Delaware Democratic Gov. John Carney signed legislation last week that grants legal protections to financial institutions that provide services to cannabis-related businesses licensed or registered under state law.
House Bill 355, sponsored by Rep. Ed Osienski and Sen. Trey Paradee, was crafted in partnership with State Treasurer Colleen Davis. The legislation clarifies that banks, credit unions and other financial entities can safely work with cannabis cultivators, distributors and retailers without risking criminal liability.
“Banks and credit unions are hesitant to serve the marijuana industry because of concerns regarding federal prosecution or penalties since marijuana remains illegal under federal law,” Davis said when the bill was introduced in March.
“H.B. 355 will provide state-level legal protection, and a clear legal framework for banks, payment processors, and other financial service providers to follow,” Davis said. “It can also ease concerns about federal enforcement and regulatory compliance among these businesses—since it allows them to demonstrate to federal agencies that they’re following a clear legal framework, ultimately leading to a safer and more transparent marijuana industry.”
While some regional and local banks are willing to take on the risk of working with cannabis businesses, larger financial institutions typically steer clear of the industry due to the lack of clarity from Congress regarding how banks can service cannabis-related businesses.
While the current rendition of cannabis banking legislation in Washington—the Secure and Fair Enforcement Regulation (SAFER) Act—aims to provide this clarity, the federal legislation has remained stagnant under Senate Majority Leader Chuck Schumer, D-N.Y., since the Senate Banking Committee approved the bill in September 2023.
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While some industry stakeholders remain hopeful that cannabis rescheduling under the current White House administration’s process to reclassify the plant from a Schedule I to Schedule III drug under the Controlled Substances Act (CSA) will instill confidence in banks to service the industry, rescheduling alone would not move that needle, according to legal experts.
The legal risks of financial institutions serving cannabis businesses under a Schedule III status would persist, Cliff Stanford, partner at Alston & Bird, told Cannabis Business Times.
“I don’t think that would move the needle sufficiently,” Stanford said of rescheduling. “I think that because of the Bank Secrecy Act obligations of the bank and the heavy penalties that bank regulators can bring for violations of that law—they take it very seriously—is that without certainty under federal law as to what bank regulators will do if they bank state-legal and Schedule III federal-level marijuana businesses, I think there’s still going to be a question in the air …
Read More: Delaware Governor Signs Bill Allowing Banks to Provide Financial Services
