May 25, 2022

Volume XII, Number 145

Advertisement
Advertisement

May 24, 2022

Subscribe to Latest Legal News and Analysis

May 23, 2022

Subscribe to Latest Legal News and Analysis
Advertisement

Federal Cannabis Reform and SAFE Banking Act Receive Bi-Partisan Support

Long-anticipated federal cannabis reform may be on the horizon. In the last month, bipartisan governors and groups from both bodies of Congress have established support for cannabis policies that would reshape federal enforcement and set the stage for further state legalization. However, notwithstanding this support, Senate leadership has again rejected the Secure and Fair Enforcement (SAFE) Banking Act after being passed by the House, despite significant bipartisan efforts to pass the Act as part of the 2022 defense budget authorization.

GOP Representatives Introduce First Republican Decriminalization Effort

On November 15, 2021, Representative Nancy Mace from South Carolina introduced the first Republican-backed cannabis decriminalization bill, the States Reform Act, with support from four other Republican representatives.The bill would amend several existing laws, but most significantly would remove cannabis from the list of Schedule 1 controlled substances, effectively ending federal cannabis prohibition.

The bill defers to states to enact additional regulations but establishes some baseline federal policies. The cannabis market would be overseen by various existing federal agencies: cannabis growers by the U.S. Department of Agriculture, cannabis products by both the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Alcohol and Tobacco Tax and Trade Bureau, and all medical use by the Food and Drug Administration. A three percent excise tax would also apply to all cannabis products, and the tax revenue would in part support law enforcement initiatives, veterans’ mental health programs, and U.S. Small Business Administration (SBA) investment in cannabis businesses.

The bill lays out baseline federal protections for cannabis use, including banning discrimination against veterans who use cannabis in accessing VA benefits, and mandating that patients have access to medical cannabis to treat conditions such as arthritis, cancer, and chronic pain.

Although the new bill does not establish a federal age limit on cannabis use, it incentivizes states to implement their own limit by both prohibiting any advertising directed at individuals under 21 and withholding federal funds from states that permit cannabis use by individuals under 21.

In an effort to address the historical impacts of cannabis prohibition, the bill provides for the expungement of non-violent cannabis offenders’ federal records and requires the immediate release of any such offenders currently in federal custody. “Non-violent offenders” specifically excludes cartel members and agents, as well as those convicted of cannabis-related DUI’s. An estimated 2,600 federal inmates would be released. The release and expungements would not apply to state convictions, which would be left at the discretion of individual state legislatures.

While this broad federal decriminalization agenda is just getting off the ground in the House, its GOP-sponsorship may carry a greater likelihood of success at both the House and Senate level, where other, more progressive Democratic bills have failed.

Bi-Partisan Call for SAFE Banking Act to Be Included in Defense Bill Fails to Sway Senate

In the week prior to Representative Mace’s introduction of the States Reform Act, a bipartisan group of senators and governors sought to instigate additional cannabis reform in letters to Congressional leaders, imploring the Senate to finally pass the SAFE Banking Act.2

In the November 10 letter, 24 governors called on Congress to include the Act in the 2022 defense spending bill, the National Defense Authorization Act (NDAA). The long-awaited Act would establish protections for financial institutions and various other professional service firms that work with the cannabis industry, shielding them from any associated federal liability. The bill has had widespread bipartisan support since 2019, but despite passing the House five times it has yet to clear the Senate and reach the President’s desk. The most recent version of the bill passed the House as part of the NDAA in April 2021. In their letter, the governors assert that “[t]he cannabis industry is legal in some form in the majority of U.S. states and . . . [is] too large of a market to be prohibited from banking opportunities,” and further that “this is a public safety issue that Congress has a responsibility to address.”

Expressing similar support, a bipartisan group of Senators urged Committee Leaders to leave the Act in the defense bill in a November 23 letter, emphasizing that “[e]nacting the SAFE Banking Act via the NDAA would support a rapidly growing industry that creates jobs, supports small businesses, and raises revenue in states that have chosen to legalize cannabis.”

Despite this continued bi-partisan support, the Senate removed the Act from the defense bill at the beginning of this month, drawing significant criticism of Senate leadership from the Act’s sponsors, though they insist they will continue to pursue any opportunity to pass the bill.3 Although the SAFE Banking Act would not impact the ongoing federal cannabis prohibition, the law, if ever passed, would very likely buoy existing state legalization policies by significantly minimizing public safety risks and tax compliance issues for cannabis businesses.

FOOTNOTES

1 States Reform Act, 117 H.R. ___  (Nov. 15, 2021), available at.

2 RE: Secure and Fair Enforcement (SAFE) Banking Act Amendment to the National Defense Authorization Act for Fiscal Year 2022 (Nov. 10, 2021), available at Rosen Leads Bipartisan Effort to Ensure SAFE Banking Act Included in NDAA, Jacky Rosen U.S. Senator for Nevada (Nov. 23, 2021), available at https://www.rosen.senate.gov/rosen-leads-bipartisan-effort-ensure-safe-b....

3 Sam Reisman, Pot Banking Legislation Is Cut From Senate Defense Bill, Law360 (Dec. 7, 2021),

© 2022 ArentFox Schiff LLPNational Law Review, Volume XI, Number 355
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement

About this Author

Stephan Wazny Product Liability Attorney Schiff Hardin Law Firm
Associate

Stephan has litigation experience in the Product Liability and Mass Torts and White Collar Defense practice areas, gaining experience in drafting motions, responses, and briefs, and researching memorandums. He also has experience working with public interest and pro bono clients on bankruptcy and transactional matters. Steve is a motivated problem solver that dedicates himself to efficient, well-organized research to develop innovative solutions.

212.745.9554
Joel M. Wallace Patent & Trademark Lawyer Schiff Hardin Law Firm
Associate

Joel M. Wallace works primarily in intellectual property litigation, with significant experience in patent and trademark litigation and non-litigation analyses across a range of industries including pharmaceuticals, medical devices and consumer goods and services. As part of his practice, he regularly prepares Hatch-Waxman Paragraph IV letters, advises clients on patent and regulatory issues, and advocates for clients in litigation, including fact discovery, expert discovery, trial, and appeal. Joel also has experience in post-grant review practice before the PTO,...

312.258.5619
Advertisement
Advertisement
Advertisement