'Absolutely Not': Cannabis Banking Giant Says Federal Reform Would Make Its Business Boom—not Obsolete

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Safe Harbor Financial CEO Terry Mendez says the company’s early origins in the cannabis sector and its deep involvement in building the regulatory framework for marijuana banking position it to expand, not shrink, if federal drug laws change. Mendez told AInvest that Safe Harbor’s evolution from one of the first cannabis-focused banking programs in the country to a publicly traded compliance platform serving financial institutions nationwide positions it for the future.

Safe Harbor “was one of the first cannabis banks in the country,” Mendez said. Its founder, Sundie Seefried, attended "Senate hearings and the congressional hearings to get things like the 2014 FinCEN letter issued, the Cole memos issued that allowed for and provided the framework for cannabis banking,” Mendez said. Those early federal guidelines became the backbone of the modern cannabis financial-compliance system. “We are one of the OGs. We’re one of the pioneers,” Mendez said, noting that “most of the MSOs banked with us because we were one of the only options.”

Originally launched as a division of Partners Colorado Credit Union, Safe Harbor opened its compliance program in 2015 before going public on the Nasdaq in 2022.

Although no longer a bank itself, Mendez emphasized that the company enables banks and credit unions to serve cannabis businesses safely and legally. “Think of us as [how] companies outsource payroll to ADP, banks outsource compliance to Safe Harbor,” he said. The company now helps financial institutions bank cannabis-related deposits across 41 states and territories.

The need for such compliance support remains significant. With cannabis still classified as a Schedule 1 substance under federal law, retailers and distributors operate under a strict anti–money-laundering regime. Deposits are collected in cash, transported by armored carriers, and delivered to the Federal Reserve before being credited to a bank. But those funds are not immediately available. “The money’s with the bank, but it’s on hold until Safe Harbor says it’s good money to accept into the bank’s coffers,” Mendez explained. The firm conducts detailed checks under the Bank Secrecy Act, including verifying that funds do not originate from individuals on federal sanctions lists.

Because cannabis distribution is federally illegal—from cultivation to retail sale—banks face regulatory obligations they would not normally encounter. Mendez noted that even preventing distribution to minors becomes part of a bank’s compliance burden. Safe Harbor’s combined expertise in banking rules, cannabis operations, and technology is designed to help institutions meet requirements that “were beyond what a bank is normally and customarily tasked to do.”

Some industry observers have questioned whether federal rescheduling of marijuana would diminish the need for specialized compliance providers. Mendez dismissed that idea: “Absolutely not.” With only about “8% of the banks in the country banking cannabis,” he said, federal reform would likely encourage more institutions to enter the sector, creating more demand for Safe Harbor’s turnkey compliance support.

He also noted that cannabis businesses currently face heavy tax burdens under Section 280E, which prohibits deducting most ordinary business expenses because marijuana is federally illegal. Reclassifying cannabis would allow operators to deduct costs, improving profitability and increasing the deposits Safe Harbor’s partner banks rely on. “It actually would be a tremendous boon for Safe Harbor,” Mendez said.

As the industry grows, from roughly $35 billion toward more than $76 billion, according to Mendez, financial institutions need experienced partners to manage compliance complexity. “The industry needs top-notch banking. It needs compliance,” he said, positioning Safe Harbor as the infrastructure that enables banks to participate safely. “It’s almost like saying back in the day, Intel inside… That’s what Safe Harbor is for the cannabis industry and for the banks.”