After years of hoping, waiting, spending, and hand wringing in the cannabis industry, powerful members of Congress tried and failed for the third Congress in a row to get their colleagues to vote to pass a cannabis banking bill.
This lame duck session, there were two paths forward for the Secure and Fair Enforcement Banking Act (SAFE Banking Act), which opens up financial institutions to cannabis businesses. The first route was to tack it on to critical spending legislation, and the second was the standalone approach. However, SAFE Banking language ultimately failed to make it to the final versions of both the National Defense Authorization Act and the $1.7 trillion government spending bill. With days left in the year, time’s just about out for any last-minute shot at a standalone bill.
The SAFE Banking Act has passed in the House several times in recent years, but it never cleared the Senate. The 60 vote threshold has forced an unprecedented — in the world of cannabis legislation — level of compromise between Democrats and Republicans. The bulk of these negotiations have happened during the lame duck scramble before Republicans take control of the House. During a House Rules Committee meeting on the NDAA earlier this month, Rep. Adam Smith said that “the effort to push it in this bill forced the question and got to 59” votes for SAFE. It’s unclear whether the votes for SAFE ever reached 60, but nonetheless, it became clear that there were other insurmountable hurdles, like Senate Minority Leader Mitch McConnell, who called SAFE “unrelated nonsense” and “easier financing for illegal drugs” while celebrating its exclusion from NDAA.
This Congress, with Democrats in control of both chambers, a narrow window opened for SAFE Banking, but as Cannabis Wire reported, divisions formed among cannabis industry and advocacy groups, and among lawmakers, amid the debate over whether banking legislation should advance ahead of broader reforms.
The compromise legislation circulated in recent days folded in the Harnessing Opportunities by Pursuing Expungement Act (HOPE Act), which would have provided funding to states to pursue expungements of cannabis offenses, and the Gun Rights And Marijuana Act (GRAM Act), which would have offered Second Amendment protections to legal cannabis consumers. These additions to the SAFE Banking Act were an effort to pull in support on both the left and the right, a tough needle to thread with Republicans reluctant to sign on to legislation seen as equity-focused.
On Monday, ahead of the official release of the omnibus without SAFE Banking language included, which had been expected for days, cannabis advocacy groups (USCC, ATACH, NORML) and industry members (Trulieve, Cresco, Curaleaf) began to lament the outcome.
Schumer looked toward 2023 when asked by reporters on Tuesday about the Act during a news conference.
“At the very end of the day, we had very good bipartisan support. We had hoped to get it done. I worked for months with different Republicans, led by Senator [Steve] Daines of Montana,” Schumer said. “But, at the last minute, both Senators [Pat] Toomey and McConnell opposed it,” he added.
“It is bipartisan. It has the support of many different groups. We’re going to go back at it next year.”
The SAFE Banking Act has been closely watched beyond the cannabis industry, too.
The American Bankers Association has been vocal in its support of the SAFE Banking Act. ABA spokesperson Blair Bernstein told Cannabis Wire that the group is “disappointed” that the Act has “failed to clear the full Congress despite strong bipartisan support,” but thanked the “many lawmakers in both parties and in both chambers for their efforts to get this bill across the finish line in this session of Congress.” The group gave a special shout out to Rep. Ed Perlmutter, who spearheaded the Act and pushed for it for years, as he prepares to retire.
The ABA isn’t giving up hope for 2023 being the year that SAFE Banking clears Congress.
“We firmly believe it is simply a matter of time until this commonsense legislation to enhance public safety becomes law, and the untenable legal limbo between state and federal law over banking cannabis finally comes to an end,” Bernstein told Cannabis Wire, adding that the group will “renew our advocacy for the SAFE Banking Act in the 118th Congress because every day that passes without this legislation is another day that puts people and communities at risk.”
Jeremiah Mosteller, a senior policy analyst on criminal justice for Americans for Prosperity, told Cannabis Wire that AFP is “disappointed that the clock ran out” in the 117th Congress for the SAFE Banking Act. AFP, as Cannabis Wire has reported, is trying to bring Republicans to the table on cannabis reform.
“Members of both parties spent much time and effort to craft a bipartisan proposal that will provide regulatory and legal clarity for small businesses and citizens alike in multiple areas of the law,” Mosteller told Cannabis Wire, adding that AFP will “not back down” until Congress moves to “restore state autonomy in this policy area.”
“This compromise agreement is a success story that deserves to be celebrated, and I believe that these efforts have set us up for success in 2023.”
Shaleen Title, founder of the nonprofit drug policy think tank Parabola Center, said in a statement that a “big part of what went wrong was the false portrayal of SAFE as a solution for small and minority-owned businesses without any substantive policy to back up those claims. Without a unified voice or broad credibility, efforts to pass the bill were particularly vulnerable.”
Title added, “For 2023, it may make sense to amend the proposal to be consistent with its talking points. For example, adding a pool of funding for Community Development Financial Institutions could lead to substantive access to capital for small businesses and thus broader support for the proposal.”
Years of lobbying
Over the past handful of years, the SAFE Banking Act has attracted substantial lobbying from some of the world’s biggest cannabis companies, as Cannabis Wire reported. The Act has also drawn lobbying dollars from banking-focused entities like the American Bankers Association and the Credit Union National Association, as Cannabis Wire reported, and from insurance groups like Travelers Companies Inc. & Subsidiaries, the National Association of Mutual Insurance Companies, and the Independent Insurance Agents & Brokers Of America, as Cannabis Wire reported.
Why have insurance companies been so laser-focused on cannabis banking? Jonathan Bergner, Assistant Vice President of Federal Affairs at the National Association of Mutual Insurance Companies, told Cannabis Wire in 2019 that the insurance industry has grappled with risks associated with federal illegality.
“Claims involving cannabis are being filed and in some cases, insurers are being compelled to do business with various elements of the cannabis supply chain,” Bergner said. “As long as this conflict between the states and the federal government on marijuana exists,” he added, the association “firmly believes that a robust safe harbor is needed to ensure that insurers are not improperly exposed to criminal or civil liability under federal law.”
Localities have registered to lobby, too, including states like Nevada and Colorado, the city of Sacramento, California, and Pasco County, Florida.
“We have business owners coming to City Hall to make deposits, sometimes carrying large sums of cash,” Javier Trujillo, the director of government and public affairs for the City of Henderson, Nevada, told Cannabis Wire in 2019. “It could be in the tens of thousands, if not more sometimes, and they do it twice a year,” at tax time.
Altria, maker of Marlboro, has also lobbied on SAFE. Cannabis Wire was the first news organization to report on Altria’s entry into cannabis lobbying in the U.S.