What Is the Safe Banking Act?

Safe Banking Act

When the new COVID-19 relief bill passed in May, small business owners in the U.S. had a lot to be happy about. For growers and distributors of legal marijuana, the news was especially good. This is because the bill contained legislation called the Safe Banking Act that specifically benefited the cannabis industry and those wanting to do business with it.

Changes to Banking

Previously, cannabis companies had to deal mainly with cash, due to the illegal status of the industry in the eyes of the federal government. Thanks to the Safe Banking Act, federal law now allows banks to accept money from the sale of marijuana in states where it is legal to do so. Because financial institutions now can do business with these companies without fear of penalty, cannabis entrepreneurs can take advantage of banking services for the first time.

Changes to Insurance

Due to both the high value and risk associated with the product, having a comprehensive insurance policy is crucial for anyone in the marijuana industry. Previous to the Safe Banking Act, however, relatively few insurers were legally allowed to offer coverage, so consumer choices were few. Under the new law, cannabis growers and distributors will enjoy both wider availability and the lower premiums that will come with competition.

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