Despite high hopes for the Democrat-controlled Congress and White House, negotiators on Capitol Hill yet again failed to deliver even modest cannabis reforms in the 4,155-page omnibus government spending legislation released early Tuesday.
“Marijuana businesses, the hundreds of thousands of people they employ, and the millions of Americans that patronize them will continue to be at a higher risk of robbery.”
Marijuana legalization advocates and members of states’ legal industries had hoped that the package–which congressional leaders intend to send to President Joe Biden’s desk this week–would include the Secure and Fair Enforcement (SAFE) Banking Act.
While dozens of states now allow adults to grow, sell, and use medicinal or recreational marijuana, because it remains illegal at the federal level, many cannabis companies struggle to access financial services–meaning they often operate as cash-only businesses, making them targets for theft. Sponsors of the SAFE Banking Act aimed to address this issue.
“The SAFE Banking Act seeks to harmonize federal and state law by prohibiting federal regulators from taking punitive measures against depository institutions that provide banking services to legitimate cannabis-related businesses and ancillary businesses (e.g. electricians, plumbers, landlords, etc.) that serve them,” explained the office of Rep. Ed Perlmutter (D-Colo.), who led the bill with Sen. Jeff Merkley (D-Ore.).
The Democrat-held House has repeatedly passed the bipartisan SAFE Banking Act, only for it to stall in the divided Senate. Following last month’s midterm elections, Republicans are set to take control of the House in early January, quashing hopes of any marijuana reforms in the next two years.
Although the upper chamber could schedule a vote on the SAFE Banking Act as a standalone bill before the GOP seizes the House, Senate Majority Leader Chuck Schumer (D-N.Y.)–an advocate of broader cannabis reform–so far has not done so, and did not even directly address the exclusion of the legislation in his remarks about the nearly $1.7 trillion package on Tuesday.
“The omnibus is the last thing we have to do to close out a very successful 117th Congress, and we’ve taken another step, a major step, towards reaching the goal line,” he said. “From start to finish–from top to bottom–this omnibus is bold, generous, far-reaching, and ambitious.”
“It’s not everything we would’ve wanted, of course,” Schumer acknowledged. “When you’re dealing in a bipartisan, bicameral way, you have to sit down and get it done and that means each side has to concede some things, but it is something that we can be very proud of–all of us. Now we must get this done before Friday, well before that if possible.”
Erik Altieri, executive director of the advocacy group NORML, said that “Democrats have promised action on cannabis consistently for the last two years, yet leadership consistently failed to prioritize and advance marijuana reform legislation, including legislation to provide clarity to banks and to provide grant funding for state-level expungements efforts, despite having several opportunities to do so. Democrats’ failure and the GOP’s continued resistance to any progress is out of step with voters’ opinion, is bad politics, and most importantly, it is bad public policy.”
“Until congressional action is taken, state-licensed marijuana businesses, the hundreds of thousands of people they employ, and the millions of Americans that patronize them will continue to be at a higher risk of robbery due to the cash-heavy nature of this industry created by outdated federal laws,” Altieri added. “Furthermore, smaller entrepreneurs who seek to enter this industry will continue to struggle to compete against larger, more well-capitalized interests.”
Amid reporting of the bill’s death Monday, Marijuana Business Dailypointed out that it “comes at a time when capital markets have dried up and both sales and wholesale prices are dropping fast in legacy states including Colorado and California–where lax enforcement also allows rampant illicit-market competition to flourish, choking out legitimate businesses.”
MarketWatchreported that “cannabis stocks ended sharply lower Monday on reports the measure would not be included” in the omnibus package.
As financial institutions & associated services providers serving the U.S. state-legal cannabis industry, we know firsthand the importance of getting #SAFEBanking passed for safety & industry growth. We will continue working to get this bipartisan policy signed into law. https://t.co/TDXadm4e89— CFIG (@FollowCFIG) December 20, 2022
Members and supporters of states’ legal industries echoed NORML’s warnings about not passing a financial services bill.
“We are deeply disappointed in leadership on both sides of the aisle and the lack of action on SAFE Banking over the past two years,” said Kim Rivers, CEO of Trulieve, a vertically integrated cannabis company that operates in multiple states. “The 425,000 employees working in the legal cannabis industry will continue to face undue risk of robberies and economic harm.”
Calling the banking bill’s exclusion “incredibly disappointing” and “a win for the illegal market,” Boris Jordan, co-founder and executive chair of the multistate operator Curaleaf Holdings, also warned that “the entire industry will suffer as a result of this failure.”
Khadijah Tribble, CEO of the U.S. Cannabis Council (USCC) and a leader at Curaleaf, said that “in failing to enact the SAFE Banking Act, the Senate missed an opportunity to pass one of the rare pieces of legislation that has the support of both Republicans and Democrats, along with the majority of the American people. Not only did the Senate squander a chance to score a bipartisan victory this year, its inaction threatens public safety and undermines the progress states are making in mending the racial inequities of the War on Drugs.”
“To say that we are disappointed is an understatement. But to assume the Senate’s inertia around cannabis banking reform dooms the entire cannabis industry discounts all of the headway we made this year,” Tribble continued. “From the Biden administration announcing that it will conduct an official regulatory review of whether cannabis should be criminalized at all to the first standalone cannabis-related bill being signed into law to fund important research–2022 will still mark the turning point in our fight to legalize cannabis.”
Tribble and others pledged to continue the movement to end cannabis prohibition.
Minority Cannabis Business Association board president Kaliko Castille said Monday that “while we are disappointed that the Senate was unable to pass this critical piece of legislation before the end of this Congress, we remain hopeful that the work we have been doing with our allies on the Hill to improve the final package will pay off when Congress reconvenes in 2023.”
SAFE Banking would have let state-legal cannabis businesses have access to bank accounts.— Arthur Delaney 🇺🇸 (@ArthurDelaneyHP) December 20, 2022
Forcing them to operate in cash makes them robbery targets.
It was a modest, anti-crime policy change with strong bipartisan support. But not strong enough.
In a Tuesday opinion piece for USA Today, Robert L. Johnson, founder of Black Entertainment Television and the RLJ Companies, emphasized that the banking bill “would create more opportunities for small and minority-owned cannabis businesses to have a fair chance to compete.”
“For years, racial and social inequities related to the criminalization of marijuana have unfairly targeted the Black community,” he wrote. “Without question, the lack of access to capital and capital formation are the principal factors holding back opportunities for minority businesses and, consequently, wealth and job creation within the minority communities they serve.”
Jim Hagedorn, whose Hawthorne Gardening Company is a supplier to the cannabis and indoor growing industries, noted Tuesday that “some critics have said that the SAFE Banking Act shouldn’t pass because it is too small a step in the broader cannabis debate. On the contrary, it’s an important step. While it won’t solve every issue… it is the best opportunity to level the financial playing field for legitimate and regulated business.”
Hagedorn stressed that “small cannabis startups aspiring to compete with more established firms have no access to reasonably priced capital to expand. To stay afloat, they often are forced to sell equity stakes, pay unreasonable interest rates and fall victim to predatory lenders. SAFE Banking will help fix that.”
There are some GOP members of Congress who back certain reform efforts–such as Sen. Steve Daines (R-Mont.), the lead Repbulican sponsor of the SAFE Banking Act, who was outraged by the exclusion.
“The failure to pass my bipartisan ‘SAFE Banking Act’ means communities in Montana and across our country will remain vulnerable to crime where legal businesses are forced to operate in all-cash,” he said. “This bill to promote public safety would have been well-positioned to pass had it gone through the regular committee process–as I called for more than a year ago. Our small businesses, law enforcement, and communities deserve better.”
However, key Republicans–including Senate Minority Leader Mitch McConnell (R-Ky.) as well as Sens. John Cornyn (R-Texas) and Chuck Grassley (R-Iowa)–are major obstacles to passing any marijuana reforms, especially a federal legalization measure that would include social justice provisions.
McConnell had bristled at the possible inclusion of the SAFE Banking Act and potentially other marijuana-related measures in the latest National Defense Authorization Act (NDAA), and celebrated on the Senate floor after it was left out–along with issuing a warning about the omnibus package.
“While action on SAFE Banking may no longer be possible in 2022, you better believe I’m going to keep fighting in the new Congress.”
“This NDAA is not getting dragged down by unrelated liberal nonsense. Good, smart policies were kept in, and unrelated nonsense, like easier financing for illegal drugs, was kept out,” McConnell said earlier this month. “Now, that same lesson must carry over into our subsequent conversations about government funding.”
Still, Senate Finance Committee Chair Ron Wyden (D-Ore.) vowed Tuesday to keep up the fight. He said in a statement that “I am frustrated and disappointed that after coming so close to meaningful cannabis reform this Congress, the Republican leader and a handful of Republican senators thwarted our efforts to improve public safety. Because when you are forcing businesses to operate as cash only, it is a public safety issue.”
“While action on SAFE Banking may no longer be possible in 2022, you better believe I’m going to keep fighting in the new Congress to bring common sense to the federal treatment of cannabis and begin to repair the harms done by the failed War on Drugs,” added Wyden.
BOWL PAC founding organizer Justin Strekal also called out the GOP minority leader, who “chose to put prohibition over people and continues to stand in front of history screaming ‘STOP,'” but added that “while we did not win this time around, if enough Senate Republicans would be willing to defy McConnell in a standalone package that contains narrow provisions such as expungements, banking, small business fairness, and veterans, then legislative victory can still be achieved in the 118th Senate.”
After the spending bill was unveiled Tuesday, Marijuana Momenthighlighted that the exclusion of the banking legislation wasn’t the only disappointing development.
“Adding insult to injury, the large-scale spending legislation continues the policy of preventing the District of Columbia from spending its own local tax dollars to legalize adult-use cannabis sales,” the outlet noted, “despite the fact that earlier versions of spending bills that advanced in the House and Senate earlier this year did not contain the rider.”
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