Debra Borchardt
The latest twist for the SAFE Act, which would provide safe harbor to banks working with cannabis companies, is that it is now in the defense policy bill. Rep. Ed Perlmutter wanted to add the SAFE Act to the defense policy bill that Congress is expected to enact into law this fall. It is one of 812 amendments that were submitted to the House Rules Committee to be included in the defense bill, but most are actually related to national defense. It was approved by the House on a voice vote.
“This will strengthen the security of our financial system in our country by keeping bad actors like foreign cartels out of the cannabis industry. But most importantly, this amendment will reduce the risk of violent crime in our communities,” Perlmutter said on the floor ahead of the vote. “By dealing in all cash, these businesses and their employees become targets for robberies, assaults, burglaries and more.”
The language that is being put forward in the defense bill does not include capital markets access. That would mean that a new amendment would be needed and that seems unlikely. That means access to the exchanges would not improve.
Jaret Seiberg of Cowan & Co. wrote that he believes there are significant hurdles to this happening. Seiberg said that he thinks Perlmutter knows there is not another non-spending bill that will pass this fall and that the House often adds amendments to bills that it knows will become law. “We saw that last year with efforts to add the SAFE Act to other bills. It is rare for those amendments to survive in the Senate. Senate Banking has not approved the SAFE Act. It has not even held a hearing on the bill. That would make it highly unusual for it to get added to a broader legislative package.”
He went on to write, “We believe Democrats are not going to give up the capital markets issue without getting social justice measures added to the bill. And we don’t see how one puts social justice provisions on this package as that would then require an excise tax. And once there is an excise tax then you are addressing 280E. In short, this quickly goes from a small protection for banking to a controversial package that could sink the broader bill. Adding the SAFE Act to the defense bill would derail Senate Majority Leader Chuck Schumer’s broader push to legalize cannabis. Comments on his bill were due this month. We believe Schumer wants to keep momentum for his effort.”
In a similar vein, Stifel’s analysts also wrote that they don’t believe anything will happen with regards to the SAFE Act. They wrote in a recent report, “Senate Majority Leader Schumer (D-NY) said he is not interested in pursuing this piecemeal solution while Senator Booker said he would do everything in his power to oppose something “making the rich richer”. Some Democrats view this as only benefiting banks, and they are unwilling to give a “win” to the industry without restorative justice, which is a bridge too far for some Republicans. Federal decriminalization and expungement would accomplish very little, given minor drug cases are handled by the states.”
