Federal cannabis policy is progressing in Congress and the Biden Administration, with the SAFER Banking Act and MORE Act advancing and talk of rescheduling.
Many federal cannabis policy bills have made little progress. But major changes could be on the horizon.
Senate Advances Cannabis Banking Reform Bill for First Time
The U.S. Senate Committee on Banking, Housing, and Urban Affairs voted today 14-9 to advance the Secure And Fair Enforcement Regulation (SAFER) Banking Act. It would allow financial institutions to establish relationships with state-licensed cannabis businesses without fear of repercussion.
The SAFER Banking Act was formerly known as the SAFE Banking Act. It would grant the cannabis industry access to financial services not available or reliably accessible without steep fees.
Senators Jeff Merkley (D-OR) and Steve Daines (R-MT) introduced the legislation. The Safer Banking Act has 22 cosponsors, including New Jersey Senators Cory Booker and Bob Menendez.
Today’s vote was the first time that Senate members have voted in favor of the measure. The House of Representatives passed an earlier version of the legislation, the SAFE Banking Act, on prior occasions.
“The SAFER Banking Act will ensure that small businesses in the cannabis industry can access banking and other financial services and keep their workers safe,” said Committee Chair Sherrod Brown (D-OH). “I look forward to passing this legislation with a bipartisan majority and bringing it to the Senate floor.”
Current banking regulations force cannabis businesses to operate in a very cash-heavy environment. They are often unable to process credit cards and access depository services.
SAFER Banking Act Federal Cannabis Policy Progresses
During the markup session, Senators offered multiple amendments. An amendment from Senator Raphael Warnock (D-GA) would have created a 5-year sunset/end for the legislation unless a report from the Treasury Department certified that it decreased the racial wealth gap and addressed the negative impacts of the War on Drugs. The amendment failed.
Senators Bill Hagerty (R-TN), Mike Rounds (R-SD), and Mike Crapo (R-ID) also offered amendments. But the Committee ruled them out of order, withdrawn, and failed.
National Organization for the Reform of Marijuana Laws (NORML) Political Director Morgan Fox praised the Committee for making progress.
“This bipartisan legislation represents an improved version of the SAFE Banking Act,” he declared. “It provides entrepreneurs with greater access to lending and other services that are available to other legal businesses.”
“The committee’s approval of the SAFER Banking Act gives hope to thousands of compliant, tax-paying businesses desperately trying to access the basic financial services other businesses take for granted,” said National Cannabis Industry Association (NCIA) CEO Aaron Smith.
“We commend Chairman Brown and the committee for taking up this important issue and urge them to move the SAFER Banking Act to a full Senate vote,” he added.
Bipartisan Congressional Cannabis Banking Policy Support
Cannabis advocates are hopeful the Senate will approve the SAFER Banking Act given its bipartisan support. 76 Senators, including 28 Republicans, represent states that regulate the sale of cannabis and/or medical or adult use.
“This morning’s successful markup of the SAFE(R) Banking Act is a historic step towards final passage of a critical policy building block for the cannabis industry. We are thankful to the Committee for including MCBA’s suggestions in the latest version of this bill,” Minority Cannabis Business Association (MCBA) President Kaliko Castille declared.
Their efforts have led to the inclusion of Community Development Financial Institutions (CDFIs) in the SAFER Banking Act. They have a record of lending to minority communities. So CDFIs can foster diversity and equity by helping minority entrepreneurs who have long struggled to secure capital.
SAFER Banking Act Progress
According to NORML in a survey last year by Whitney Economics, over 70 percent of participating cannabis businesses say that “lack of access to banking or investment capital” is their top challenge.
The National Conference of State Legislators, National Association of Attorneys General, National Association of State Treasurers, the American Bankers Association, Credit Union National Association, Independent Community Bankers of America, the NAACP, Americans for Prosperity, United Food and Commercial Workers Union (UFCW), and 20 bipartisan state governors have all endorse the SAFER Banking Act.
In addition, a diverse group of commercial and advocacy organizations, including the National Conference of State Legislatures, the American Bar Association, the NAACP, and the American Bankers Association, support it.
While it might pass the Democratic-controlled Senate if a great deal of effort is exerted, it and other pro-cannabis bills are less likely to progress in the Republican-controlled House of Representatives.
MORE ACT Fight Continues in House of Representatives
House Judiciary Committee Ranking Member Jerrold Nadler (D-NY), Representatives Earl Blumenauer (D-OR), Barbara Lee (D-CA), Sheila Jackson Lee (D-TX) and Nydia Velázquez (D-NY) reintroduced the Marijuana Opportunity Reinvestment and Expungement (MORE) Act (H.R. 5601).
The MORE Act is more interested in social justice than the SAFER Bank Act. It would make federal cannabis policy progress by decriminalizing it at that federal level. The bill aims to correct the injustices of failed drug policies that have disproportionately impacted communities of color and low-income communities. It would require resentencing and expungement of prior convictions.
The MORE Act also ensures that all benefits in the law are available to juvenile offenders.
“I am proud to reintroduce the MORE Act. As more states continue to legalize marijuana, we must change federal law to reverse failed policies criminalizing marijuana,” said Nadler.
Comprehensive Social Justice & Economic Policy
The MORE Act decriminalizes cannabis by removing it from the Controlled Substances Act (CSA). It would apply retroactively to prior and pending convictions and enables states to set their own policy.
The Act requires federal courts to expunge prior convictions, allows prior offenders to request expungement, and requires courts, on motion, to conduct resentencing hearings for those still under supervision.
It would impose a 5% sales tax on cannabis to create an Opportunity Trust Fund for three programs.
The Community Reinvestment Grant Program would provide services to individuals most adversely impacted by the War on Drugs, including job training, re-entry services, legal aid, literacy programs, mentoring, and substance use treatment.
The Cannabis Opportunity Grant Program would provide funds for loans to assist small businesses owned and controlled by socially and economically disadvantaged individuals.
The Equitable Licensing Grant Program would fund programs that minimize barriers to cannabis licensing and employment for individuals most impacted by the War on Drugs.
The MORE Act would also open up Small Business Administration funding for legitimate cannabis-related businesses and service providers.
It also provides protections for marijuana use or possession and for prior convictions for a marijuana offense.
It provides that the use or possession of marijuana, or prior conviction for a marijuana offense, will have no adverse impact under the immigration laws.
The Act requires the Bureau of Labor Statistics to collect data on the industry. They want to ensure that people of color and those “economically disadvantaged” participate in the industry.
Social Justice and Federal Cannabis Policy
“It is past time for the federal government to catch up with the majority of states who have legalized cannabis,” said Rep. Earl Blumenauer, Founder and Co-Chair of the Congressional Cannabis Caucus. “It is the gold standard, reflecting the concerns of businesses, researchers and impacted communities alike.”
The MORE Act is the only comprehensive cannabis reform passed by either chamber of Congress twice.
“Our federal cannabis laws are outdated and out-of-touch,” said Barbara Lee, Co-Chair of the Congressional Cannabis Caucus. “Cannabis is now a multi-billion-dollar industry. Yet Congress continues to lag behind. But we can’t just stop with decriminalization.”
“We need to pass the MORE Act as an important component of a broader effort to reform our drug laws, which disproportionately harm racial minorities and fuel over-policing and mass incarceration,” said Jackson Lee.
“Our communities of color have been over-policed by racially biased practices that have led to a disproportionate amount of unjust marijuana-related arrests,” said Velázquez, Ranking Member of the House Small Business Committee. “It is past time that we right the wrongs of the past by decriminalizing marijuana.”
The MORE Act has the support of a broad coalition, including the Leadership Conference on Civil and Human Rights, Drug Policy Alliance, NORML, Students for Sensible Drug Policy, Better Organizing to Win Legalization, Minorities for Medical Marijuana, and the Center for American Progress.
Biden Administration and Rescheduling
Last month, the Department of Health and Human Services (HHS) and the Food and Drug Administration (FDA) recommended President Joe Biden move cannabis from Schedule I to Schedule III status under the federal Controlled Substances Act (CSA).
The cannabis scheduling review process began last year on the orders of President Joe Biden.
Marijuana has been a Schedule I narcotic for about 50 years, while Cocaine is Schedule II.
In general, Schedule III controlled substances, like anabolic steroids, are FDA-approved drugs. The federal government regulates, and they are only legally available by prescription.
The HHS recommendation was sent to the Drug Enforcement Administration (DEA). It will conduct a separate review. The DEA has final authority to schedule or reschedule a drug under the CSA. In 2016, the DEA claimed that international treaties prevent cannabis from being lower than a Schedule II narcotic.
Advocates Unhappy with Schedule III Recommendation
“It will be very interesting to see how DEA responds to this recommendation. Given the agency’s historic opposition to any potential change in cannabis’ categorization under federal law,” NORML Deputy Director Paul Armentano said. “It is safe to say that this process still remains far from over.”
NORML has called for removing cannabis from the CSA, similar to tobacco and alcohol. It would resolve conflicts between state and federal cannabis policy and allow the state markets to flourish.
“Rescheduling the cannabis plant to Schedule III of the U.S. Controlled Substances Act fails to address this conflict adequately. Existing state legalization laws, both adult use and medical, will continue to be in conflict with federal regulations. Thereby perpetuating the existing divide between state and federal marijuana policies,” Armentano argued.
Ending Cannabis Prohibition and Protecting Small Businesses Necessary
“Moving cannabis to Schedule III simply re-brands prohibition. It doesn’t end it. This decision would lead to much-needed tax relief for some cannabis businesses. It would do nothing to remove criminal penalties that still continue to disproportionately impact minority communities,” said Castille.
“We urge President Biden to make good on his promise to end arrests for marijuana. Fully remove cannabis from the CSA. This is the only way to ensure equity, social justice, and economic opportunities in the cannabis industry,” he added.
Several cannabis industry experts have pointed out that it would help with some business and medical patient issues. However, some believe it would allow Big Pharma corporations to enter the industry. This would disrupt efforts promoting small businesses in the state-legal cannabis industry.
“A super-majority of Americans, including majorities of Democrats, Republicans, and Independents, support ending the federal criminalization of marijuana. (It) would not be accomplished under Schedule III,” BOWL PAC Founder Justin Strekal said. “For President Biden to truly fulfill his campaign promise to decriminalize marijuana, it must be removed from the CSA entirely.”
