Major federal marijuana reform advanced Thursday thanks to an old Congressional trick—tucking unrelated business into a larger, must-pass bill—when the U.S. House of Representatives approved granting legal protection for banks working with cannabis businesses as part of the annual defense spending bill.
The so-called Secure And Fair Enforcement (SAFE) Banking Act—which would allow cannabis businesses in the 36 states with retail dispensaries to pay taxes with a check and secure loans and allow customers to use debit cards—passed the House for the fifth time late Thursday, when key elements of the bill were included in the National Defense Authorization Act (NDAA).
If passed by the Senate and signed into law by President Joe Biden, federal banking regulators would be forbidden from punishing banks for dealing with the marijuana industry, and proceeds from “legitimate cannabis related” businesses would not be considered “proceeds from unlawful activity” and would be thus exempt from money-laundering laws.
That would mean an end to the risky and cumbersome “all cash” life most cannabis businesses are forced to live.
Advocates say equal access to banking services is required for black and brown people most harmed by the war on drugs, who have thus far largely been shut out of the multi-billion-dollar cannabis industry, to finally enjoy economic opportunity in marijuana.
But passage in the United States Senate, where lawmakers want banking folded into a bill with other marijuana reform measures and not military spending, seems highly unlikely.
Marijuana banking reform is currently not included in the Senate version of the NDAA. And some crucial marijuana legalization advocates have indicated they’d prefer to pass cannabis reform on its own, and package banking reform with social equity measures including expunging past marijuana arrests.
On Wednesday, Sen. Cory Booker (D-NJ), one of the three main sponsors of a marijuana legalization bill currently sitting fallow in the Senate, told POLITICO that using the defense spending bill to pass banking “undermines the ability to get comprehensive marijuana reform and the kind of things that are harder to get done like expungement of people’s records.”
The marijuana industry has been clamoring for banking and tax reform for years, but only recently has cannabis become increasingly dominated by large publicly traded companies, the so-called “multi-state operators” (or MSOs), some of which enjoy valuations of more than $1 billion.
According to Booker, passing only banking reform would satisfy one of the main asks for these big cannabis companies—which may then sit out or even advocate against other marijuana reform that help small businesses.
“I think it’s really important that we get the SAFE Banking Act done, but to do it without doing other things, makes the other things even harder to get done,” he told POLITICO. “You’re letting them, their interests, off the hook, and all the other equity issues suffer as a result.”
Though a review of other senators’ comments suggests that SAFE Banking has little to no chance of sneaking in via the NDAA, Booker’s analysis prompted a sharp rebuttal from advocates including Amber Littlejohn, executive director of the Minority Cannabis Business Association.
Access to capital is the “number one” impediment for small business owners, including BIPOC people, from entering the marijuana industry, Littlejohn tweeted. Failure to pass banking reform—as part of the NDAA or another bill—will mean fewer people of color in the industry, she said.
The matter won’t be decided until next week at the earliest. The Senate was not scheduled to be in session on Friday.