With the legalization of marijuana in various states over the past several years, a problem had developed related to the ability of legitimate marijuana businesses to deposit earnings in a bank account. Banks are subject to federal regulation, oversight, and examination. For now, marijuana remains illegal under federal law. Therefore, profits from the sale of marijuana are, for federal purposes, proceeds from illegal activity and are subject to anti-money laundering federal laws, and could not safely be deposited in a bank account. In instances where smaller, regional banks were permitting profits from legitimate marijuana businesses to be deposited, the banks were often charging exorbitant fees based on the alleged “risk” of such deposits.

The recent passage of the SAFE Banking Act, which, in short, exempts legitimate marijuana business profits from being considered proceeds from an illegal business, and thus removes them from the reach of anti-money laundering federal law, has changed all that. Earnings from legitimate marijuana businesses can now be safely deposited into bank accounts. Additionally, the Act prohibits banks from closing the accounts of customers based on the perceived “risk” of operating a marijuana-related business. Further, the Act allows marijuana businesses to safely deposit cash at banks, versus keeping large amounts of cash on-site, which can represent a risk to the business.