Proposed Legislation to Assist Financial Institutions Servicing Marijuana Industry by Richard B. Newman, October 20, 2019 The Secure and Fair Enforcement Banking Act of 2019 (“SAFE Banking Act”) recently passed the U.S. House of Representatives. The SAFE Banking Act is designed to protect federally-insured financial institutions that provide services to marijuana-related businesses in states where it has been legalized. Should the bill get through the Senate and ultimately be signed by President Trump, it would be a major victory for the multibillion-dollar marijuana industry. At present, financial institutions that serve the legal marijuana industry risk prosecution under numerous laws, including, but not limited to, the Controlled Substances Act, the Racketeer Influenced and Corrupt Organizations Act and a federal money laundering statute. Additionally, banks risk losing Federal Deposit Insurance Corporation insurance, a significant incentive for them to steer clear of such businesses. As a result, those in the cannabis industry do not have easy access to secure financial services. The SAFE Banking Act would legalize marijuana-related business proceeds. It would prohibit federal banking regulators from limiting, penalizing or otherwise discouraging a depository institution from providing financial services to cannabis-related legitimate businesses or service providers. The SAFE Banking Act provides that, for the purposes of provisions of federal law, the proceeds from a transaction involving activities of a marijuana-related legitimate business or service provider shall not be considered proceeds from an unlawful activity solely because the transaction involves proceeds from marijuana-related activities. Marijuana has been legalized in one form or another in 33 states. It also remains illegal under federal law. Proponents of the bill believe that it would be a significant step toward legalizing the recreational and medial use of cannabis, protecting states’ rights and de-scheduling marijuana. Opponents believe that the proposed legislation would do little more than facilitate money laundering. The bill comes amidst recent warning letters issued by the Federal Trade Commission and the U.S. Food and Drug Administration to cannabis sellers and advertisers for making myriad unsubstantiated CBD efficacy claims. Advertisers should consult with an experienced FTC defense attorney prior to disseminating such claims. Prior to making claims about purported health effects of CBD products, advertisers need competent and reliable scientific evidence to support their statements. Claims about CBD as a treatment or cure for serious diseases, including representations conveyed through testimonials, are triggers and a high-priority for regulators. Richard B. Newman is an FTC defense attorney representing digital marketers in advertising substantiation proceedings and investigations conducted by the Federal Trade Commission. Informational purposes only. Not legal advice. Filed under: Blue Book, Revenue, Revenue Blog Tagged under: Federal trade commission, Marijuana, SAFE Banking Act About the Author Richard B. Newman Richard Newman is an FTC defense lawyer at Hinch Newman LLP. He is a nationally recognized FTC defense lawyer and advertising compliance attorney. He regularly provides advertising counsel and represents clients in high-profile investigations (CIDs) and enforcement proceedings initiated by the Federal Trade Commission, state attorneys general, departments of consumer affairs, and other federal and state agencies with jurisdiction over advertising and marketing practices. Richard’s practice also concentrates upon transactional matters relating to the dissemination of national advertising campaigns, including the gamut of affiliate marketing, telemarketing, lead generation, list management and licensing agreements.