Hooray, Congress is going to pass cannabis banking legislation any day!

Oh Virginia, I feel like I’m telling you that Santa Claus isn’t real, but now that the Motley Fool has come out and said it, it’s not like I’m the first to break your little hearts.  And with Christmas AND Hanukkah on the horizon to boot…

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If you’re not familiar with the MORE Act – introduced back in the summer by Rep. Jerry Nadler (D-N.Y.) and Sen. Kamala Harris (D-Calif.), let me take a hot minute and fill you in on it.  The technical name for it – Marijuana Opportunity, Reinvestment, and Expungement Act – is shortened to the MORE Act for practical purposes, although we can pretty much be sure it’s the no more act when it gets to the Senate. 

Let’s tally up the votes for this thing.

Don’t get too far ahead of yourself, grasshopper.  Earlier in the year, the Secure and Fair Enforcement (SAFE) Banking Act passed the House by a vote of 321 to 103; this is another bill that deals with legitimate banking for the cannabis industry, at least in states and jurisdictions where we have regulated and compliant businesses. 

Nothing in this piece of legislation actually takes cannabis products off the Schedule I or any other FDA/DEA list.  This one just says that it’s likely better to let cannabis industry businesses put their money in the bank so the government can legally steal it using 280E or other structured means to tax the industry right out of profitability. 

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So what’s the difference in the two bills?  Excellent, I thought you might never ask.  The MORE Act goes well beyond anything the SAFE banking provisions were ever concerned with, and the bill is about social justice and clearing up the criminal records of those who were disproportionately affected by the fact that marijuana has been an illegal drug for the past 90 years or so. 

If cannabis were removed as a Schedule I drug, then it would also mean that all those 280E taxes would fall by the wayside.  Not a bad thing for the cannabis industry, but certainly no moneymaker for the government entities that collect those extra taxes because of the scheduling situation. 

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Alright, we’ve got taxes and expungement of criminal records on a very large scale as potential pitfalls from the other side, but we also have a majority of Americans who think that it’s time to stop treating cannabis as if it were heroin or other truly dangerous drugs.  Where does that leave us with the cannabis banking legislation situation?

Same guy, same Senate, same story. 

Without going into the politics of the entire scene – although it’s pretty obvious that the majority of Democrats, especially those running for office in 2020, seem to be in favor of loosening the regulations on cannabis production and distribution, the pivot point in the Senate is Mitch McConnell.  And this guy is in no hurry to see anything related to the Devil’s Lettuce hit the streets in a more legal way than it does right now. 

Even if it were to come to a floor vote in the Senate, it’s still not clear that there are enough votes to pass the law.  The Democrats could vote as a unanimous block – not all that likely, when you look through the list of Senators who would be voting – and still not have enough votes to pass the bill.  There’s also no guarantee that the bill would get a presidential signature and become law.  

The Fresh Toast also agrees with our conclusion; mainly for the exact same reasons – McConnell and the potential vote count.  We also have to look at possible Dem frontrunner – Biden – who has stumbled his way through the no’s and yes’s of the issue, depending on which way the wind is blowing.  Bloomberg (good grief, no, just no) is also a candidate who has no love for cannabis.  If either of these guys were to win, then you can pretty much bet that cannabis banking legislation isn’t going forward any faster than a snail’s pace into the next quad. 

No banking legislation, then what?

So the likely scenario is that we keep pushing along in the current state of things.  This isn’t necessarily a bad thing for the industry, so don’t wring your hands and weep just yet.  There are many ways that decriminalizing or legalizing cannabis federally could upend the apple cart and put the vast majority of small businesses in the space right out of business.  Yes, it sucks that we’re still nowhere on banking, but it’s still a good thing that everyone has a chance, albeit a slowly slimming one, of getting ahead in the industry under the setup we have today. 


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