Prospects seem rosier for Senate passage of cannabis banking reform – but no guarantee

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The push to pass major federal cannabis banking reform resumes in earnest Thursday during a Democratic-controlled U.S. Senate Banking Committee hearing about the challenges that a largely cash-based industry poses to small businesses and employees.

Guaranteed to enter the conversation is the much-anticipated Secure and Fair Enforcement (SAFE) Banking Act, which a bipartisan group of lawmakers in both chambers of Congress reintroduced in late April.

As observers note, the House of Representatives has passed SAFE Banking in some form seven times under Democratic leadership.

Prospects in Republican House Speaker Kevin McCarthy’s chamber are less certain, but the Senate is understood to be the main obstacle.

The Senate has never voted on the proposal, either on the floor or in committee, despite vocal support from Majority Leader Chuck Schumer, who on Saturday repeated an earlier (and unfulfilled) promise to get banking reform done.

It’s believed President Joe Biden would sign the bill into law if it were to reach his desk.

If he did so, federal banking regulators would be prohibited from punishing financial institutions that offer basic banking services to marijuana businesses following state law.

‘Step forward’

The fact that senators are formally entertaining the topic on Capitol Hill is by itself reason for enthusiasm among marijuana industry executives and representatives.

The bill’s introduction boosted shares in publicly traded multistate operators two weeks ago, which observers note is a sign of how little progress Congress has made on marijuana reform since the arrival of the multibillion-dollar U.S. cannabis industry.

Thursday’s hearing is best understood as “a meaningful step forward,” said Reggie Babin, a former chief counsel to Schumer who is now senior counsel at Akin Gump, an influential Washington DC law and lobbying firm.

“This appears to be setting up SAFE Banking for a thorough consideration in the Senate, which suggests we are moving past where we were,” Babin told MJBizDaily.

“This is a prerequisite for a committee vote, which is a prerequisite to floor consideration.”

But advancement to the floor of the full Senate for an up-or-down vote isn’t expected to happen this week.

The bill itself is not currently scheduled to receive full scrutiny and possible amendments in what’s called the “markup process,” generally considered a prerequisite for full Senate consideration.

The timeline on that is ambiguous.

Another committee hearing with a markup will follow “soon,” staffers for Ohio Democratic Sen. Sherrod Brown, the committee chair, vowed to MJBizDaily via email.

There is bipartisan agreement on at least that much, as Ryann DuRant, a spokesperson for Republican Sen. Tim Scott, the ranking Republican member on the committee, told MJBizDaily.

“Ranking Member Scott has called for SAFE Banking to go through regular order so members of the Senate Committee on Banking, Housing, and Urban Affairs have the opportunity to debate and contribute to the bill,” she wrote in an email.

“The Ranking Member looks forward to a robust discussion on the topic in this week’s hearing.”

Observers say the list of witnesses that have been called to appear before the committee on Thursday might indicate the tenor of the conversation.

As of Monday, the only witnesses were Sens. Jeff Merkley, Democrat of Oregon, and Steve Daines, Republican of Montana, the current Senate sponsors who have sponsored the bill previously.

“Daines has always called for the bill to go through regular order and is glad that Senator Brown finally scheduled a hearing for the SAFE Banking Act,” Rachel Dumke, a Daines spokesperson, told MJBizDaily in an email.

“SAFE Banking has passed the House seven times with broad bipartisan support and the Senator believes there is the strong bipartisan support in the Senate and he will be working to build a consensus here to get the bill passed.”

The process

Experts in Senate procedure note that SAFE Banking does not need a markup or a committee vote to become law.

They also note that efforts to attach SAFE Banking to must-pass legislation such as the annual defense spending bill failed in the previous Congress, when the Senate ran out of time to consider SAFE Banking via “regular” order.

And cannabis advocates will recall the Senate held a hearing in 2019 that’s very similar to what’s scheduled for Thursday.

But enough has changed in the ensuing four years for industry advocates to be bullish, said Aaron Smith, executive director of the DC-based National Cannabis Industry Association, which lobbies for small and medium-sized marijuana businesses on Capitol Hill.

The number of states that have legalized adult-use marijuana has more than doubled, from 11 states to 22, with Maryland the next state scheduled to roll out recreational sales, on July 1.

Also, conservative strongholds such as Kentucky, the home state of Senate Minority Leader Mitch McConnell, have passed laws allowing medical marijuana.

Forty states have authorized full-fledged MMJ markets.

“This translates into significantly more representation of states with some kind of cannabis industry in the Senate, including on the Republican side of the aisle,” Smith wrote in an email.

“This coupled with the fact that the House has passed SAFE with uncommonly bipartisan majorities seven times and unprecedented institutional support for reform, gives us hope that the Senate will finally approve the legislation this year,” he added.

Ed Conklin, executive director of the U.S. Cannabis Council, also is encouraged, saying in an email that the hearing represents “a crucial step on the way to passing the SAFE Banking Act.”

In addition to blanket opposition to hitching SAFE to larger legislation, past Republican opposition to the bill, spelled out in a U.S. Department of Justice memo made public in early December, hinged on some ambiguities that the DOJ feared could complicate investigations of money laundering.

Current bill language reflects those concerns.

And it’s understood that progressive Democrats will not repeat earlier demands for SAFE to be packaged with social justice initiatives such as equity programs, but rather, the measure will be considered along with expungements for federal marijuana crimes as well as clarified permissions for cannabis users to legally own firearms.

Long odds, bad vote

The odds of SAFE passing, however, remain long.

Skeptics point out that the Senate has already considered a cannabis question this year and rejected it.

Under the Senate’s cloture rule, 60 votes are needed to end debate on a bill and bring it to an up-or-down vote.

On April 26, a motion to end debate and hold an up-or-down vote on a bill that would have allowed the Veterans Administration to run a clinical study on cannabis’ efficacy with chronic pain and PTSD in military veterans was rejected 57-42, with one abstention.

“I don’t think the hearing this week is going to suddenly usher SAFE Banking through the Senate,” said John Hudak, the director of Maine’s Office of Cannabis Policy and a former Brookings Institute fellow.

“But I think it starts the process of changing hearts and minds, which I think is very important.”

To get to 60 votes, he said, “you’ve got to pick off some people who are cannabis skeptics, and SAFE Banking is a nice comfortable place for some members to dip their toes into cannabis.”

However, “I am deeply skeptical the 118th Congress is going to be the one to push SAFE Banking through,” Hudak added.

Chris Roberts can be reached at