McConnell Opposition Dooms Banking Bill
Marijuana advocates and executives are up in arms after opposition from Senate GOP Leader Mitch McConnell (Ky.) resulted in Congress failing to pass a key cannabis banking bill, dealing a massive blow to the industry.
The $1.7 trillion omnibus spending bill unveiled Tuesday includes all kinds of expenditures, but it does not include the SAFE Banking Act, a bipartisan measure that would undo federal restrictions that make it difficult for legal cannabis businesses to access financial services.
“The fact that there was speech after speech and tweet after tweet about how cannabis policy was a priority and we know they were very certain that the votes are there, but it just was never brought to the floor, is of course disappointing,” said Kim Rivers, CEO of Florida-based Trulieve Cannabis Corp.
The measure has a ton of political support.
It passed the House seven times — receiving a whopping 321 votes last year — and had enough GOP support to reach 60 votes in the Senate.
But it did not have the support of McConnell, whose opposition kept it out of the spending bill.
McConnell first blocked the SAFE Banking Act’s inclusion in the defense bill earlier this month, arguing that it would make the U.S. financial system “more sympathetic to illegal drugs.”
It now faces an even steeper climb to become law in the next Congress, with Republicans taking over the House.
The bill’s supporters argue inaction could lead to devastating consequences.
Cannabis businesses have suffered from a sustained wave of robberies because federal law forces many of them to operate in cash. Due to the threat of federal penalties for banks that work with cannabis firms, dispensaries often struggle to access loans and are subjected to huge interest rates if they do manage to secure funding.
“This very much means that there will continue to be people whose lives are being put at risk because they’re having to operate in an all-cash business,” said Kaliko Castille, president of the Minority Cannabis Business Association.
Untold numbers of smaller cannabis companies that were waiting for SAFE Banking and don’t have easy access to capital may soon go out of business, industry executives warned Tuesday.
Some of those companies will enter the illegal market, which allows them to dodge heavy taxes stemming from federal rules that restrict cannabis businesses from taking common deductions.
“What the Senate did by not voting for SAFE Banking is encourage the illicit market to thrive,” said Boris Jordan, executive chairman of Massachusetts-based firm Curaleaf. “The illicit market doesn’t do testing, doesn’t pay taxes, and at the moment is not being enforced against, so they’re thriving, whereas the companies that are actually operating under the rules are the ones that are suffering.”
Advocates were near certain that the SAFE Banking Act would cross the finish line before Democrats ceded control of the House next Congress, particularly after President Biden embraced marijuana reforms for the first time in October.
Senate passage, however, was always elusive. The bill was set to be included in last year’s defense package, but Senate Majority Leader Charles Schumer (D-N.Y.) pulled it amid pressure from marijuana justice advocates who noted that it didn’t address social inequities caused by the war on drugs.
Schumer eventually pushed for the bill after it was combined with the HOPE Act, a bipartisan measure that would incentivize states to speed up low-level marijuana expungements. But this time, it was McConnell who refused to include the measure.
“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,” Khadijah Tribble, CEO of the U.S. Cannabis Council, said in a statement.
Lawmakers and advocates have criticized Schumer for opting not to prioritize a stand-alone vote in the Senate. He instead focused on a comprehensive marijuana legalization bill that didn’t have a chance of passing the upper chamber.
Some point to a Justice Department memo released earlier this month warning that the banking bill could hinder investigations into money laundering and illegal drugs if it wasn’t tweaked, which sparked concerns among prominent GOP senators.
Others have looked inward, arguing that the cannabis industry’s message hasn’t resonated on Capitol Hill like it should, given marijuana’s immense popularity.
“I feel like in some places, folks thought we had more support than we really did,” Castille said. “And ultimately, we’ve still got to do some work with more offices to make sure that we have the votes there and that Leader McConnell doesn’t feel like he’s in a power position to be able to shut things down.”
A September Morning Consult poll commissioned by the Independent Community Bankers of America found that two-thirds of voters support allowing cannabis firms to access banking services. Just 10 percent of respondents in a November Pew Research poll said that marijuana should be outlawed in all cases.