Why Safe Banking Failed and Where Does the Industry Go Next?

On December 7, retiring U.S. Senator Pat Toomey received a message in his inbox from eight Pennsylvania state Republican lawmakers. It discussed federal marijuana banking reform. However, the plea failed, like most issues related to the SAFE Banking Act.

The Pennsylvania Cannabis Coalition released the lawmakers’ message earlier this month. A week later, the cannabis industry used the message in one last effort to lobby for the proposed banking regulations.

Cannabis is a $6.3 billion business in Pennsylvania, with 30,000 industry employees. However, access to banking is limited. Many business owners and employees face dire consequences. Bank accounts have been canceled. Even more horrific, workers at medical marijuana dispensaries have been murdered.

Placing Blame for the Unsuccessful Cannabis Reform

Arguments for including SAFE Banking in the omnibus spending bill were logical and compelling. SAFE Banking would also benefit the nationwide cannabis industry. Lawmakers turned to Toomey while looking for other Senators to support them during lobbying efforts.

However, the appeal came while staffers for the retiring Toomey had already started packing the office. According to a source close to the Senate negotiations, staffers were too busy wrapping up official duties and attending farewell parties to hear legislative pitches.

The latest situation with Toomey shows the challenges lawmakers encounter while pursuing marijuana legislation. Cannabis industry executives and insiders are frustrated with Congress and eager to blame Republican Minority Leader Mitch McConnell or Democratic Majority Leader Chuck Schumer for the unsuccessful plea. 

Interviews with lawmakers, lobbyists, and activists uncovered the factors contributing to the doomed SAFE Banking Act, including a mix of false assumptions about the cannabis industry, obscure Senate rules, missteps, competing priorities, and inflexible partisan politics.

Failed Efforts on Both Sides

McConnell’s last-minute fight against SAFE helped prevent it from being included in the annual defense spending bill (National Defense Authorization Act) at the beginning of the month and the omnibus spending bill last week.

During the lame-duck session, time ran out to submit SAFE for a floor vote. Schumer’s decision to push the bill into larger legislation, a common technique used in Washington, seemed like the best chance of passing the cannabis banking legislation before next year.

However, Schumer ran out of time to finalize a deal with Republicans in the Senate. His own caucus also hesitated to pass SAFE without including a provision for criminal record expungement and other social justice measures.

The director of policy for the National Cannabis Roundtable, a lobbying group based in Washington, D.C., with members operating major multistate marijuana businesses, such as Trulieve Cannabis and Cresco Labs, spoke about the recent events, saying Senate leadership on both sides failed significantly. He believes Schumer and McConnell share the blame equally.

Insufficient Votes from Each Party

Some staffers for Republican lawmakers and lobbyists claim SAFE Banking would have 60 votes if called to the Senate floor. Sixty votes would be required to overcome the filibuster rules. However, a former Capitol Hill staffer close to negotiations in the Senate said support for the bill maxed out at 59 votes. Without a floor vote, knowing who would have been the 60^th vote is impossible.

A Department of Justice memo cited enforcement concerns, indicating weakening support for the proposed legislation among the Republican party. There aren’t enough votes on either side to pass SAFE Plus or SAFE Banking as a standalone bill. Many Democrats don’t support the bill unless it includes social justice measures, and not enough Republicans support it if social justice measures are included.

The cannabis industry often fails to understand federal lawmakers’ views regarding marijuana and how Congress works. Stakeholders in the industry insisted the bill would pass. However, cannabis issues remain low on the list of priorities for many lawmakers.

Although multiple states bypassed federal law and set up legal marketplaces, Congress doesn’t prioritize cannabis. Producing viable legislation to legalize marijuana at the federal level requires more work on the GOP side, given Mitch McConnell’s efforts to slow progress and only nine Republicans cosponsoring the bill.

The blame doesn’t fall on one side, though. Only half of the Democratic caucus supports SAFE.

What’s Next for SAFE?

The next steps are still unclear. Some industry executives think Congress should prioritize SAFE as a standalone bill. Other stakeholders believe those advocating for the legislation portrayed it as a solution for minority-owned and small businesses but didn’t support those claims with concrete policy. That left the bill vulnerable and called its credibility into question.

John Fetterman will replace Toomey, giving Democrats a two-seat Senate majority. However, Republicans will control the House, where SAFE Banking must pass to advance the measure.

California Representative Kevin McCarthy is favored as the next House Speaker. Currently, Florida Representative Matt Gaetz and members of his party’s conservative House Freedom Caucus are leading a rebellion against McCarthy. They’re threatening not to support him unless he makes specific concessions.

Lawmakers might demand concessions on specific House rules in exchange for supporting McCarthy and avoiding multiple ballots for House speaker, a scenario that could happen for the first time in a century.

The demands might include creating an informal rule only to vote on legislation with majority Republican support and making a method that would allow a single member to prompt a process to remove the speaker.

Despite SAFE Banking’s bipartisan support, those demands would stop the bill in its tracks. Tweaking it to get it passed in the future will also be challenging, considering it won’t contain everything each side wants. 

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