Why Are Democrats Blowing It On Marijuana?

Earlier this month the House and Senate passed the National Defense Authorization Act (NDAA), a bill that funds the Department of Defense and U.S. Military.  Normally, this would be of little interest to those who care about marijuana policy.  But this year, the hopes of many cannabis advocates and industry participants were raised when language that would allow cannabis businesses access to the banking system was included in NDAA bill that passed the House a month earlier.

Despite this optimism, the final version of the NDAA passed by the House and Senate did not include the cannabis banking language, leaving cannabis businesses to continue to operate without access to basic banking services and institutional lending, services that are available to every other industry in the country.  This happened despite the fact that support for banking access is largely bipartisan, with many Republicans having signed on to similar legislation, and the banking industry weighing in with strong support for passage.

As we near the end of 2021, the unified government in Washington, D.C. that the Democratic Party controls has not passed a single meaningful piece of cannabis reform legislation.  When the Democrats won control of the Senate following the contentious Georgia election, many industry observers believed that passing banking reform was the lowest hanging fruit for the new Congressional session.  But infighting among Democrats and their allies have led to the current impasse in D.C. on marijuana policy reform.

The failure to pass cannabis reform doesn’t come from a lack of support among elected Democrats, but rather infighting among the caucus about what reform they should prioritize and how to pass it.  A rift has emerged among both Democrats and the advocates who support the issue on prioritization and strategy.

Nowhere is this more apparent than the ongoing debate about banking reform vs. full legalization.  Many in the advocacy community and on Capitol Hill understandably want the Democrats to go all in on full legalization. Organizations like the ACLU and the Drug Policy Alliance, and high-profile Senators like Cory Booker, Ron Wyden and Majority Leader Chuck Schumer have made it clear that they will not accept banking reform at the expense of full legalization.

As someone who has spent my life advocating for cannabis legalization, it is hard not to be sympathetic to this position.  The Democrats have a two-year window with unified control of the federal government, and given that support for legalization nationwide is approaching 70%, and over 80% among registered Democrats, there is no reason the party shouldn’t push for full reform.

Yet even with overwhelming support for legalization among the general public, the path to comprehensive reform in the United States Senate is challenging, if not impossible, given the current make-up of the chamber.  The current filibuster rules effectively require 60 votes to pass anything through the Senate, and there is currently no chance of getting 60 Senators to vote for comprehensive reform.

With the chamber split 50 – 50, Democrats would need every member of their caucus to vote in favor and be joined by 10 Republicans.  To date, only Republican Sen. Rand Paul has expressed support for cannabis legalization, and it is difficult to see the libertarian leaning Paul going along with the kind of tax rates proposed in Sen. Schumer’s yet-to-be-introduced Cannabis Administration and Opportunity Act, let alone its racial justice provisions.

It is theoretically possible that Sen. Schumer could push to pass legalization through reconciliation, which would only require 50 votes.  But reconciliation can only be used once or twice a year, and it is hard to fathom Schumer using the process for something like marijuana reform at the expense of one of the President Biden’s major policy priorities.

Even if Senate Democrats could figure out a way to call a vote on a legalization bill that would only require 50 votes to pass, there is no indication that there are currently 50 Senators in favor.  For all the excitement around this issue, many Senate Democrats remain opposed or undecided.  Just this year Sen. Jeanne Shaheen of New Hampshire stated, “I don’t support legalizing marijuana” while Sen. Jon Tester of Montana said legalization would “cause more problems than it solves.”  Senators Joe Manchin (D-WV), Bob Casey (D-PA), and Mark Kelly (D-AZ) have all stated they are undecided on federal legalization.

With no current path to full legalization, many cannabis reform advocates turned their attention to the SAFE Banking Act as the most achievable reform in the current Congress.  Representatives Ed Perlmutter of Colorado and Earl Blumenauer of Oregon, both staunch supporters of full legalization, have been pushing Congress to pass SAFE Banking as a pragmatic approach in the current political environment.  Before the passage of the NDAA, a bipartisan group of Senators on the Senate Armed Services Committee including Jacky Rosen (D-NV), Gary Peters (D-MI), Angus King (I-ME), Kevin Cramer (R-ND), and Mark Kelly (D-AZ) sent a letter to Majority leader Schumer urging him to include SAFE Banking in the final version of the NDAA.

Yet Sen. Schumer and other allies have refused to budge on their insistence that Congress pass full reform before taking up banking or other incremental reforms.  They have backing from important interest groups like the ACLU and the Drug Policy Alliance, the latter of whom sent an action alert to their thousands of email subscribers asking supporters to lobby their members of Congress not to pass banking reform because it doesn’t address the racial injustices of marijuana prohibition.

This infighting is leading to natural allies on this issue finding themselves as political opponents.  For example, while the Drug Policy Alliance actively lobbied to kill marijuana banking reform, the Minority Cannabis Business Association, which represents black and brown owned cannabis businesses, has been advocating for the measure’s passage, making the case that minority owned cannabis businesses currently have the least access to capital and are disproportionately subject to predatory lending and management agreements that effectively strip black business entrepreneurs of their ownership or leave them as figureheads for mostly white well-heeled investors.

While the Democrats fight over the issue and effectively maintain the status quo through their inaction, some Republicans are starting to take action of their own that could eventually lead to them reaping the political rewards that will come from legalization from a Democratic party that has every opportunity to own this issue, and its supporters’ votes, for years to come.

Last month Rep. Nancy Mace (R-SC) introduced the States Reform Act, the first ever Republican authored comprehensive bill to legalize cannabis at the federal level.  And there is a lot for advocates to like in Rep. Mace’s bill.  The States Reform Act sets a 3% excise tax on cannabis businesses, compared to the Sen. Schumer’s proposed tax rate that maxes out at 25%.  Mace’s bill would recognize all existing state licensed cannabis businesses as legal under federal law, as opposed to having to go through a potentially costly and lengthy federal licensing process as contemplated in Sen. Schumer’s legislation.  

Rep. Mace’s bill would also put cannabis regulation in the hands of the Alcohol and Tobacco Tax and Trade Bureau (TTB), effectively treating marijuana like alcohol as many activists have long advocated.  This is in stark contrast to Sen. Schumer’s proposal which would give regulation of cannabis to the Food and Drug Administration, treating cannabis more like tobacco and subjecting it to a regulatory approval process that would favor large well-capitalized companies and could put most small cannabis operators out of business.

While the States Reform Act does not go as far as the Cannabis Administration and Opportunity Act when it comes to social equity and licensing for impacted communities, it goes a lot further when it comes to criminal justice reform and expungement that have a disproportionate impact on communities of color.

While this bill does not yet have the backing of Republican leadership, the fact that a conservative Republican military veteran has taken the mantle on this issue could lay the foundation for what Republican led legalization could look like in the near future.  

After all, it is widely expected that Republicans will take back the House of Representatives, and possibly the Senate, in the 2022 mid-terms.  While GOP leadership in Congress has not yet come around on this issue, they can read polling as well as anyone else and surely understand that this is a winning issue across the political spectrum.

Democrats have never had a better opportunity to own the cannabis reform issue and its political spoils.  But their window to take advantage of the issue and pass meaningful legislation, whether the bi-partisan supported low hanging fruit of banking reform and record expungement, or broader comprehensive reform, will likely close in only one year.   Should the Democrats fail to take advantage of this opportunity, they may find themselves ceding the political benefits of this issue to the other side of the isle for a generation.