The off-topic reply – sprinkled into Sen. Chuck Schumer’s Twitter mentions – landed minutes after the Democratic Senate Majority Leader celebrated the passage of the Respect for Marriage Act on Tuesday night.
PASS #SAFEBANKING @SenJeffMerkley
— djkocisi finance (@djkocisi1) December 13, 2022
The anonymous Twitter user’s singular focus represents the thinking of a significant portion of the cannabis industry – as do the replies in anything else related to Schumer’s December agenda:
For many big multistate operators (and their shareholders), what remains of Congress’ dwindling lame-duck session is all about the SAFE Banking Act – to the exclusion of almost anything else, be it inflation, same-sex marriage, the Ukraine war or even the continuing functions of the federal government.
There’s some justification for the myopia.
It would be another major win for the $33 billion marijuana industry in a lame-duck session in which President Joe Biden signed a landmark cannabis research bill.
And victory has for at least a year seemed tantalizingly close.
After all, versions of the bill – which generally forbids federal banking regulators from punishing financial institutions that serve state-legal marijuana businesses and which has nine Republican co-sponsors in the Senate – have passed the House of Representatives seven times, most recently in July, but have not received an up-down vote in the Senate.
In the months since, the cannabis industry has been told repeatedly, in some instances by Schumer himself, that a deal was close – maybe even a done deal – inspiring hopes that have moved marijuana stocks only to see them tumble again.
Now, exhausted with the cycle of raised hopes repeatedly crushed, some cannabis business leaders have resigned themselves to no SAFE Banking at all until after the next Congress is seated Jan. 3.
“I think operators have gotten to the mental state of, ‘If it passes, then it’s a huge windfall I didn’t expect, but I will continue to operate my business in the harsh environment that currently exists,'” Vince Ning, the founder and co-CEO of Nabis, a California-based licensed distribution company, told MJBizDaily.
“I’m hopeful, but I’ve been let down so many times I’m going to go out on a limb and say it’s not going to happen.”
zzzzz…our TL is now filled w/regurgitated analysis of IBs who have been wrong for 3+ yrs, on SAFE banking and % of it passing, with daily calibration and pivoting. Unless its farming for the fake dopamine of “likes”, not sure it is very helpful to retweet those as a “just fyi”.
— Merida Capital Holdings (@MeridaCap) December 12, 2022
Repeated hopes repeatedly dashed
The most recent fake-out was earlier this month, when lawmakers slid SAFE Banking language into the defense-spending bill, the National Defense Authorization Act (NDAA).
A deal to approve SAFE via this method was done, only to be undone just as quickly after a rebellion led by two key Republicans, Politico reported.
First, Iowa Sen. Chuck Grassley’s office publicly released a weeks-old memo from the U.S. Department of Justice saying the feds had enforcement concerns should SAFE pass.
That provided cover for any law-and-order-minded lawmaker to oppose the measure and rebutted the argument used by Montana Republican Sen. Steve Daines that SAFE – which would allow cannabis businesses to stop dealing exclusively in cash – would discourage strong-arm robberies and break-ins. Three people were killed this year during marijuana store robberies in Seattle.
Next, Minority Leader Mitch McConnell led a chorus of voices repeating another familiar line: tacking cannabis reform onto other legislation such as the NDAA isn’t something they are inclined to support.
“I think everybody – activists, industry people – got pretty excited at the prospect,” Adam Goers, senior vice president of corporate affairs at New York-based multistate operator Columbia Care, told MJBizDaily.
“It’s certainly disappointing it didn’t turn out that way.”
As of Tuesday, the consensus among Goers and other cannabis industry principals and their lobbyists is that the next-best opportunity for Congress to pass SAFE Banking is as part of the so-called “omnibus” spending bill that funds the government.
One major reason is that the Senate is running out of time to consider any more stand-alone legislation, as Boris Jordan, chair of Massachusetts-headquartered MSO Curaleaf Holdings tweeted.
Stand Alone not an option this year . No time !
— Boris Jordan (@Boris_Jordan) December 11, 2022
Congress must pass that omnibus bill to keep the federal government funded and avoid a government shutdown.
If no long-term deal can be struck, Congress could pass short-term spending bills – punting the problem away for a week or two.
That cycle seemed to begin Tuesday, as lawmakers announced a bipartisan deal to pass a weeklong spending bill as negotiations on a yearlong package continue.
But if McConnell remains opposed to packaging SAFE with other legislation, attempts to slide banking into the omnibus will fail.
And on Tuesday, South Dakota Republican John Thune, the Senate minority whip, hinted at such a reality, telling Bloomberg that hitching SAFE Banking onto the spending bill “divides” Republicans.
For the rest of the lame-duck session, SAFE Banking’s biggest enemy might be the finite time left on the calendar.
Running out of time
“I can’t find any examples of lame-duck legislation passing on Jan. 1 or Jan. 2,” Hirsh Jain, principal of Ananda Strategy, a Los Angeles-based consultancy, told MJBizDaily.
“If it’s not happening by Christmas, it’s basically not happening.”
And Jain has noticed other cannabis industry figures adopting a line similar to Ning’s: psychologically adjusting to a reality in which SAFE Banking doesn’t pass.
And SAFE Banking, many other observers point out, is no panacea.
SAFE Banking would not solve problems around taxation posed by Section 280E of the tax code, which forbids tax deductions for businesses selling federally illegal drugs – something the rescheduling process launched by President Joe Biden in October could fix – nor would it allow marijuana companies to ship products across state lines.
As late as Wednesday morning, analysts at New York-based brokerage firm Cowen continued to insist that SAFE could be in the omnibus language released next week – if Schumer “really” wants it.
However, other observers, such as South Carolina Rep. Nancy Mace, signaled that it’s time to move on.
“SAFE Banking is a good bill and it’s a shame all the misinformation about how its passage was imminent,” Mace posted in a now-deleted tweet Wednesday.
“As we close on the end of the legislative session we must look ahead and look beyond SAFE next Congress.”
Yet Goers remained optimistic that SAFE Banking could yet pass and be signed by Biden before the next split Congress is seated, with Schumer leading a 51-member Democratic majority caucus in the Senate and the Republicans having a nine-seat majority in the House.
That opportunity will remain alive as long as Congress is in session.
But without a solid proposal, SAFE Banking’s future remains anyone’s guess.
“Don’t listen to anybody who tells you that they know what will happen,” Goers said, pointing out that Schumer, McConnell and other leaders in Washington DC are still trying to work on a deal themselves.
“Anybody who tells you they know what’s going on, doesn’t.”
Chris Roberts can be reached at chris.roberts@mjbizdaily.com.
