SAFE Banking’s failure: Who’s to blame, and what’s next for marijuana industry?

A rational and impassioned plea for federal marijuana banking reform from eight Pennsylvania state Republican lawmakers landed in the inbox of retiring U.S. Sen. Pat Toomey on Dec. 7.

But like almost everything related to the SAFE Banking Act, the bill in Congress most desperately desired by major companies in the $33 billion U.S. marijuana industry, it didn’t work.

The eight state lawmakers’ message, released publicly in mid-December by the Pennsylvania Cannabis Coalition advocacy group and picked up a week later by the cannabis industry during a last-ditch lobbying effort, made a fiscal and moral appeal:

In their state alone, cannabis is a $6.3 billion business. Yet, an industry that employs 30,000 in Pennsylvania, the lawmakers wrote, “still has limited access to banking,” a situation with “unacceptable real-world consequences including” murdered medical marijuana dispensary employees as well as canceled bank accounts.

Their argument was compelling and logical.

It was appealing to the nationwide marijuana industry as well.

When key lobbies such as the U.S. Cannabis Council went looking for pliable senators to lean on during a final desperate lobbying effort to convince senators to include SAFE Banking in the omnibus spending bill, they turned to Toomey.

But by the time the industry made its appeal, staffers for the retiring Toomey – who will be replaced in the next Congress by Democrat John Fetterman – were already packing up the departing senator’s office and attending farewell parties rather than listening to legislative pitches, a source close to the Senate negotiations told MJBizDaily.

As frustration with Congress boils over among cannabis industry insiders and executives, eager to pin blame on either Democratic Majority Leader Chuck Schumer or Republican Minority Leader Mitch McConnell – with final analyses appearing to hinge on partisan ideology – the Toomey episode illustrates the difficulties marijuana legislation encounters on Capitol Hill.

Ultimately, a mix of arcane Senate rules, inflexible partisan politics, competing priorities and missteps and false assumptions by the marijuana industry all helped doom SAFE Banking, MJBizDaily learned from interviews with more than a half-dozen lobbyists, activists and lawmakers.

‘Both sides’

It’s true that McConnell materialized as a last-minute roadblock, helping to block SAFE from both the annual defense spending bill (National Defense Authorization Act) on Dec. 6 and the omnibus spending bill earlier this week.

Without enough time in the lame-duck session to submit SAFE to the typical committee process and a floor vote, Schumer’s push to package cannabis banking reform into larger legislation – a common enough technique in Washington – was considered the bill’s best shot at passage before 2023.

It’s also true that Schumer didn’t craft a deal with Senate Republicans in time, and that his own caucus balked at passing SAFE without social justice measures such as expungements of criminal records.

“It is absolutely a colossal failure of Senate leadership – on both sides,” said David Mangone, director of policy for the National Cannabis Roundtable, a Washington DC-based lobbying group whose members include representatives of major marijuana multistate operators Cresco Labs and Trulieve Cannabis.

“We underestimated Sen. McConnell’s willingness to block, and we also underestimated Chuck Schumer’s willingness to fight hard for this,” Mangone added.

“The blame falls squarely on Senate leadership in equal ways. The blame is shared by McConnell and by Schumer.”

Yet, it’s also true that whatever arguments the cannabis industry presented to leery lawmakers – and however they were presented – weren’t enough to sway enough senators.

Though some lobbyists and staffers for Republican lawmakers still insist SAFE Banking had 60 votes if called to the Senate floor – the threshold to overcome the chamber’s filibuster rules – the bill also had only nine official GOP co-sponsors.

A public commitment of support from only one more Republican would seal the deal.

One former Capitol Hill staffer close to the Senate negotiations told MJBizDaily that committed support topped out at 59 votes.

Speculation as to who might have been the theoretical 60^th vote typically falls on Sen. Tommy Tuberville, R-Alabama.

Though Alabama media reported in August that the pro-Trump former college football coach was in favor of SAFE, he never went on record with his stance.

And without a floor vote, it’s impossible to know for certain whom that 60th vote might have been.

‘Just aren’t 60 votes’

Other Washington insiders pointed to the Dec. 5 publication by Punchbowl News of a Department of Justice memo citing enforcement concerns as a clear signal that Republican support was wavering.

“There just aren’t 60 votes in the Senate to pass either a SAFE stand-alone (bill) or a SAFE Plus,” said Jarrod Loadholt, a partner at DC law firm Ice Miller’s Public Affairs Group.

In the end, too few Democrats would support a SAFE Banking bill without social justice measures – and too few Republicans supported SAFE with those measures, he said.

“There’s enough blame to go around, because in a sane world a stand-alone SAFE bill would have 60 votes in the Senate … and it didn’t,” he said.

“If anything, the fact that we can’t pass things like this with 50 votes is the real culprit here, and we shouldn’t lose sight of that.”

“I think it’s the poster child for filibuster reform.”

SAFE Banking might also be a sort of mirror for the cannabis industry.

One prominent lobbyist said industry stakeholders’ repeated insistences that the bill would pass was both representative of the industry’s inflated sense of importance as well as a misunderstanding of how Congress works and federal lawmakers’ overall slate of concerns, where cannabis remains low on the list.

“I think SAFE failed because cannabis is still not a priority for Congress, despite nearly half of the states having bypassed federal law to set up state-legal marketplaces,” said Kaliko Castille, executive director of the Minority Cannabis Business Association, who added his own partisan analysis in email to MJBizDaily:

“It’s clear that we have more work to do on the GOP side of the aisle to make any cannabis legislation viable,” he wrote.

“The blame doesn’t fall to one side of the aisle, but when you’ve got half of the Democratic caucus in support but only 9 Republicans cosponsoring and Mitch McConnell continuing blocking any progress, it’s clear where the work needs to be put in.”

“We’ve got to talk about this issue as one of personal freedom, protecting and incentivizing small business formation and creating local jobs rather than just an issue of social justice, which it is.”

Going forward, it’s unclear what form the next version of SAFE will take.

Some industry executives, including Luis Merchan, the chair and CEO of Florida-based cannabis operation Flora Growth, believe a stand-alone SAFE should be Congress’ priority.

Other stakeholders, such as Shaleen Title, an attorney and CEO of the drug-policy think tank Parabola Center, believe SAFE’s loudest voices were disingenuous.

“A big part of what went wrong was the false portrayal of SAFE as a solution for small and minority-owned businesses without any substantive policy to back up those claims,” she said.

“Without a unified voice or broad credibility, efforts to pass the bill were particularly vulnerable.”

Though Toomey’s replacement, Fetterman, gives the Democrats a two-seat Senate majority, the Republicans will control the House of Representatives, where SAFE Banking will need to pass for an eighth time for the measure to advance as far as it did.

And the state-of-play in the House is still unclear.

Uncertain future

California Rep. Kevin McCarthy, the presumptive favorite to become House Speaker, is currently managing a rebellion led by Florida Rep. Matt Gaetz and other members of his party’s ultra-conservative House Freedom Caucus, who are threatening to withhold their support for McCarthy without certain concessions.

In exchange for supporting McCarthy and avoiding the spectacle of multiple ballots for House speaker for the first time in a century, those lawmakers might demand certain concessions on House rules.

Those demands could include a mechanism for a single member to trigger a procedure to remove the speaker as well as codifying an informal rule that brings forward for a vote only legislation that has majority Republican support.

That would doom SAFE Banking in the House, despite its bipartisan support.

But with so much about the makeup of the House itself to be determined, “right now, to predict how, when or why something might move in the House, is getting way, way ahead,” said one prominent lobbyist who asked for anonymity in order to speak freely.

About all that’s clear is that whatever form SAFE Banking 2.0 takes, the lobbyist added, it’s “not going to be everything one side wants.

“That is not how you get something to the president’s desk.”

Source: https://mjbizdaily.com/why-safe-banking-failed-and-what-are-next-steps-for-marijuana-industry/