Cannabis Banking Needs a Law, Not More Guidance

By Terry Mendez, CEO of Safe Harbor Financial

When I read the American Bankers Association’s July 1 letter to Congress, I saw the country’s largest banking trade group making the same argument cannabis operators have been making for a decade: cash-only businesses are a public safety problem and it’s the surrounding communities that carry that risk, not just the operators with limited access to banking.

The timing is no coincidence. Sen. Jeff Merkley filed the Senate version of the SAFE Banking Act of 2026 on June 24, and Sens. Lisa Murkowski, Elizabeth Warren, and Steve Daines signed on as co-sponsors. A bipartisan group of eight House members, led by Rep. Dave Joyce, introduced the companion bill the next day. Versions of this legislation have cleared the House seven times since 2019. The Senate Banking Committee approved a broader version in 2023. What has stalled it since is floor action in the Senate, not a lack of votes or a lack of understanding of the problem.

The SAFE Banking Act prevents federal regulators from penalizing or discouraging banks that serve state-legal cannabis businesses. It stops regulators from pulling a bank’s deposit insurance because it banks cannabis. It creates a safe harbor from criminal prosecution and asset forfeiture for banks and their employees, while preserving every financial institution’s right to decide whether to serve the industry. It also extends the same protections to the lawyers, landlords and vendors who work with cannabis operators and have faced the same banking access problems without ever touching a plant.

The bill does not legalize cannabis, nor alter the taxes paid by state-licensed cannabis operators, nor hand the industry a free pass. The bill would remove the legal uncertainty that keeps otherwise willing banks and credit unions on the sidelines. Financial institutions would still be responsible for Bank Secrecy Act and anti-money laundering compliance, customer due diligence, state licensing verification, transaction monitoring and adapting to evolving expectations from multiple federal and state regulators. SAFE Banking removes one of the biggest barriers preventing more financial institutions from entering the market. It does not remove the operational complexity of serving one of the country’s most highly regulated industries.

Congress has debated this issue for years. The debate is no longer about understanding the problem. It’s about acting on it.

That distinction gets lost in a lot of the coverage of cannabis policy right now because there is a lot happening at once. In April, the Department of Justice moved state-licensed medical cannabis from Schedule I to Schedule III. The DEA is in the middle of a hearing on broader rescheduling that opened June 29 and is set to run through July 15. Those are meaningful developments, but neither one changes a bank’s obligations under the Bank Secrecy Act or FinCEN guidance and neither one gives a bank the legal certainty the SAFE Banking Act would provide.

Rescheduling and banking reform are two different processes solving two different problems, and it is a mistake to assume progress on one closes the gap left by the other.

Safe Harbor has spent nearly a decade building the compliance infrastructure that allows banks and credit unions to serve this industry within existing federal guidance. That work has been tested through more than two dozen state and federal examinations. What’s missing is the legal certainty that would allow more financial institutions to confidently enter the market, expanding access to banking services for licensed operators while reducing reliance on cash.

If Congress passes this bill, I expect more banks and credit unions to take a serious look at serving licensed cannabis businesses. That is a good thing for an industry that has operated in cash for far too long and it is a good thing for the communities where these businesses sit. Getting there requires an actual vote in Congress.

Terry Mendez is the CEO of Safe Harbor Financial (NASDAQ: SHFS), a leader enabling financial services companies to compliantly service the regulated cannabis industry. He has led efforts to facilitate compliant banking and credit solutions across regulated markets in the U.S. Terry holds an MBA from the Wharton School and brings prior executive experience from Deloitte, Arrow Electronics, and Broadridge Financial Solutions.