If you’ve been following along with the SAFE Act then you know that Congress has officially scheduled a full vote for sometime this week. This historic legislation (full name: Secure and Fair Enforcement Act) is designed to create protections for financial institutions that choose to serve the cannabis industry. There are plenty of articles written about the contents of this legislation, its history, and the process it still needs to go through before becoming law. I’m not going to write about any of those things, but instead going to share my perspective on what your institution should focus on in preparation of the SAFE Act or a similar law being implemented.


Like most laws written by those that don’t quite understand the industries they address, the passing of the SAFE Act will likely introduce a greater regulatory burden to institutions that choose to partner with the legal cannabis industry. While the assurances it will provide is undoubtedly a step in the right direction, it’s only the first step. The implementation of new examination procedures mandated by the SAFE Act presents both a challenge and an opportunity.


The challenge will be in adapting your existing cannabis banking program to meet these newly defined expectations. We’ve spoken with countless bankers that serve cannabis businesses in some form or fashion, and the majority of these programs look nothing alike. A manual based compliance and oversight program requires substantial time and effort to stay up-to-date with changing regulations. This challenge is exacerbated by the fact that these new exam procedures will be highly dynamic based on the shifting laws and regulations of the cannabis industry itself.


The opportunity, however, is for your institution to adopt a best-of-breed cannabis compliance program designed to address your examiner’s newly-defined expectations while focusing on maximizing profitability. We expect any new exam procedures to place an emphasis on reducing the risk of illicit funds from entering the financial system, while also clarifying some of the more nebulous elements of cannabis banking oversight (FinCEN reporting, UBO, site visits, monitoring, etc.). The key to positioning yourself for success revolves around your people, process, technology, and data.

People and Process

Regardless of how you’ve allocated existing resources to your cannabis banking program, the most important aspect is how your team operates. Clearly defining ownership responsibilities and designing processes that can be easily followed is critical in ensuring your program’s success. Your team should focus on forming strong relationships with the cannabis clients you are serving or plan to serve, as those relationships will provide a deeper understanding of each business and help to reduce risk. The processes you choose to follow should be extensive but adaptable to make way for regulatory changes. Moreover, your people and processes must be responsive to the ever-evolving market dynamics that could impact your overall program.

Technology and Data

With roles and responsibilities clearly defined, you’ll also need to evaluate the technical components of your cannabis program, as well as the data you have available to help reduce risk and identify opportunities. From ATMs to loan origination systems, transaction monitoring platforms to enterprise risk management suites, we’ve seen the very real impact technology can have on an institution’s ability to increase commercial efficiencies and address regulatory compliance challenges.


Technology can be a great enabler in that it can provide systems that standardize operations, automate repetitive tasks, and reduce the risk of errors or omissions. But technology alone cannot be effective – we must look to the data and information flowing through these systems to truly measure their ability to provide value to the institution. For cannabis banking, the key to maintaining effective oversight relies on the underlying data you use to monitor the program.


As rules change and the market evolves, the data residing inside the institution will not be enough to satisfy your examiner’s expectations. Instead, forward thinking institutions are looking to the cannabis industry itself to determine what data is available and how that data can strengthen their oversight activities. Since the cannabis industry is already heavily regulated, there are systems in place to reliably track license, supply chain, and point-of-sale data. This information is critical in preventing illicit funds from entering the financial system, as well as identifying trends or patterns that could pose a higher risk to your institution.

Moreover, the data you capture from both internal and external sources will be necessary to properly document your compliance activities both now and in the future. As regulations continue to evolve in both the cannabis and banking industries, that data you continuously collect and monitor will allow you to more easily adapt to these changing requirements. A clear line of sight into your cannabis clients’ operations gives you a proactive way of responding to key risk indicators while also acting on new opportunities to create value for your institution.

We’ve helped financial institutions across the country future-proof their cannabis banking programs by implementing technology and data to reduce risk. Schedule your Cannabis Readiness Assessment to determine how your current posture will withstand impending regulatory change.