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SAFE Banking Act Appears to Stall Out – for Now

The Democratic party was almost successful in securing a weed deal. A bipartisan group of Senators worked on negotiating a cannabis package in Senate Majority Leader Chuck Schumer’s office for weeks. The group included Senators Dan Sullivan (R-Alaska), Steve Daines (R-Montana), and Rand Paul (R-Kentucky).

They reached a bargain representing various cannabis issues, including criminal record expungements, banking, and guns. Libertarians, conservatives, and progressives could all find something to be happy about in the package.

However, despite hopeful beginnings, the National Defense Authorization Act failed to gain Senate approval. The group of Senators hoped the Act would guarantee the passing of the cannabis package, but enthusiasm plummeted. Top Republicans attacked the banking legislation, a primary feature of the deal, causing the entire plan to unravel.

Failed Attempts at Marijuana Legalization

The recent setback is only one of multiple disappointments for people in the cannabis industry. Although the number of states to legalize recreational marijuana has almost doubled in recent years, cannabis advocates still struggle with current legislation.

Nearly half of Americans live in states that allow the legal possession of marijuana for anyone 21 years old or older. Maryland and Missouri are the newest states to legalize adult-use cannabis after last month’s midterm elections.

However, the only recent legislative win advocates can crow about is the bill President Joe Biden signed to expand research for medical marijuana.

The cannabis package in the National Defense Authorization Act might have been the last opportunity to make significant progress on changing federal legislation as Republicans prepare to take control of the House.

Concerns Over the Cannabis Banking Bill

Congressional lawmakers were interested in submitting a marijuana banking bill during the lame-duck session. The Department of Justice (DOJ) recently sent a memo to those lawmakers about its concerns over the proposed measure. The memo outlines the department’s concerns and addresses the bureaucratic challenges many states face while navigating the government’s division over cannabis laws.

Despite multiple states legalizing marijuana for recreational and/or medical use, it is still an illegal substance at the federal level. The money cannabis business owners make from marijuana could be considered the result of a federal crime. Credit unions or banks in business with marijuana retailers might also face federal charges. Financial institutions aren’t willing to take that risk.

Lawmakers in the House passed the Safe and Fair Enforcement Banking Act in 2021 for the fifth time since it was introduced in 2013 by Ed Perlmutter of Colorado. The National Defense Authorization Act (NDAA) included this measure. The goal was to guide banks in working with people in the cannabis industry. The Act also prohibits federal regulators from imposing penalties on banks providing financial assistance to legitimate cannabis businesses.

Financial Services for Weed Dispensaries

The cannabis package revolves around the SAFE Banking Act. It would allow banks to provide financial services to people in the cannabis industry. Typically, dispensaries are cash-only businesses. That makes them a target for theft and other crimes. Despite passing the House six times, the bill has never made progress in the Senate.

Dave Joyce (R-Ohio) and Alexandria Ocasio-Cortez (D-New York) introduced a bill combining the SAFE Banking Act with the HOPE Act. It provides grants for expunging convictions for non-violent cannabis offenses at the state level.

Don Young, the late Alaska GOP Representative and former co-chair of the Congressional Cannabis Caucus, introduced the Gun Rights and Marijuana (GRAM) Act. It would protect the firearm possession rights of cannabis users.

At least ten Republicans have co-sponsored or indicated their support for the SAFE Act. Last month, co-sponsor Senator Kevin Cramer (R-North Dakota) said he was open to the Hope and SAFE acts, particularly if Daines also supports it. Daines mentioned that the conversations about the cannabis package were productive. According to Senator Paul, over 60 votes favored the package.

However, key Republic Senators questioned the cannabis banking provision, causing the deal to start falling apart.

Potential Complications with Enforcement

Staffers for the ranking member on the Senate Judiciary Committee, Chuck Grassley (R-Iowa), and other senators met with Justice Department representatives last week. They voiced concerns about how agency officials plan to enforce the bill. Grassley’s office attacked the bill in a statement released after the meeting.

Senate Majority Leader Mitch McConnell (R-Kentucky) spoke about Democratic efforts and slammed them for trying to add language to the defense spending bill about allowing banks to do business with cannabis businesses.

The proposals seem irrelevant, getting reliable supporters to rethink attaching the package to the NDAA. Although Senators Cramer and Tommy Tuberville (R-Alabama) support the banking provision, they believe it doesn’t belong in the defense spending package.

Time Might Have Run Out

More legislation is likely to pass in the lame-duck session besides the NDAA. However, obstacles will arise while negotiating an omnibus funding package. The NDAA won’t make it into the major package if McConnell continues opposing SAFE.

Paul is confident over 60 Senators would favor SAFE if it were a standalone vote on the floor. However, Democrats left this until the last possible minute. There’s a slim chance the Senate will find time for a standalone SAFE package.

Cannabis advocate Justin Strekal, a former political director for NORML, a pro-legalization group, says other bills will come out of the Senate. He hopes Republican supporters will try to secure a victory by fighting their caucus leader.

Daines expressed his focus on getting new bills passed before the year ends. However, Tuberville and other GOP supporters said they might have to wait until next year to deal with it.

The chance for SAFE successfully passing is slim, with Republicans set to take over the House next month. Kevin McCarthy (R-California), House Minority Leader, voted in the bill’s favor. However, he hasn’t indicated whether he wants to spend time on cannabis legislation.

It’s possible that Democrats gambled with the lame duck and ran out of time to pass SAFE after spending over three years fighting for it.

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