WASHINGTON — Canadian cannabis companies and their investors cheered a Senate committee's decision Wednesday to push forward with measures designed to ease federal financing restrictions on their U.S. counterparts.
Executive members of the Senate banking committee voted 14-9 to send the SAFER Banking Act for a full vote on the Senate floor, although it was not immediately clear when that vote would take place.
The bill is just the latest iteration of multiple bipartisan efforts over the years to make it easier for cannabis companies that operate legally under state laws to access federally regulated financial services.
Advocates say the bill would make the industry, much of which is forced to operate on a cash-only basis in the U.S., safer and less prone to money laundering, tax fraud and armed robbery.
"A cash economy is great if you're a criminal. It's great if you want to rob stores," said Sen. Jeff Merkley (D-Ore.), one of the bill's co-sponsors and a longtime champion of cannabis finance reform.
During one particular 12-month period in Oregon, Merkley said, 153 separate robberies were reported — "basically one every other day" — by cannabis workers who were targeted because they might be carrying large sums of cash.
"None of these robberies had to happen if we weren't in a cash world. And it's not just Oregon, it's happening in every state that has the cash economy."
Canadian industry players, however, have been awaiting reforms for a very different reason: the prospect of unfettered expansion into a market 10 times the size of the one they have at home.
Wednesday's vote "represents a milestone for cannabis reform in the United States," said Omar Khan, senior vice-president of corporate and public affairs for Calgary-based retailer High Tide Inc.
"If passed into law, this bill will provide further legitimacy, improve employee and customer safety, and offer much-needed guidance for commerce."
Ontario-based Canopy Growth has been gradually laying the foundation for a foothold in the U.S. market while waiting for the laws to change, which is not a matter of if but of when, said CEO David Klein.
"Regulatory change will continue to be implemented incrementally," Klein said in a statement.
"Our novel Canopy USA strategy provides us with a U.S. platform of leading brands with exposure to the fastest growth markets now, while remaining poised for growth and a fast start following a federal permissibility event."
Cannabis stocks on both sides of the border spiked briefly over the course of the hearing before settling back down to more modest levels — a reflection, perhaps, of the challenging political realities on Capitol Hill.
Members of Congress are currently seized with yet another spending stalemate with the White House, with the prospect of a federal government shutdown looming past Saturday's funding deadline.
High Tide is also keen to see cannabis removed from Schedule 1 of the Controlled Substances Act, where it resides alongside heroin, LSD and ecstasy as a drug "with no currently accepted medical use."
That's another long-awaited step that the U.S. Department of Health and Human Services publicly recommended taking just last month, following a review ordered last October by none other than President Joe Biden.
High Tide wants the U.S. Drug Enforcement Administration to expedite its review of that recommendation, which would move cannabis to Schedule 3, a category of "moderate to low potential" for abuse.
Doing so would clear the way for cannabis producers — so-called "plant-touching" businesses — to be listed on major North American securities exchanges, Khan said.
"It's our goal to become one of the top five multi-state operators in the U.S., once regulations permit."
The bill is also designed to prevent federal banking regulators from acting like "moral police" who can deny financial services to organizations "because they simply don't like the business that they're in," Merkley said.
That pitch seemed to resonate with Republicans on the committee, several of whom made the argument that gun manufacturers and oil and gas companies would also benefit from similar protections.
In Wyoming, marijuana has never been legal for either recreational or medical use, but that shouldn't be a barrier to legalized activity in other states, such as neighbouring Colorado or Montana, said Sen. Cynthia Lummis (R-Wyo.).
"I like the way Wyoming is now; I don't support legalization of marijuana," Lummis said.
"I don't want other states telling us that certain economic activities should be verboten if they exist now. ... The main reason I support this legislation is because it takes a major step towards ending the banking industry being weaponized."
The National Cannabis Industry Association called Wednesday's vote an important step that bodes well for the bill becoming law, given that 76 U.S. senators, including 28 Republicans, are from states that regulate the use of cannabis.
It "gives hope to thousands of compliant, tax-paying businesses desperately trying to access the basic financial services other businesses take for granted," said Aaron Smith, the association's CEO.
"This uniquely bipartisan legislation has the potential to save lives and help small businesses; it's time for Congress to get it to the president's desk without further delay."
Not everyone is as enthusiastic.
Georgia Sen. Raphael Warnock (D-Ga.) registered some of the loudest complaints during Wednesday's hearing, saying the bill is focused on all the wrong aspects of the legacy of America's 50-year-old war on drugs.
"I'm not opposed to easing or undoing federal restrictions around cannabis," Warnock said. "But this bill, I would argue, will make things worse. It will set the terms for a step backwards — backwards in the pursuit of equity and justice and safety."
Warnock wants the legislation tied to broader reforms, such as expunging criminal records for cannabis convictions and investing in lower-income communities that have been unjustly targeted over the course of the last half-century.
While cannabis use in the U.S. tends to be evenly divided between white and Black Americans, the latter group is "nearly four times more likely than white Americans to be arrested," he added.
"This bill will make life safer for bankers, for businesses and financial institutions, some of whom have been profiting from the cannabis industry illegally for years," Warnock said.
"Which is ironic, given many of the regular folks who illegally sold or used cannabis are sitting in jail cells right now."
Senate Majority Leader Chuck Schumer (D-N.Y.) has vowed to bring the bill to a quick vote, along with provisions to speed the state expungement process and to lift restrictions on gun ownership for legal cannabis users.
This report by The Canadian Press was first published Sept. 27, 2023.
James McCarten, The Canadian Press