Cannabis Rumors On Capitol Hill

Sources have confirmed that Senate Majority Leader Chuck Schumer is committed to trying to push through a more global legalization bill before pivoting to a smaller bill like the SAFE Banking Act.

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.

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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 (more on that below). 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).

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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.