Federal Cannabis Legalization Looks Unlikely, Democrats Hope For Deal On Banking

It appears the chances of federal cannabis legalization have moved from slim to none in recent weeks. Democrats, facing the reality of losing control of the U.S. Senate and possibly even the House of Representatives in November, are hoping to still put together a deal on cannabis banking, much as they tried to do in 2021.

According to Politico, which interviewed dozens of lawmakers, there’s little hope that decriminalization will happen in 2022, even though many leading Democrats – including Senate Majority Leader Chuck Schumer – have voiced support for it.  Instead, Democrats hope to get their Republican colleagues to agree on new regulations that will open the door for banks to provide financial services to cannabis companies.

It’s been an ongoing issue since legal sales first began almost a decade ago. It’s considered key to helping better establish the cannabis industry and combat the illegal drug trade.

Time Is Not on the Democrats’ Side

While elections can always offer surprises, most observers believe the Republicans will regain control of the U.S. Senate in the November elections. Some even believe they will regain control of the House. Democrats have the advantage in both chambers right now, with the slimmest of advantages in the Senate.

With only a few months left before the election, Democrats have shifted to promoting the Safe Banking Act, which would allow national banks to provide services for cannabis businesses. With marijuana still illegal at the federal level, banks typically do not provide these services. It’s left cannabis businesses having to deal primarily in cash, which is both inconvenient and a security risk.

Democrats hope to attach provisions to the Act that would include social equity and criminal justice provisions to the bill if it moves forward. “There’s a greater sense of urgency,” Rep. Earl Blumenauer, an Oregon Democrat and supporter of the cannabis industry, told Politico. “I think there’s a broader base of support.”

There’s Potential Problems For Cannabis Legislation

While many efforts  on marijuana have been bipartisan, Politico notes that support is not particularly strong in the GOP. Also, it’s unclear whether Republicans would support any additional measures beyond those involving cannabis banking, such as the social equity and criminal justice measures Democrats want to include.

The American Banking Association already has asked for Congress to provide “greater legal clarity” to banks operating in legal cannabis states. “The rift between federal and state law has left banks trapped between their mission to serve the financial needs of their local communities and the threat of federal enforcement action,” the association said in a news release.

Other attempts at making a change have sputtered out. At one point, lawmakers intended to make cannabis banking reform part of a Chinese competition package, but that is no longer the plan.

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