Cannabis banking unlikely to pass Congress in lame-duck session

With six weeks left in 2024, Washington, D.C.-based cannabis lobbyists and federal marijuana reform advocates already have entered “wait until next year” mode.

Despite friendly signals from President-elect Donald Trump and unfinished business from an exiting Democratic majority in the U.S. Senate, there is little hope for long-anticipated bills such as cannabis banking reform to advance in the lame-duck session, according to marijuana lobbyists, advocates and industry players.

“Our position for most of this year is to not expect anything of the lame-duck” session, said Morgan Paxhia, a principal of cannabis hedge fund Poseidon Asset Management in San Francisco.

Before Election Day, there was some hope – and perhaps a chance – for Democratic Senate Majority Leader Chuck Schumer, who called the SAFER Banking Act for a committee hearing in September 2023, to enact the bill by attaching it to other must-pass legislation.

However, sweeping Election Day success by Republicans means congressional Democrats have other priorities between now and Jan. 3, 2025, the last day of the current Congress.

To-do list does not include cannabis

For one, Congress is on the hook to pass budget bills to avoid a government shutdown that looms Dec. 20.

And Senate Democrats are scrambling to complete a long to-do list, including judicial appointments, before yielding control of the chamber.

Some, including Sen. Cory Booker of New Jersey – an advocate of federal marijuana legalization – have said outright that banking is “not (a) priority right now.”

“They’ve been very candid about the fact there is a very limited number of legislative days to get their ducks in order before a new administration and new, unified GOP control of Congress comes in,” said Michelle Rutter Friberg, director of government relations at the Washington, D.C.-based National Cannabis Industry Association.

“The calculus has really shifted.”

Last week, Republicans selected U.S. Sen. John Thune of South Dakota as the next majority leader.

A longtime skeptic of marijuana legalization, Thune will replace outgoing Senate Republican Leader Mitch McConnell, another reliable obstacle to MJ reform.

In this environment, “I don’t see a world where something like SAFER Banking is such a priority,” said Shanita Penny, a senior vice president at public-advocacy firm Forbes Tate Partners, which represents major cannabis companies on Capitol Hill.

Even broaching marijuana banking with a stressed lawmaker could backfire on the lobbyist brazen enough to try it, she added.

“It makes you appear tone-deaf,” Penny told MJBizDaily.

Continued status quo in Congress

The continued status quo of limited banking options – and, with it, limits on investment – will frustrate operators in the $32 billion regulated U.S. marijuana industry heading into 2025.

Since the SAFER Banking Act had its first-ever Senate markup hearing, Schumer has declined to call the bill for a full hearing, saying on one occasion there was inadequate Republican support to bypass filibuster rules in the Senate.

That’s more than can be said about the House of Representatives, where neither House Speaker Mike Johnson of Louisiana nor his predecessor, U.S. Rep. Kevin McCarthy of California, called the bill for a hearing.

Previous sessions of the House, meanwhile, passed some version of banking protections multiple times.

Republicans’ turn

Paxhia points out that for all of their cannabis advocacy, Democratic lawmakers have not delivered solid federal reform for the regulated marijuana industry.

Meanwhile, Johnson – a staunch cultural conservative who voted against SAFE Banking and also opposed the marijuana research act signed into law by President Joe Biden – might turn out to be an obstacle should any desperate play emerge at the last second.

Johnson has said he wants a “clean” budget bill to keep the government open without a host of unrelated pet projects tacked on, noted Charlie Panfil, a public policy adviser with The Daschle Group who focuses on cannabis matters.

That means “there will not be many opportunities for primarily Democratic policy initiatives like SAFER Banking to be attached to what is supposed to be clean” government-spending legislation, Panfil said.

It also would mean industry advocates and players must look ahead to the Trump administration – or perhaps as far in the future as the next midterm elections – or to other means of advancing marijuana reform.

“I think it’s a question of, ‘Wait and see where Trump lands on it,’” Poseidon’s Paxhia said.

“But I do have some bit of anxiety to think about two more years in this industry without reform,” he added.

“We’ve already seen companies going bankrupt … I don’t know how that won’t continue by the time Congress can get something done.”

Chris Roberts can be reached at chris.roberts@mjbizdaily.com.