September 26, 2023

NAFCU warns lawmakers of potential reg overreach in cannabis banking bill

US Capitol buildingAhead of tomorrow’s markup of the Secure and Fair Enforcement Regulation (SAFER) Banking Act, NAFCU sent a letter to the Senate Banking Committee highlighting some potential revisions to the bill to provide greater clarity and certainty to credit unions and other financial institutions looking to provide services to marijuana-related businesses (MRBs) in states that have legalized marijuana.

NAFCU has consistently called on lawmakers to provide credit unions with legal clarity and certainty for serving MRBs, noting that credit unions have been “hesitant to provide financial services to these members and their small businesses” given marijuana’s Schedule I classification. The association does not have and will not take a position on the broader question of marijuana legalization or decriminalization.

In the letter, NAFCU Vice President of Legislative Affairs Brad Thaler outlined concerns in section 10 of the bill, which is related to federal banking regulators’ authorities.

“NAFCU supports the intent of this bill, but we are concerned that the new language in the base text could be read to dramatically increase regulators’ authorities and discretion, which could have a significant impact on credit unions,” Thaler wrote. Some of the concerning provisions highlighted could:

  • add regulatory burdens and regulator overreach, especially as it relates to ways in which financial institutions should engage with consumers to “increase access”;
  • give financial regulators too much discretion in terminating a deposit account, which NAFCU said should only be based on violations of the law, unsafe or unsound practices, or violations of exam-related issues; and
  • lead to varying notice requirements across the banking regulators.

In addition, NAFCU advised that the NCUA should be added to the biennial survey on accessing deposit accounts for businesses – a stipulation of section 10.

NAFCU will monitor Wednesday’s markup and keep credit unions informed of developments related to the legislation.