Marijuana industry spends millions lobbying as shutdown threatens SAFE Banking

August 8, 2023 · MJ Biz Daily

The cannabis industry continues to spend millions of dollars on high-powered lobbyists to sway U.S. senators to pass marijuana reform, but those efforts could be thwarted this fall by a government shutdown that threatens to upend Congress’ legislative calendar.

U.S. marijuana companies and trade groups spent more than $2.4 million lobbying the U.S. Senate in the first half of 2023, according to the most recent federal lobbying disclosure filings.

That’s less than the $2.9 million spent on trying to woo the Senate over the second half of 2022, including the lame-duck session when cannabis banking reform seemed tantalizingly close.

Still, this year’s dollars have been funneled to influential lobbying firms stocked with Capitol Hill veterans, including a former Democratic Senate majority leader and a former top aide to President Joe Biden.

While some companies have curbed spending or canceled contracts entirely given the economic and financial headwinds battering the industry, other firms have come to grips with the reality that a lobbying outlay is the cost of survival.

Yet, so far, the results have been frustratingly familiar: Popular, long-sought-after reform measures including guaranteed access to banking and more ambitious goals such as rescheduling still remain just out of reach, if frustratingly close.

As lawmakers head home to their districts for the August recess, the SAFE Banking Act’s chances of passage in President Biden’s first term remain alive – for now.

But the odds of passage will steadily dwindle without the passage of vital spending bills, according to congressional aides and Capitol Hill lobbyists.

“As we get later in September, if that’s not getting done, this could be a real problem,” said one cannabis industry lobbyist who requested anonymity in order to speak freely.

“A government shutdown would suck all the air out of the room.”

Shutdown looming

Congress’ main concern after reconvening on Sept. 5 will be to pass necessary spending bills to avoid a government shutdown on Oct. 1.

Triggered when Congress can’t pass spending bills, a shutdown is a major disruption that, as of now, looks likely, as the Brookings Institution, a Washington DC-based think tank, recently observed.

The longer Congress goes without a spending deal in place, the less time there will be on legislative calendars for other business.

That includes the SAFE Banking Act receiving its long-promised Senate Banking committee markup hearing, the prerequisite before a vote on the full Senate floor.

That’s the “regular order” process that advocates promised would happen this year.

SAFE Banking did make history this spring by getting a mid-May informational hearing.

A markup hearing, in which amendments are introduced and debated and the bill potentially altered in a public forum, was promised this summer, first in June and then in July.

But bipartisan squabbling over the bill’s final form – as well as a desire to secure more Republican co-sponsors to ensure SAFE Banking has the necessary 60 votes to bypass cloture – led to the Senate adjourning for August recess without that hearing.

Additional requests from companies that already have bank accounts are further complicating the picture.

Lobbyists for publicly traded cannabis companies have proposed adding language to SAFE Banking that would allow access to major U.S.-based exchanges, such as the Nasdaq.

Most cannabis multistate operators currently trade on the smaller Canadian Securities Exchange.

However, most Washington observers agree the major sticking points for such a proposal remain anti-money-laundering language as well as whether SAFE Banking can secure enough Republican co-sponsors to guarantee passage on the full Senate floor.

And lobbying records confirm the obvious: Though federal rescheduling and, eventually, a nationwide legal industry like Canada’s remain on the wish list, SAFE Banking is the marijuana industry’s top priority.

The marijuana “industry appears to be exclusively focused on SAFE to the exclusion of everything else, and, therefore, the members are responding accordingly,” said Don Murphy, a veteran Washington DC lobbyist and director of government relations for the Texas-based Marijuana Leadership Campaign.

Until SAFE passes, “nothing else,” such as rescheduling, “will have any juice,” he added.

“After all, if Congress can’t pass even the smallest of incremental reforms like banking, what hope is there for comprehensive reforms?”

Meanwhile, the Biden administration’s review of marijuana’s status under the Controlled Substances Act continues in the background, though it’s generally accepted on Capitol Hill that necessary reform will have to come from Congress.

And with SAFE Banking having repeated success in the House of Representatives but being stymied in the Senate, most attention has shifted to the Senate.

Top dollars

Marijuana industry spending reflects these priorities, as well as the issue’s urgency and the need to curry favor with well-connected Washington power players.

New York-based Curaleaf Holdings was the marijuana industry’s top spender on Capitol Hill with a reported $450,000 worth of lobbying activity, according to the most recent quarterly Lobbying Disclosure Act forms filed in late July.

The company paid for its in-house lobbyist, Matt Harrell, and also retained Denver-based Brownstein Hyatt Farber Schreck, one of the nation’s largest lobbying firms, according to records.

Ohio-based Scott’s Miracle-Gro reported spending $400,000 in 2023, with $180,000 of that spent on DC-based BGR Group’s government affairs team and another $100,000 on Brownstein.

Cresco Labs spent $250,000, hiring both Brownstein as well as DC-headquartered Putala Strategies, whose principal, Chris Putala, is a former Senate aide to President Biden.

Cannabis companies were also represented by dedicated DC-based advocacy groups, including:

  • The Coalition for Cannabis Policy Education and Regulation, or CPEAR, whose funders include tobacco giant Altria Client Services. CPEAR spent $340,000.
  • The National Cannabis Roundtable, which reported spending $330,500.
  • The U.S. Cannabis Council, which spent $210,000.

Advocates and critics both point out that the marijuana industry’s spending on crafting friendly federal policy, while far and above past years, still pales in comparison to the cash splashed by entrenched special interests such as defense contractors and pharmaceutical companies.

“Markets are bad. There’s price compression. All the capital’s dried up. But we tell our counterparts: We know business is bad, but it’s either give up or get to DC,” John Sullivan, the chief lobbyist for Chicago-based Cresco Labs, told MJBizDaily in a phone interview.

“This is the only way to fix it.”

Dead after Christmas?

If Congress can quickly come to terms on a spending bill in September, that likely would allot plenty of time for a SAFE Banking markup hearing and vote in the Senate, said Reggie Babin, a former top aide to Sen. Chuck Schumer and now senior counsel at DC-based Akin Gump Strauss Hauer & Feld, another well-connected law firm retained by marijuana companies to represent their interests.

“I’ve always pointed to October as the most likely window to carve out a couple of weeks” for SAFE Banking, Babin told MJBizDaily in an interview.

“But that could be complicated if there’s a shutdown that costs you legislative days in the fall.”

If October passes without that hearing, there’s a definite time crunch.

Though some prominent voices such as Curaleaf chair Boris Jordan have said that early 2024 is a good time to pass SAFE Banking, several cannabis lobbyists speaking on background agreed the bill’s chances are greatly reduced if there’s no vote before the end of this year.

Curaleaf did not provide comment by the deadline for this story.

There’s also some feeling on Capitol Hill that marijuana reform is a mostly Democratic Party issue, meaning Republicans might be loath to contribute to what could be seen as a Democratic win in a presidential election year, one lobbyist said.

Also this fall, the industry should see the reintroduction of some more ambitious marijuana legislation such as the States Reform Act championed in past sessions by Rep. Nancy Mace, a South Carolina Republican.

That bill, which legalizes marijuana at the federal level but delegates many regulatory powers to individual states, could reappear in Congress as soon as next month, a Mace spokesperson said.

However, most of the attention and resources will continue to be spent on SAFE Banking, though the looming government shutdown is the main obstacle that’s out of the marijuana industry’s control.

And the longer SAFE Banking lingers in committee, the less likely any other reform remains. (Full Story)

In categories:Banking Politics
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