Cannabis crime wave boosts banking prospects on Capitol Hill

Jordan Brown, a 29-year-old budtender, was shot and killed on March 19 during his shift at World of Weed in Tacoma, Wash.

Joshua Chase, owner of Oakanna in Oakland, was shot in the foot in the early hours of April 24.

Brian Garcia, 28, was shot and killed less than two weeks ago in a dispensary in Los Angeles.

All three men were shot during confirmed or suspected robberies of cannabis shops. Industry officials and state lawmakers say crimes against those businesses have increased in recent years due to the large amount of cash they are often required to keep on hand, since federal restrictions discourage banks from doing business with them.

Exact numbers are difficult to pin down, but in Washington state alone officials say there were more than 50 armed robberies of cannabis stores in the first two months of 2022 — a greater number than in all of 2020 or 2021.

“The time for congressional dithering on this issue needs to end, because people are dying,” Washington State Treasurer Mike Pellicciotti said in an interview. “Robbers go where the cash is.”

Now, this wave of robberies and deaths may shift the outlook on Capitol Hill for legislation that would make it easier for cannabis companies to open bank accounts and apply for small business loans. Sen. Patty Murray (D-Wash.) — the third-ranking Senate Democrat — recently stated that cannabis banking is a top priority for her in negotiations over a China competition bill. The American Bankers Association and all 50 state banking associations cited public safety concerns in a recent letter to Senate leaders urging its inclusion.

“There's kind of growing momentum and interest,” said Sen. Jeff Merkley (D-Ore), a lead sponsor of the bill.

The recent spate of headline-grabbing robberies and deaths have highlighted the negative impacts of federal inaction, and spurred involvement from powerful lawmakers. Meanwhile, the delayed introduction of a federal decriminalization bill in the Senate — which would also fix the problem — has reopened the door for weed and banking. But the bill still faces a potentially fatal obstacle: Democrats’ insistence that it include social equity or criminal justice reform provisions alongside the banking legislation.

The House has passed the SAFE Banking Act six times in the past three years. Currently, it’s under consideration as an amendment in the House’s version of the COMPETES Act — also known as the China trade bill. Support for it has grown in the Senate, but the legislation has never made any progress in the chamber.

As the conference process begins in earnest, a bipartisan handful of Senators are pushing for its inclusion.

“I'm hoping to see it in the bill,” Sen. Steve Daines (R-Mont.) said. “We've got the Republican votes to get this passed.”

Shifting alliances

Murray and Daines are examples of the Capitol Hill shift on cannabis banking — and both were inspired by developments in their home state.

Murray, a long-time co-sponsor of the bill, said after violence at Washington's state cannabis shops increased that including it in the COMPETES Act is now a top priority for her. Her shift from supporter to champion is important because of the high rank and influence she has within Senate leadership. On April 20, an unofficial cannabis holiday, Murray held a press conference in Washington state to tout the SAFE Banking Act.

Daines, meanwhile, was not a co-sponsor of the bill in the previous Congress, but is now the lead GOP sponsor. Daines’ home state of Montana legalized adult-use marijuana in the 2020 election — which Daines credits with influencing his decision to sponsor the bill.

“The people of Montana decided they want to have it legal in our state, which is why I support the SAFE Banking Act,” Daines said last year. “It’s the right thing to do.”

Ideological tightrope

The SAFE Banking Act’s biggest barrier has arguably been the rapid rate at which American sentiment on cannabis policy has changed. In just a few years, the bill went from going too far for Republicans and some moderate Democrats to not going far enough for progressive Democrats.

In the last Congress, some Republicans argued that allowing banks to work with the cannabis industry was akin to giving tacit federal approval to the weed business. Then-Senate Banking Chair Mike Crapo (R-Idaho) gave it a sparsely-attended hearing, but never brought the bill up for a markup.

Now, in the current Congress, the bill is too conservative for some lawmakers. It gives banks access to a rapidly growing, multi-billion-dollar industry, but does not specifically address or provide relief for the people who have spent time in prison for selling the same product.

Sen. Cory Booker (D-N.J.), for example, signed on to co-sponsor the bill in 2018. But in late 2021, he said he would “lay myself down” in the Senate chamber to keep it from passing as part of the National Defense Authorization Act without including some sort of social equity or criminal justice reform provisions.

Republicans, meanwhile, have come around on the bill. The 2018 version of this bill had just four Republican sponsors. Now it has nine.

Devil in the details

Key Democrats, including Senate Banking Chair Sherrod Brown (D-Ohio), are still talking about adding provisions to the bill — something Merkley calls “Safe Banking ‘plus’.”

Here’s where it gets complicated, though: Even the Republican and Democrat co-sponsors of this bill are at loggerheads over adding anything to it.

“By itself, without any criminal justice enhancement, I think we’re still unlikely to be able to find success,” said Merkley.

But Daines says the opposite. “If Democrats start adding additional revisions, it's not gonna make it,” he stated.

When told about Daines' stance, Merkley smiled. "You see how difficult things become then," he replied.

And there’s another problem: The banking amendment doesn’t have a lot to do with a bill focused on competitiveness with China.

Yes, the cannabis industry is projected to be a $32 billion industry in 2022. But China doesn’t have a legal cannabis market for America’s industry to compete with. Republicans tend to oppose unrelated add-ons to big legislative packages.

In fact, Minority Leader Mitch McConnell has pilloried Democrats for adding cannabis banking to a litany of unrelated legislation.

“China has been steadily building up its military and economic might, and the Democrats’ answer is to help Americans get high?” McConnell said on the Senate floor in February.

COMPETES currently is a top priority for both Democrats and Republicans, and lawmakers on both sides are loath to derail it over something like access to banking for cannabis businesses.

“If it adds votes and doesn't take them away,” Sen. Dick Durbin (D-Ill.) responded last week when asked if he supports including weed banking in the COMPETES Act.

The second-highest-ranking Senate Democrat is a co-sponsor of the SAFE Banking Act, and his response indicates Democrats aren’t willing to jeopardize passage of the far-reaching package in order to fight for cannabis banking.

Other vehicles

If cannabis banking isn’t included in the conference report for the COMPETES Act, it isn’t the end of the story.

“There are other vehicles that are out there … other bills we could attach this to,” House Rules Chair Jim McGovern (D-Mass.) explained.

Rep. Ed Perlmutter (D-Colo.) — the House co-sponsor of this bill — is a member of the House Rules Committee, which gives him one final bit of leverage over the bill after the conference process concludes. He almost added SAFE as an amendment to the final version of the NDAA after negotiations concluded on the defense spending bill last year, until Speaker Nancy Pelosi talked him down. He’s said his style isn’t to “blow things up,” but his frustration is growing. If he decides to propose banking as an amendment to the COMPETES Act post-conference, that step doesn’t sit well with fellow Democrats.

“To amend it [after the conference process], it would have to go back over to the Senate,” McGovern pointed out. “Let's see if we can keep it in the COMPETES Act.”