After weeks of speculation and horse-trading, efforts to include federal banking legislation for cannabis companies in a congressional spending bill has perished in D.C. – for now.
For a while, the industry felt pretty optimistic that the Secure and Fair Enforcement (SAFE) Banking Act would cross the voting line this year, especially coming off the heel of President Biden’s signal that the federal government would change how it views the plant.
But a sure thing isn’t so until it is. The proposal failed to make it into the National Defense Authorization Act earlier this month, and by Tuesday, hopes fell flat after it failed to appear in the omnibus.
The SAFE Banking Act appeared to be the best compromise to begin rolling back cannabis prohibition nationwide and protect banks that work with operators, but the prospect faced staunch opposition from Senate Minority Leader Mitch McConnell (R-KY) over the course of lame-duck negotiations.
The Republican minority leader dubbed the effort as a “pet priority” for congressional Democrats, ultimately creating a chilling effect for other GOP lawmakers who otherwise may have been open to voting for legislation that included SAFE banking language.
Senate Majority Leader Chuck Schumer (D-NY) could push the issue as the session inches toward a close, but the chance of that is unlikely.
“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,” NORML Executive Director Erik Altieri said.
“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patronize them will continue to be at a higher risk of robbery due to the cash-heavy nature of this industry created by outdated federal laws. Furthermore, smaller entrepreneurs who seek to enter this industry will continue to struggle to compete against larger, more well-capitalized interests.”
Sentiment about the failure to pass SAFE was not universal, but most were disappointed with the lack of any substantial action with regard to legalizing and/or normalizing the cannabis industry at the federal level.
Joseph Davidsohn, co-founder of Qanvus, a Wyoming-based industry consulting firm, said operators need access to reliable banking and lending solutions if the industry wants to make it, adding that “Perfection is the enemy of progress.”
“While the SAFE Banking Act as written misses some important points to satisfy all sides, failure to provide legislation that allows banking only serves to foster organized crime and support the continuation of a black market and predatory lending – thereby breaking the law, costing jobs, hurting investors, and destroying projections for much needed tax revenue,” Davidsohn said.
The Senate’s “continued inaction is unacceptable and the outcome of these discussions is deeply disappointing,” said Michael Bronstein, president of American Trade Association for Cannabis & Hemp (ATACH), citing the challenges that come with the continuation of risk associated with operating a cash-only business.
“The inability for the Senate to pass SAFE has dangerous real-world consequences including: employees of businesses unable to access banking services, state-licensed cannabis retailers that operate in cash, businesses being targeted for violent robbery, and tragic loss of life,” Bronstein said.
In an email, Florida-based Trulieve (CSE: TRUL) (OTCQX: TCNNF) CEO Kim Rivers said, “Despite significant bipartisan support within Congress and increasing popularity among constituents, cannabis reform to allow basic banking services for state legal cannabis companies has once again failed to advance. As a result, the 425,000 employees working in the legal cannabis industry will continue to face undue risk of robberies and economic harm. Trulieve will continue to fight for meaningful cannabis reform to provide greater security for our employees and increased access to cannabis.”