Key Senate Democrats Block SAFE Banking Act's Inclusion in Must-Pass Defense Spending Bill [FEATURE]

In the ongoing struggle among congressional Democrats over whether to prioritize incremental marijuana reform legislation over pushing for full federal legalization, proponents of the former saw a stinging defeat this week when Senate heavyweights stripped the SAFE Banking Act (HR 1996) out of the Senate version of the must-pass National Defense Authorization Act (NDAA).

[image:1 align:right caption:true]The SAFE Banking Act would protect financial institutions that do business with state-legal marijuana companies even while federal marijuana prohibition remains intact. Its backers argue that it is desperately needed to protect the industry from the logistical and security burdens of conducting a billion-dollar all-cash business. They managed to get the act’s language inserted into the NDAA when the measure passed the House in September.

But Senate Majority Leader Chuck Schumer (D-NY), Senate Finance Committee Chair Sen. Ron Wyden (D-OR), and Sen. Cory Booker, who have drafted their own full legalization bill, had made it clear for weeks that they wanted to hold off on the banking bill until after Congress passes legalization. And they still felt that way this week despite pressure from other senators to keep the banking bill in the NDAA.

“We’re going to keep talking, but Sen. Schumer, Sen. Booker, and I have agreed that we’ll stay this course,” Wyden told reporters Monday, adding that “the federal government has got to end this era of Reefer Madness.”

The move infuriated SAFE Banking Act supporters. Rep. Ed Perlmutter (D-CO), chief sponsor of the bill, moved to reinsert the bill language in a meeting of the House Rules Committee Wednesday, but ultimately decided not to force a vote on the amendment. And Rule Committee Chairman Jim McGovern lashed out at Schumer during the debate.

“I don’t really quite know what the hell his problem is,” McGovern said, referring to Schumer. “But what he’s doing is he’s making it very difficult for a lot of small businesses—and minority-owned businesses, too—deal with the issue of cannabis to be able to move forward and to expand and to hire more people.”

The issue has also split the drug reform community, with groups such as the Marijuana Policy Project (MPP) and the National Organization for the Reform of Marijuana Laws (NORML) supporting the push for the SAFE Banking Act and groups such as the Drug Policy Alliance (DPA) calling instead for outright legalization.

“Marijuana criminalization means nearly every minute someone is arrested for marijuana and it serves as the pretext for horrific interactions with law enforcement, like the death of Philando Castile,” DPA executive director Kassandra Frederique said in a press release. “While we agree cannabis businesses, like any other businesses, need access to banking services—and in fact, the DPA-supported MORE Act (HR 3617) would fully resolve the marijuana banking issue–we cannot do so at the expense of equity and justice for Black, Latinx and Indigenous communities that have borne the brunt of prohibition. And we cannot prioritize banking services while cannabis continues to be used as justification for police violence against these communities,” she added.

“By slipping SAFE into the Defense Authorization bill ahead of moving the MORE Act, Congress is sending a clear message that the industry and huge multi-state operators take precedent before the countless people that have had their lives devastated by punitive and racially-motivated drug policies,” Frederique continued. “We can and must move comprehensive marijuana reform—centered in equity, justice and community reinvestment—first and foremost. Then, and only then, can we talk about banking inconvenience.” 

“We are disappointed in the elimination of the SAFE Banking provisions from the NDAA,” MPP deputy director said in a Tuesday statement. “It is unacceptable that so many state-licensed cannabis businesses are operating entirely in cash simply because the Biden administration and Congress, in spite of overwhelming public support, refuse to support even modest reforms to our country’s failed federal cannabis laws.”

While acknowledging that the banking bill did not take on the social justice side of the equation, Schweich argued it would have been at least some progress

“While the SAFE Banking provisions would not have addressed criminal justice reform, this was a valuable opportunity for incremental progress, a principle that has served the cannabis reform movement well for many years,” he said. “Furthermore, Congress has missed an opportunity to assist hundreds of small and minority-owned businesses in medical and adult-use cannabis states across the country. Without SAFE Banking, employees of cannabis businesses will continue to face public safety risks. Cannabis businesses are experiencing burglaries, armed robberies, and thefts at disturbing rates. It is abundantly clear that leaving cannabis businesses unbanked is dangerous for both workers and the surrounding community.”

NORML was equally perturbed.

“It is unfortunate that Congress failed to take this opportunity to affirm the legitimacy of state-legal marijuana markets and instead acted in a way that will continue to deny this emerging legal industry access to basic financial tools and services,” NORML political director Justin Strekal said in a Tuesday statement. “Until Congressional action is taken, state-licensed marijuana businesses and those millions of Americans that patronize them will continue to be at a higher risk of robbery due to the all-cash nature of this industry. Furthermore, smaller entrepreneurs who seek to enter this industry will continue to struggle to compete against larger, more well-established and well-capitalized interests.”

Despite the defeat this week, the fight to get the SAFE Banking Act back in the NDAA is not over. The current version of the NDAA will now have to go back to both chambers for final approval before heading to the president’s desk, and the act’s supporters will certainly try to get it reinserted before then.

Meanwhile, the prospects for actual ending federal marijuana prohibition this year appear dim, especially given that it would need 60 votes in the Senate, where Republicans have operated primarily as obstructionists so far. If neither the SAFE Banking Act nor marijuana legalization materializes, the Democrats will have squandered an opportunity to pass important, popular legislation. There’s still next year, but it is already looking to be pretty messy in the run-up to the mid-term elections.