A final effort on federal marijuana banking reform by including it in Congress’s military spending bill failed Tuesday, reports Forbes. Provisions allowing American Cannabis companies to do business with banks were left off a larger defense bill currently under discussion in both chambers of Congress.
The Senate won’t likely allow the measure back in the final NDAA, according to Bank of America Securities analyst Lisa Lewandowski.
Lewandowski, however, pointed out that the disconnect between federal and state marijuana laws cannot continue long-term. This is even more urgent due to the $18 Billion in legal Cannabis spending last year and the growing marijuana market.
“My work on this bill is far from over,” said Rep. Ed Perlmutter (D-Colo.), who spearheaded efforts for the SAFE Banking Act. “Going forward, I plan to pursue every possible avenue to get SAFE Banking signed into law.”
Deepening Divide On Banking Reform
In a demonstration of a deepening divide within the marijuana industry, some legalization advocates aren’t complaining, reports Forbes.
After years of doing nothing, this Democratic-controlled Congress seemed a good bet to pass significant reform of federal Cannabis policy. Federal weed policy is virtually unchanged since former President Nixon signed the Controlled Substances Act more than 50 years ago.
Majority Leader Chuck Schumer and other top Democrats have sponsored outright federal legalization. But the Secure And Fair Enforcement Banking Act seemed the best chance for a win.
Most major banks won’t work with marijuana businesses, because they’re all illegal under federal law. This means state-legal dispensaries and other businesses dealing with Cannabis have to pay state and federal taxes (and all other bills) in cash.
The SAFE Banking Act promised to ameliorate this situation by stopping federal banking regulators from punishing financial institutions that work with “legitimate cannabis-related” businesses.
SAFE Banking Inserted Into NDAA
Though most large Cannabis corporations already enjoy access to banks, many smaller businesses do not. Supporters of the bill said it would have allowed cash-only legal cannabis businesses to finally enjoy reliable access to banking. That would make marijuana businesses like the several dozen burglarized in California over the past two weeks less alluring targets for robbery.
The House of Representatives passed the SAFE Banking Act five times in some form or another. But it has never scaled the steep cliffs of the Senate.
A plan arose, however, to circumvent this deadlock. In September, members of Congress inserted language from the SAFE Banking Act into the House version of the National Defense Authorization Act (or NDAA), the annual military spending bill.
But on Tuesday, the Senate removed SAFE Banking language from the final version of the NDAA. That means 2021 will almost certainly end without any significant progress at all on marijuana policy at the federal level.
That triggered a round of emotions reactions from supporters like lead sponsor Rep. Perlmutter. “[P]eople are still getting killed and businesses are still getting robbed because of a lack of action from the Senate,” he said in a statement, while promising to keep pushing the issue.
According to Forbes, Senate leadership didn’t agree on SAFE Banking. But some marijuana activists didn’t support it, either.
This was partly because senators including Schumer and Sen. Cory Booker (D-NJ) doubted the defense spending bill was the right way to pass marijuana reform. But it was also because advocates like Booker believe that just passing banking reform will make passing other more significant reforms, later, much more difficult. It would give Congress the cover of having “done something,” while really taking next to no political risk at all.
“It is unfortunate that Congress failed to take this opportunity to affirm the legitimacy of state-legal marijuana markets and instead acted in a way that will continue to deny this emerging legal industry access to basic financial tools and services,” said NORML political director Justin Strekal.
But late last week, the Drug Policy Alliance, an advocacy group that helped pass legalization bills in multiple states, spoke out against packaging SAFE Banking in the defense spending bill.
In their analysis, more ambitious legislation, like the full federal legalization bill called the MORE Act, would solve the banking conundrum while also actually legalizing marijuana. It would also go a long way towards addressing other problems caused by the War On Drugs.
That set off a controversy that saw marijuana activists divide into two rough camps. According to one group, SAFE Banking is a social-equity measure. As such, it’s needed right now, and the Senate is making a huge mistake. According to the other, SAFE Banking just helps big businesses and doesn’t guarantee access to capital for black and brown entrepreneurs anyway, and is a half-measure at best.
‘They Don’t Want Legalization’
Rushing a banking reform bill through Congress isn’t really what small Cannabis business owners need, according to Amber Senter. Senter, an Oakland, California-based marijuana entrepreneur and social-equity advocate, directs an incubator burglarized last week.
“I felt like it [SAFE Banking] was being rushed,” she said. “The whole ‘well, it’s not perfect, but it’s something’ approach has never helped Black or Brown people.”
Besides, many doubt that big businesses would keep lobbying for full legalization once they received banking reform.
“They don’t want legalization,” Senter said. “They just want to make it easier on their bottom line, and legalization does not do that for them. Legalization invites competition.”