Too much Cash in Cannabis New Bill Coming

Both sides of the political aisle are throwing their support behind a bill to embed key marijuana banking legislation in a larger package intended to improve American competitiveness, raising the prospect that a major cannabis bill will pass through the upper chamber this year. As part of a broad package being worked out in both chambers designed to improve supply chains and manufacturing, Sen. Patty Murray, D-Wash., is pushing for the SAFE Banking Act to be included. The legislation, which cleared the House earlier this year, would protect financial institutions that service state-legal marijuana businesses from being penalized by federal regulators.

Washington Senator Patty Murray is fighting to include cannabis legislation in a new bill that is currently being considered by the Senate. The legislation, which was featured in the House’s version of the bill known as the Competes Act, would aim to reduce the amount of cash that weed dispensaries are forced to use. This makes them prime targets for robberies, as well as creating other public safety concerns. “Weed dispensaries are currently sitting on a ton of cash because they’re not able to deposit it in banks,” Murray said in a statement. “This puts them and their employees at risk, and it’s just not safe.”

Several senators are attempting to incorporate the bill, which has been passed in the House six times and has dozens of Democratic co-sponsors, into the larger competition package. The aim is to use the Cannabis Act as a way of evening out some of the tax advantages that have been extended to the marijuana industry. “We’re going to have to get more aggressive on this,” said Senate Majority Leader Chuck Schumer (D-NY) in an interview. “The fact that there’s so much cash in cannabis creates all sorts of problems.”

Under current law, marijuana businesses are not able to deduct business expenses like advertising or rent from their taxes. They are also required to pay a higher tax rate than most other businesses. The new bill would allow them to deduct those expenses and lower their tax rate. “The bottom line is that the banking bill has been on the books for a long time. It’s ready to go. It must be enacted,” says Senate Democratic Whip, Jon Tester of Montana, a member of the conference committee and co-sponsor of the SAFE Banking Act.

According to one Montana newspaper, Sen Steve Daines believes that other Republicans may be willing to support the legislation. “We’ve got nine Republican co-sponsors officially on it, with around 50 Democrats,” he said. We have the votes in the Senate to pass the SAFE Banking Act as a standalone if we wanted to; there are just a few remaining undecideds.” But while the SAFE Banking Act may have enough support to pass in the Senate, it’s unclear whether House Republicans will take up the legislation. It’s also possible that President Biden could veto the bill if it does make it to his desk.

In the meantime, cannabis businesses are forced to operate on a cash-only basis.

Before the August recess, when Congress shifts its attention to the November midterm elections and legislation slows to a crawl, Senate conferees are expected to complete a compromise China competitiveness bill that may win the backing of 60 senators. Senator Schumer (D-N.Y.), who previously blocked the SAFE Banking Act due to concerns that its passage might harm prospects for tougher action on China, has now signed off on the new bill. The SAFE Banking Act would protect banks that work with cannabis businesses from being penalized by federal regulators. The legislation would also allow for greater transparency and tracking of the cannabis industry, which is currently operating in a legal gray area.

If the banking bill is coupled with provisions to expunge marijuana convictions and repair damage caused by the war on drugs, Senate Democrats are said to be willing to pass it. But it’s unclear if Republicans will go along with those provisions. However, conference committee rules prevent lawmakers from adding further social equity or criminal justice reform provisions to the SAFE Banking Act, making it more difficult for it to get Schumer’s approval and becoming part of the final package that goes to President Biden’s desk.

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K Street lobbyists anticipate that about a dozen GOP senators will vote for the legislation, which cleared the House last year with support from every Democrat and almost all Republicans. Even so, some GOP senators have concerns about whether or not the bill is appropriate for inclusion in the China competitiveness package. Bill Cassidy (La.) and Roy Blunt (Mo.) said they aren’t sure if it’s a good fit. Lawmakers are rushing to pass the banking bill before it becomes a midterm election issue. Industry lobbyists are pushing for a quick passage of the bill, citing a recent spate of robberies at cash-only marijuana dispensaries as motivation. In March, an employee at a Washington state pot shop was shot and killed during an armed robbery, while a robber fatally wounded the owner of a Colorado dispensary during a holdup last month.

“If you look at what’s happening in Colorado and Washington, there are increasing concerns about public safety with all this cash on the streets,” said Aaron Smith, executive director of the National Cannabis Industry Association. A key sticking point for some GOP senators is whether the legislation would protect banks. The current system is not working and the new bill will help to correct that, said Sen. Jeff Merkley (D-Ore.), a co-sponsor of the legislation. “This is a commonsense solution that says let’s provide banking services so we can get rid of this huge public safety hazard,” he said.

Merkley said he believes there is enough GOP support to pass the bill, but it’s unclear if Senate Majority Leader Mitch McConnell (R-Ky.) will bring it up for a vote. A spokesman for McConnell declined to comment on the legislation. Advocates have attempted to persuade Schumer and other hesitant Democrats that the banking bill’s passage would help boost cannabis legislation, not hurt it. “My experience has been that every time you get someone who is somewhat uncomfortable with wider change but might be persuaded on modest details, once you get them to vote for those minor changes, it becomes much simpler to get them to vote for much bigger changes,” said Steve Elmendorf, a Democratic lobbyist who is working on the issue. Elmendorf added that he thinks it’s “inevitable” that marijuana will be legalized at the federal level within the next five years.

Last week, the American Bankers Association and bankers groups from all 50 states urged Senate leaders to include the banking bill in the conference report, stating that the “urgently needed” legislation would address the recent spate of robberies and improve transparency and tax collection for cannabis businesses. “The inability of state-licensed cannabis firms to access safe and regulated financial services has created public safety risks and unnecessary costs for these businesses,” the groups wrote. The banking bill is also supported by many law enforcement groups, including the National Sheriffs’ Association and the Major County Sheriffs’ Association. “This legislation will provide much-needed clarity to financial institutions that choose to serve state-licensed, legal cannabis businesses and ancillary companies,” the groups said in a letter to Senate leaders.

The legislation has also picked up support from several business groups, including the National Association of REALTORS®, the American Trucking Associations, and the U.S. Chamber of Commerce. State officials have been inundating the Senate with similar missives. Colorado Attorney General Philip Weiser (D) and Ohio Attorney General Dave Yost (R) recently penned a letter to Senate leaders, noting that the existing system encourages crime while also preventing accurate monitoring of trillions of dollars in marijuana sales.