In a step towards achieving the goals of the SAFE Banking Act, California Governor Gavin Newsom approved Assembly Bill 1525, which importantly provides that banks, credit unions, and other financial servicers to cannabis businesses do not violate California law “solely by virtue of the fact that the person receiving the benefit of any of those services engages in commercial cannabis activity as a licensee.” AB 1525 provides:
This bill would provide that an entity, as defined, that receives deposits, extends credit, conducts fund transfers, transports cash or financial instruments, or provides other financial services, including public accounting, as provided, does not commit a crime under any California law solely by virtue of the fact that the person receiving the benefit of any of those services engages in commercial cannabis activity as a licensee.
Governor Newsom stated:
I am signing Assembly Bill 1525, which affirmatively protects certain entities providing financial services to the legal cannabis industry and allows licensees to request that specific information about them be shared with financial institutions … This bill has the potential to increase the provision of financial services to the legal cannabis industry, and for that reason, I support it.
The goal of AB 1525 is to make it easier for financial institutions to adhere to federal reporting requirements. Specifically, AB 1525 now allows licensed cannabis businesses to sign a waiver permitting state or local licensing and regulatory authorities to share “application, license, and other regulatory and financial information” with a designated financial institution “for the purpose of facilitating the provision of financial services for that licensee.” Now, it will be easier to be assessed for loans and other services. Governor Newsom directed state regulators to establish rules meant to protect these businesses’ privacy, and he urged that such data be kept confidential and used only “for the provision of financial services to support licensees.”
As we reported a few times in the past two years, the SAFE Banking Act was a landmark cannabis banking bill that the House of Representative passed last year. That progress, of course, has unfortunately been undercut by Senate Republicans. Most recently, upon urging from multiple groups, including state treasurers, it was also included in the latest Democrat-proposed coronavirus stimulus bill worth $2.2 trillion. AB 1525 is markedly similar in that it aims to help legitimize the cannabis industry and aid in the multiple concerns that come when such a lucrative industry is forced to operate on a cash-only basis. Here’s hoping this will create a new wave for other states and ultimately, on the federal level as well.