and indirect changes. Some of the most pertinent issues are listed below:

Increased fundraising opportunities

The cannabis industry is thriving, as shown by the growth in recent years and projections that it will surpass $100b by 2030. However, raising capital has proven difficult for many entrepreneurs as they look to start or expand their businesses. That is set to change.

A safe harbor has been established by the SAFE Banking Act, which will protect federal depository institutions and credit unions from federal prosecution under the new legislation. In turn, they will be able to facilitate transactions are funding to marijuana businesses without fear of financial consequences.

In turn, this should enable companies to raise more capital than ever before. Better still, they should be well-positioned to do this in a stress-free and time-efficient manner. Crucially more options should lead to better interest rates.

Improved industry reputation

Despite the fact that one-third of Americans now live in states where marijuana is legal for both recreational and medicinal use, some people doubt the sector. While some doubters are waiting for further research (even though there has been lots of it), others simply won’t trust a sector that is somewhat unverified and unsupported due to those federal implications.

The SAFE Banking Act removes this particular obstacle. Even when the affected people are unlikely to become direct consumers, the changing mindset and growing acceptance will make cannabis sales more accessible to a large-scale audience.

It can consequently be assumed that this will spearhead quicker changes to legislation in the states that are yet to legalize marijuana. And it could potentially open the door to nationwide transactions for new and established dispensaries.

Easier integration with payment processors

In addition to changing the landscape for the relationships between MRBs (marijuana-related businesses), the changing legislation can influence the bonds shared between brands and their consumers. Not least because they can accept credit cards.

The advancements in payment processing, including Vector Payments, can provide convenient payments for consumers in both online and offline settings. When linked to banks and financial institutes that no longer need to worry about potential federal comebacks, it sets the foundation for a better and smoother integration.

In turn, this allows businesses in the cannabis sector to offer the same payment processing facilities that companies in other industries do. At a time where consumer expectations are at an all-time high, this can be hugely beneficial.

Opportunities for new products 

As previously mentioned, the marijuana industry is evolving at a faster rate than almost every other business sector. Changing legislation and federal regulations are only one of the contributing factors. Open mindsets and new products are equally crucial.

With large audiences across multiple generations and both genders turning to CBD products for medicinal and recreational reasons, dispensaries and product manufacturers have been able to test the waters with new products. Improved financial situations and increased working capital should continue to facilitate this for years to come.

Gummies, chocolates, drinks, lotions, tinctures, topicals, sprays, and capsules are just some of the options already available. With a bigger market to aim for, product creators will be set to try new and exciting product types, flavors, and concentration levels.

Improved customer services

When businesses are in a position to distance themselves from ‘cash only’ protocols, they are able to deliver a far more comprehensive service. Aside from choosing better POS facilities and payment processing, it allows them to incorporate a range of additional services that are designed with consumer convenience in mind.

This could include an ‘order ahead’ process, recurring subscriptions, monthly repayment plans, and more. Sign-ups grew by 60% in the first month of the pandemic, and the changing consumer habits must not be ignored. Data-driven analysis to predict consumer habits or integrate A.I. facilities will play a key role.

The industry continues to grow at a rapid rate, and businesses looking to upgrade their games will thank the SAFE Banking Act for its direct and indirect influence on the consumer experience.

More accurate forecasting

On the one hand, all legitimate cannabis businesses face an uphill battle to predict the future of the market. However, access to better funding delivers a level of stability that enables companies to make far more accurate forecasts and use analytical tools to identify the right moments for expansions.

The frustration of being unable to strike at the optimal time has been one of the leading factors behind a large number of closures throughout the pandemic, but the new Bill promises to draw a line under those issues.

While that doesn’t suddenly guarantee success or remove business risks, owners can now plot their next moves with a far clearer understanding of what falls under the realm of possibility at any given time. It should help companies transition with greater ease. 

Increased confidence

Perhaps the most important upshot for businesses in this arena is that the ability to accept credit card payments will put them in a more confident state of mind. Cash is no longer king, especially with the changing trends caused by the pandemic. Increased payment flexibility and freedom should inspire brands to take the initiative.

This could result in greater investments for their dedicated marketing strategies, product selections, dispensary store floor blueprints, and more. It may even extend to staff developments to ensure a comprehensive and consistent service.

As businesses continue to see the benefits of the new regulations and the possibilities it brings, an even greater acceleration of growth can be achieved. A strong and passionate mind is truly the most powerful asset of all.

Does the SAFE Banking Act protect consumers?

In short: yes. And it should be a point of interest for all legitimate companies, because the flourishing black market and money laundering services are a real problem for the industry. 

The truth is that some financial institutions already work with businesses in this sector. However, expanding the financial opportunities for legitimate firms should simultaneously make it harder for black market services to work. In turn, this can have a big impact on the industry, such as;

  • Gain access to a larger audience because nobody will use the black market.
  • Fewer problems caused by unsafe CBD products, which subsequently protects the legitimate industry.
  • Improved consistency of regulatory guidelines and compliance across the nation.
  • Increased trust from new audiences and consumers who may have previously heard scare stories.
  • Fair and standardized (minus general brand-to-brand fluctuation) pricing.

Consumers stand to receive a service that provides greater reliability, value, and product quality. With this, all companies stand to benefit from improved market opportunities in the immediate and long-term future.

What’s next?

While the Bill has passed Congress, a roadmap must still be followed before its impacts are felt by financial services, cannabis businesses, and consumers. The Act has actually been four years in the making as the 2019 version was first devised in 2017. 

The next big breakthrough will be for the Senate to approve the SAFE Banking Act. it is likely to occur before the year is finished, but there are stumbling blocks. Notably, as per The Fresh Toast, Chairman Crapo wants to add a condition that states “all cannabusiness in need of financial services from banks must have a THC content of at most 2%”, which would cause major issues.

Once the SAFE Banking Act comes into action, legitimate cannabis business will be tasked with reaching out to the financial support providers they need to secure backing and ensure that the advanced payment processing facilities are in place to ensure that they can accept credit cards and provide the best service to customers.

Safe Banking Act passes in Congress May 2021


The SAFE Banking Act is a legislation that has been in the offing for some time and is one of the most important developments to hit the marijuana industry in recent years. It promotes a transparent environment for businesses, financial institutes, and consumers alike while simultaneously removing any fear of financial and federal backlash.

In addition to altering the landscape with almost immediate results, it can be the catalyst for the continued development of the industry both regionally and nationwide. Its assumed influence on financial and legal issues, as well as consumer relations and mindsets, confirms its place as the most important breakthroughs for the sector.

The future for new MRBs and established brands has never looked brighter. To find out how you can capitalize on the situation with help from advanced Vector Payments, get in touch with our agents today!