BACKGROUND
Although 40 states and the District of Columbia have legalized cannabis in some form, cannabis remains illegal under federal law. This federal-state conflict creates regulatory uncertainty for insurance producers and insurers, who face potential federal criminal and civil liability for providing insurance coverage to cannabis-related businesses. As a result, many state-legalized cannabis businesses are unable to obtain essential insurance products.
THE ISSUES
Despite widespread state legalization, it remains federally illegal to grow, sell, possess, or use cannabis products. Participating in any part of the cannabis enterprise can lead to a host of federal violations, creating a conflict of authority. Concerned about compliance requirements, regulated financial institutions – including insurance agencies, brokerages, and companies – have been reluctant to offer financial services to state-legalized cannabis-related businesses or service providers.
The Secure and Fair Enforcement Regulation (SAFER) Banking Act would address this problem by prohibiting regulators from penalizing financial institutions that provide financial services, including insurance, to cannabis-related businesses. Without these protections, financial institutions remain exposed to federal liability, leaving state-legalized cannabis businesses without access to critical financial services and insurance coverage.
In October 2025, Congress passed legislation to reclassify many hemp and CBD products as cannabis products under federal law. As a result, the number of businesses operating in the current legal landscape of federal illegality and state legality will likely increase, meaning more businesses and their service providers will need SAFER Banking Act relief.
Denying businesses access to insurance and other financial services increases risk and costs, leaving businesses, workers, consumers, and local communities more vulnerable to crime and financial instability.
Efforts to address cannabis-related financial services reform have been underway for more than a decade. Previous versions of the SAFER Banking Act passed the House of Representatives multiple times but stalled in the Senate. The legislation has not yet been reintroduced in the current Congress.
OUR POSITION
The Council supports enactment of the SAFER Banking Act to establish a clear federal safe harbor from federal criminal and civil penalties for insurance agencies, brokerages and companies working with state-legalized cannabis businesses.
