The U.S. House of Representatives narrowly approved a $3 trillion coronavirus stimulus bill on Friday that includes provisions for cannabis banking, even as opposition to the measure builds in the Republican-controlled Senate.
The bill named the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act passed 208 to 199.
"House Democrats should take pride in the monumental accomplishment of passing The Heroes Act," House Speaker Nancy Pelosi (D-Calif.) said in a statement. "For now, please know of the overwhelmingly (sic) response I have received from across country for this legislation, which reflects the needs of the American people and allocates the resources to kill the virus and grow the economy."
Cannabis industry advocates hope the inclusion of cannabis banking provisions in a broader bill will increase its odds of passing through the Senate. The standalone Secure And Fair Enforcement (SAFE) Banking Bill, which seeks to provide a safe harbor for banks that service the cannabis industry, passed the full House of Representatives last September in a historic vote.
But Senate Republicans, led by Majority Leader Mitch McConnell (R-Ky.), seem to have made up their minds about some of the more ambitious asks in the HEROES Act, including cannabis protections.
"The bold new policy from Washington Democrats that will kick the coronavirus to the curb and save American families from this crisis, here it is, here it is: new annual studies on diversity and inclusion within the cannabis industry," McConnell said, mocking House Democrats in a speech on Thursday.
"Maybe it's best if House Democrats focus on cannabis studies and leave economics to the rest of us. This is a totally unserious effort," he added
Lobbyists and activists have been pushing for some sort of banking reform or financial relief for cannabis businesses to be included in coronavirus legislation. Although cannabis businesses have been deemed essential in many states, they cannot access federal aid, like small business loans and disaster relief. Amid the extraordinary conditions imposed by the pandemic, many of these businesses are struggling.
"The cannabis industry is getting hit with the same challenge everyone else is, but they don't have access to the funding that every other business has right now to continue to keep those people employed," said Keegan Peterson, founder and CEO of cannabis human resources management company Wurk.
Kevin Sabet, former White House Office of National Drug Control Policy advisor and president of the anti-cannabis group Smart Approaches to Marijuana, seized on blockbuster cannabis sales in the days leading up to lockdown measures across various states as evidence the industry doesn't need federal aid.
"Millions of small business owners across the nation have seen their livelihoods dramatically affected by this pandemic. Numerous industries have been forced to completely shut down and have made great sacrifices to comply with shutdowns and limitations on their business operations. The marijuana industry has been a painfully obvious exception to this. This industry has used its lobbying arm to force state officials to keep their storefronts open, sued leaders who shut them down, and bragged incessantly about their revenues," Sabet said in a statement.
But Peterson, who has had front row seats to the devastation the pandemic has wreaked on an industry already suffering after a challenging 2019, said it's more nuanced than that.
"[Cannabis is] an essential business, but that doesn't mean that cannabis revenues are going through the roof. I think there has been a false narrative. Cannabis companies in March had their highest day in revenue, they also had their lowest day of revenue," he said. "Folks are talking about the good things that are happening at this time, and they are not being as open about the challenging things that are happening."
The SAFE Banking Bill would permit banks to transact with cannabis businesses, offering up much needed financial products like loans, credit, and debt funding at a time when many cannabis businesses are struggling.
David Wenger, an attorney who sits on the board of cannabis company Body and Mind, said that access to these various products would be a "game changer" for cannabis companies. Wenger and his colleague, Jeff Schultz, now a partner at Feuerstein Kulick, penned an op-ed in MarketWatch last year urging lawmakers to amend SAFE Banking to include activities regulated by the Securities and Exchange Commission, too. A change like that would grant U.S. cannabis companies access to the U.S. capital markets, inject cash in a growth industry, and, they argue, would coax bigger banks to jump into business with the cannabis industry.
Regardless of whether Congress heeds their call to amend SAFE, they are supportive of wrapping the bill into a coronavirus stimulus package.
Cannabis industry advocates also argue that operating a cash-heavy business during the outbreak poses a health risk. Conflicting information on how long the novel coronavirus can live on surfaces and the likelihood of transmission from contact with infected items have prompted some businesses to shy away from cash altogether. In early March, the Federal Reserve even began quarantining bank notes received from Asia before releasing them back into circulation, according to the Wall Street Journal.
"If the Treasury is quarantining cash, someone in the federal government believes it is unsafe to be handling physical cash, which begs the question: why are they forcing — not permitting, forcing — the cannabis industry to use cash, when they know it's unsafe?" Schultz said.
For now, the fate of the $3 trillion "HEROES Act," which seeks among other things $1 trillion for state and local governments, relief for student loans, hazard pay for health care workers, and another round of stimulus checks, is tenuous.