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Iowa Representatives Help Pass SAFE Banking Act

Archived Industry News:Iowa Representatives Help Pass SAFE Banking Act

Last Updated: 4/23/2021 9:30 AM

Iowa Representatives Help Pass SAFE Banking Act

By a bipartisan vote of 321 to 101  this week, the U.S. House passed the SAFE Banking Act of 2021, a bill that provides clarity to financial institutions seeking to serve legitimate cannabis businesses.

All four Iowa representatives — (pictured from left) Ashley Hinson, Mariannette Miller-Meeks, Cindy Axne and Randy Feenstra — voted in favor of H.R. 1996, which would allow banks to provide services to cannabis companies in states where it is legal.

The Iowa Bankers Association communicated directly with Iowa's congressional delegation on the SAFE Banking Act. The current disparity in state and federal law and lack of regulatory guidance makes it very difficult for Iowa banks to determine what is considered cannabis-related and whether they can or cannot provide financial services. Bankers around the state have advocated for clarification, noting that this discrepancy is leaving legal, cannabis-related businesses unbanked. The issue is complicated even more when a bank is doing business in multiple states, where the legality of cannabis differs. Businesses and consumers may also have involvement with cannabis-related business activity, which brings into question whether banks are allowed to provide services. This involvement may include: production, equipment ownership, research, retail space, investments in out-of-state projects, wages, etc. Passage of the SAFE Banking Act will allow Iowa banks to provide needed financial services to legal, cannabis-related businesses.

Prior to the vote, the IBA joined all 50 other state bankers associations in writing a letter to lawmakers in support of the legislation. The state bankers associations’ letter emphasized that as a result of this conflict, “this segment of our local economies is forced to operate on an all-cash basis, which creates serious public safety, revenue administration and legal compliance concerns.” They added that “our members are committed to serving the financial needs of their communities —including those that have voted to legalize cannabis.” Read the letter.

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