The Safe Banking Act Explained:

The Safe Banking Act, formally known as the Secure and Fair Enforcement Banking Act of 2023, stands as a pivotal piece of legislation designed to bridge the gap between state-legalized cannabis industries and the federal banking system. This act, which has seen several iterations since its first introduction in 2013, aims to resolve the banking challenges faced by cannabis businesses, a sector that has been largely ostracized by financial institutions due to federal regulations and the classification of marijuana.

The Secure and Fair Enforcement (SAFE) Banking Act, now reintroduced as the SAFER Banking Act, continues to serve as landmark legislation for bridging the gap between state-legal cannabis businesses and the federal banking system. Despite cannabis legalization in over three dozen states for medical or recreational use, cannabis-related businesses (CRBs) still face hurdles accessing traditional financial services due to marijuana’s Schedule I classification under federal law.

Key Takeaways (2025 Update)

• Enabling Legal Banking for CRBs: The SAFE Banking Act provides federal protections for banks, allowing them to serve cannabis businesses operating legally under state laws without fear of federal prosecution or regulatory penalties.

• Reduced Risk and Improved Oversight: By facilitating non-cash transactions, the Act helps reduce armed robberies and fraud while increasing financial transparency and government oversight.

• Expanded Access to Credit: Legal cannabis businesses gain access to commercial loans, payroll services, credit lines, and merchant processing.

• Community Development Support: The Act includes protections for Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs) to ensure financial access for underserved communities participating in the cannabis economy.

• A Step Toward Federal Reform: While the Act doesn’t legalize cannabis at the federal level, it is widely viewed as a foundation for broader reform initiatives.

SAFER Banking Act: What’s New in 2025?

In 2025, the SAFE Banking Act evolved into the SAFER Banking Act (Secure And Fair Enforcement Regulation Banking Act) with broader support and provisions. It passed the Senate Banking Committee with a bipartisan 14–9 vote and now awaits a Senate floor vote—expected later this year.

Key 2025 Enhancements:

• Stronger Consumer Protections: The SAFER Act explicitly protects account holders and depositors, including CRB employees and ancillary service providers.

• Regulatory Clarity: Federal regulators are prohibited from terminating or limiting deposit insurance solely due to a financial institution’s cannabis-related clientele.

• Increased Access to Capital: More clarity around lending enables investment, real estate development, and expansion for cannabis license holders.

Senate Banking Committee Momentum

With Democrats and Republicans finding common ground in public safety and business regulation, the Senate Banking Committee’s advancement of the SAFER Act is a major milestone. Senators Cory Booker, Jeff Merkley, and Steve Daines have voiced strong support, citing the urgent need to move cannabis businesses out of a cash-only ecosystem.

Federal Banking Regulators and Cannabis

The SAFER Act specifically restrains federal regulators from:

• Discouraging banks from working with CRBs

• Penalizing CRBs through asset forfeiture

• Denying federal benefits like FDIC insurance or Federal Reserve services due to cannabis-related activities

This clarification is essential for compliance departments, ensuring that servicing a cannabis-related client doesn’t automatically trigger federal scrutiny.

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Impact on Financial Institutions in 2025

For financial institutions, this legislation significantly lowers the risk profile of engaging with the cannabis sector. Banks, credit unions, and fintechs can now:

• Offer basic depository services like checking, ACH, and payroll

• Structure cannabis business loans with better underwriting transparency

• Provide merchant accounts for POS and online cannabis payments

• Facilitate real estate financing for dispensary and cultivation facilities

Forward-thinking institutions like Herring Bank are leveraging this shift by providing industry-specific financial solutions and compliance expertise.

Banking Services for Cannabis Businesses

Pre-SAFER Challenges:

Before the SAFER Act, CRBs relied on workarounds—such as armored cash pickups, crypto solutions, or closed-loop payment apps—all of which posed risks and regulatory gray areas.

Post-SAFER Opportunities:

Under SAFER, cannabis business owners should expect:

• Full-service banking: No more workarounds—get real accounts and integrate with modern accounting software.

• Improved tax compliance: Easier payments for excise, payroll, and local cannabis taxes.

• Faster access to capital: No more relying solely on private equity or hard money lenders.

Cannabis Banking and Federal Law: The 2025 Outlook

Despite progress, cannabis remains federally illegal under the Controlled Substances Act. However, the SAFER Act offers a de facto legal framework for cannabis banking. It carves out an exemption for state-compliant businesses, allowing them to fully participate in the financial system without triggering anti-money laundering penalties.

Forward-looking guidance: Cannabis business owners should prepare by:

• Building transparent financials and clean audit trails

• Separating ownership from management structures for clearer reporting

• Leveraging automated cash tracking and bank integration tools

• Staying compliant with state and local cannabis regulations

Community Equity and Financial Inclusion

The 2025 version of the SAFER Act expands access for underserved and minority entrepreneurs. CDFIs and MDIs now have express protections to work with cannabis enterprises, opening the door to equity-focused funding models.

State-level trend to watch:

States like New Mexico and New York have started tying social equity license holders to state-backed lending programs. As more states follow suit, expect a growth wave of local banks and mission-driven lenders entering the market.

Impact on Financial Institutions

For financial institutions, particularly depository institutions and credit unions, the Safe Banking Act opens the door to serving marijuana-related businesses. This legislation allows banks and other financial service providers to engage in financial transactions involving the cannabis industry, such as accepting marijuana-related income, without the fear of federal penalties. This not only benefits the banks and credit unions in terms of new business opportunities but also offers the marijuana industry access to essential banking services, from basic checking accounts to more complex financing options.

Ensuring Fair Enforcement and Compliance

The Act emphasizes fair enforcement regulation to protect financial institutions that serve marijuana businesses. By clarifying bank secrecy act guidelines and amending the SAR reporting guidelines, the Act provides a clear framework for how banks can comply with federal law while serving state-legal cannabis businesses. This includes providing banking services to hemp-related legitimate businesses and ensuring that transactions involving activities of a state sanctioned marijuana business are treated with the same legal standing as those of any other business.

Expanding Financial Services to the Cannabis Industry

One of the critical aspects of the Safe Banking Act is its focus on expanding the range of financial services available to the cannabis industry. By reducing the hurdles for financial institutions seeking to offer marijuana banking services, the Act ensures that cannabis businesses can access financial services that are critical for their operations and growth. This includes loans, credit lines, and the ability to process electronic payments—services that have been largely inaccessible due to the cannabis business’s legal ambiguity at the federal level.

FAQs: 2025 Cannabis Banking Landscape

What is the SAFER Banking Act?

An evolution of the SAFE Banking Act, the SAFER Act provides explicit federal protection for banks and insurers that serve legal cannabis businesses.

Does this legalize cannabis federally?

No. Cannabis remains a Schedule I drug, but the Act allows state-compliant businesses to access banking without triggering federal enforcement.

Can cannabis employees now open personal accounts?

Yes. The SAFER Act protects employees, vendors, and contractors in the cannabis industry from account closures due to “marijuana involvement.”

Will this help new cannabis startups?

Absolutely. Startups can now pursue SBA loans (pending separate legislation), real estate financing, and traditional business credit products—paving the way for healthy growth.

Final Thoughts: 2025 and Beyond

As we look ahead, the SAFER Banking Act is expected to pass by the end of 2025. It sets the stage for comprehensive federal cannabis reform, and possibly rescheduling or descheduling marijuana within the next few years. Cannabis business owners should begin structuring their companies with institutional financing in mind—transparent books, clean ownership records, and scalable operational frameworks.

Herring Bank: Cannabis Banking Solutions for 2025

As a proactive financial institution, Herring Bank offers full-service banking solutions tailored for cannabis operators in compliance with the SAFER Act. These services include:

• Business checking and escrow accounts

• Cash management and armored deposit services

• Digital banking with cannabis-friendly integrations

• Lending options for real estate, equipment, and working capital

Ready to move from cash to compliant banking? Contact Herring Bank’s Cannabis Banking Team for a personalized onboarding plan.

Frequently Asked Questions

What is the Safe Banking Act?
The Safe Banking Act, officially known as the Secure and Fair Enforcement Banking Act of 2023, is legislation designed to facilitate banking and financial services for the cannabis industry by providing federal protection for financial institutions that offer services to cannabis-related businesses operating legally under state laws.

How does the Safe Banking Act protect financial institutions?
The Act provides “safe harbor” protections for banks, lenders, and insurers, preventing federal banking regulators from penalizing these institutions for offering their services to legitimate cannabis businesses. This includes protections against terminating deposit insurance, asset forfeiture, and other punitive actions related to serving the cannabis industry​ (Wikipedia)​​ (Congress.gov)​.

Will the Safe Banking Act increase access to financial services for the cannabis industry?
Yes, by ensuring financial institutions can serve cannabis-related businesses without fear of federal penalties, the Act is expected to significantly increase the accessibility of banking, lending, and insurance services for the marijuana industry, thereby enhancing operational efficiencies and security for these businesses​ (The National Law Review)​.

What are the main provisions of the Safe Banking Act?
Key provisions include prohibiting federal banking regulators from penalizing financial institutions for serving cannabis businesses, clarifying that proceeds from legitimate cannabis business transactions are not considered unlawful, and providing protections against asset forfeiture for banks providing loans or other services to the cannabis industry​ (Wikipedia)​.

What is the SAFER Banking Act?
The SAFER Banking Act is legislation that aims to provide legal cannabis businesses access to essential banking services such as bank accounts, credit cards, and checks. It seeks to protect financial institutions that serve these businesses from federal penalties.

Who supports the SAFER Banking Act?
Colorado U.S. Senators Michael Bennet and John Hickenlooper, among other bipartisan group of senators, have shown strong support for the SAFER Banking Act, highlighting its importance for public safety and financial inclusivity for cannabis businesses.

Why is the SAFER Banking Act necessary?
Currently, due to federal law, cannabis businesses are largely forced to operate on a cash basis, posing significant safety risks and creating challenges for compliance and oversight. The Act aims to bring banking laws into the 21st century, allowing these businesses to access the banking system and enhance safety for their customers and employees.

How does the SAFER Banking Act promote public safety?
By allowing cannabis businesses to shift away from cash-reliant operations, the Act aims to reduce the opportunity for crime associated with large amounts of cash. In Denver, for instance, a significant percentage of marijuana industry-related offenses have been burglaries or attempted burglaries.

What impact does the SAFER Banking Act have on communities of color?
The Act recognizes the importance of inclusivity within the cannabis industry for communities of color. It extends protections to Community Development Financial Institutions and Minority Depository Institutions, which serve marginalized communities, making it easier for these communities to participate in the industry.

What changes does the SAFER Banking Act introduce?
The SAFER Banking Act, an update to the previously introduced SAFE Banking Act, includes provisions for financial institutions to foster banking relationships within their communities. It also aims to expand surveys on unbanked and underbanked small and medium-sized businesses, enhancing financial inclusivity.

What is the status of the SAFER Banking Act?
The Senate Banking Committee voted to pass the SAFER Banking Act, moving it closer to becoming law. The U.S. House of Representatives has passed the SAFE Banking Act multiple times, indicating strong bipartisan support for banking reforms in the cannabis industry.

Herring Bank, offering a suite of financial services for cannabis-related businesses (CRBs) in alignment with the Safe Banking Act, showcases effective navigation through the cannabis banking environment. Catering specifically to the burgeoning cannabis industry, Herring Bank provides comprehensive banking solutions that include checking and savings accounts, online banking capabilities, sophisticated cash management tools, and tailored loan programs aimed at fostering CRB growth. Their offerings demonstrate a keen understanding of the unique challenges and regulatory requirements faced by the cannabis sector, underscoring their dedication to enhancing compliance and operational efficiency for entities involved in cannabis banking.