This situation is common for a “cannabis-related legitimate business or service provider” (CRLB) operating in New Jersey and other states, because the federal government classifies marijuana as a Schedule 1 controlled substance, creating a conflict in authority. Schedule 1 classification defines marijuana as having (i) a high potential for abuse, (ii) no currently accepted medical use, and (iii) no accepted safety standards for its use under medical supervision. Concerned about compliance requirements, federally regulated financial institutions have been reluctant to offer financial services to CRLBs.
However, on Sept. 25, 2019, the House of Representatives passed the Secure and Fair Enforcement Banking Act, commonly known as the SAFE Banking Act. The SAFE Banking Act, if made into law, would provide protection from federal interference for financial institutions that choose to provide financial services to CRLBs. Specifically, the SAFE Banking Act would provide a safe harbor for banks by mitigating the legal risks associated with providing banking services to state-legalized cannabis businesses.