The saga of cannabis legalization at the federal level is
ongoing, as the Democratic-controlled House of Representatives
continues to pass sweeping legalization bills that (to date) have
gotten little traction in the divided U.S. Senate. (Link). The result has heightened
speculation throughout the cannabis community, as activists,
entrepreneurs and those with cannabis convictions wait for the
federal government to act. And while it's impossible
to say precisely what a final cannabis-reform bill will look like,
those in the know (like the publishers of an unidentified
cannabis-newsletter, for example) have gleaned some interesting
things from the smoke signals coming from Capitol Hill.
Chuck Will Have a Lot to Say
As Politico recently wrote, "Chuck Schumer really likes to
talk about weed." (Link). Indeed, cannabis reform has
become the cause celebre of the senior Senator
from New York, as he continues to advocate for a sweeping
legalization bill that could include everything from criminal
justice reforms to provisions allowing plant-touching companies to
access the U.S. capital markets. Leaflet sources have
confirmed that Schumer will be the gatekeeper of what ultimately
goes to the floor (at least for now) and that he's committed to
trying to push through a more global legalization bill before he
will pivot to a smaller bill like the SAFE Banking Act.
Schumer sees budget reconciliation – the bureaucratic
process by which congress often passes budget-related legislation
– as a potential vehicle for his preferred cannabis
legalization bill and plans to bring his bill to the floor within
the next few weeks. The draft bill itself may be
released in the coming days and is likely to begin its legislative
journey with the Senate Finance Committee chaired by Washington
Senator, Ron Wyden. If the bill fails (as many within
Schumer's own camp expect that it will), Schumer will likely
pivot to Plan B – the SAFE Banking Act.
The Votes (May) be there for SAFE Banking
The SAFE Banking Act passed the House in May 2020 and would
prohibit federal regulators from penalizing financial institutions
for doing business with state-legal cannabis
businesses. It could also solve the cannabis
industry's Section 280E problem (check out our piece on that
above if you missed it). (Link). Several senators within the
Democratic caucus have made it clear that eliminating Section 280E
is of particular importance, and the version of the SAFE Banking
Act passed by the House provides that revenues of a state-legal
cannabis business are not the
proceeds of an unlawful activity – allowing cannabis
companies to take all the same ordinary business deductions their
counterparts in other industries can take. However, some
Capitol Hill insiders are skeptical that this particular provision
of the House version has the necessary votes in the
Senate.
That said, Leaflet sources have indicated that there may already be
enough votes in the Senate to pass SAFE Banking in some
form. And while this might leave some in the industry
disappointed, it would nevertheless be a substantial step forward
in the fight for increased (if not outright) cannabis
legalization. It could also set the table for a more
comprehensive cannabis bill in the months and years to come.
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