Cannabis News of Note for the Week:
Punchbowl News AM (12/19): 2023 was a great year for bank legislation and also, a terrible one (newsletter, text below)
Politico Pro Cannabis (12/18): Retired Law Enforcement, Military Now Protecting Weed Shops (paywalled newsletter, text below)
Cannabis Reports of Note for the Week:
Punchbowl News Special Edition Canvass Year End (12/19): What Capitol Hill and K Street leaders do — and don’t expect — in 2024
Throughout the year, we’ve asked leaders on K Street and Capitol Hill about their outlook for the 118th Congress. Expectations have remained low — not entirely surprising for a divided government.
The year is over, but this Congress is only just hitting its halfway point with the whole of 2024 to go. We’d like to highlight from our final surveys of the year what K Street leaders and senior Hill staffers expect — and don’t expect — from a Congress so far mired in extraordinary dysfunction and intraparty fights.
While there’s little to boast about legislatively this year, 2024 is a crucial election year with control of the House, Senate and White House all up for grabs. That means it’s unlikely Congress will do much next year beyond funding the government. But we’ll see.
Impeachment: House Republicans voted on Dec. 13 to open an impeachment inquiry into President Joe Biden. A final impeachment decision could come early next year. But the Canvass community has consistently warned that’s a risky move for Republicans. At least 65% of Hill staffers and 72% of K-Streeters said it could hurt Republicans in the 2024 election.
Ukraine and border funding: Ukraine and the U.S.-Mexico border have little in common, but they’re now intertwined in a tenuous legislative battle. Republicans have grown increasingly hostile to the idea of sending more money to Ukraine and insist any negotiations must include restrictive border policy measures.
Still, 78% of top Hill aides say Congress will eventually pass funding for border security. And 64% of congressional staffers say lawmakers will approve additional aid for Ukraine.
Senate Majority Leader Chuck Schumer already scrapped the chamber’s holiday recess plans while negotiators continue to try to find an agreement. But a deal is unlikely before the end of the year. And then the real hiccup will be at the GOP-run House.
Bank CEO clawback pay: The bank failures earlier this year prompted a flurry of legislative proposals. That included the Senate Banking Committee’s RECOUP Act, introduced by Sens. Sherrod Brown (D-Ohio) and Tim Scott (R-S.C.). The bill would strengthen the power of financial regulators to claw back the pay of bank executives when their financial institutions fail.
When asked about the bill’s prospects in this Congress in June, 61% of senior Hill staffers and 55% of K Street said they don’t think the proposal will become law.
The RECOUP Act cleared the Senate banking panel on a nearly unanimous vote in June. The Senate could vote on it next year, but the GOP-controlled House isn’t in a hurry to take it up. Still, retiring House Financial Services Committee Chair Patrick McHenry (R-N.C.) has made clear he’s open to dealmaking in 2024.
Cannabis banking: Measures to allow financial institutions to extend their services to legal cannabis businesses remain in limbo. There’s plenty of bipartisan interest in cannabis banking legislation, but most K Street leaders (61%) and senior Hill staffers (55%) believe it is unlikely the 118th Congress will pass the SAFER Banking Act.
The bill cleared the Senate Banking Committee in September with bipartisan support, a major victory for the cannabis industry and the financial sector. But it’s still likely to face some roadblocks. It hasn’t passed the Senate yet, for one. Getting a vote in the House isn’t a sure thing under the ultra-conservative Speaker Mike Johnson, either.
Artificial intelligence: Most Hill staffers (63%) believe it’s important for Congress to pass legislation to curb the risks of AI. And several lawmakers, including Schumer, have called for urgent action to mitigate cyber and AI-driven meddling in the 2024 elections.
Despite the urgency, just 21% of K Street respondents think this Congress will act on AI. This is somewhat surprising because congressional leadership has prioritized learning more about AI this year, and lawmakers have introduced a long list of bills in 2023 to regulate the technology.
An executive order Biden signed in October setting new rules for AI and privacy guidelines for federal agencies could provide a blueprint for Congress.
Punchbowl News AM (12/19): 2023 was a great year for bank legislation and also, a terrible one
December is always a good time to reflect on the year in banking policy. Was it a good year for financial services legislation? Yes, we’d argue.
Was it also a terrible year? Yes.
Hear us out: We think 2023 was great for the actual development of financial policy. Overlapping crises from across the U.S. economy and the globe pushed lawmakers to weigh significant changes to the laws undergirding our financial system, whether that was the spring’s miniature banking blowup or the year-long crypto winter.
The Senate Banking Committee, chaired by Sen. Sherrod Brown (D-Ohio), came back to legislative life this year, holding a markup for the first time since late 2019. The result was a set of banker accountability standards that saw near-universal bipartisan support from the panel’s members. That was no small feat.
The House Financial Services Committee, led by Rep. Patrick McHenry (R-N.C.), cleared dozens of bills during several markups this year. Many of those bills had bipartisan support, including legislation that would transform the legal environment for the crypto sector.
But 2023 was terrible for legislative progress. Neither banking panel saw their marquee bills get a vote in the House or Senate, let alone sent on to the president’s desk. The only partial exception was the FEND Off Fentanyl Act, which was added to the Senate’s annual defense authorization package before being stripped from the final product.
A lack of floor time has felled many bills but these financial services packages had a better shot than most. Senate Majority Leader Chuck Schumer spoke frequently about policy proposals coming out of Brown’s committee including cannabis banking reform and banker accountability legislation. And McHenry was about as close an ally of House Republican leadership as a lawmaker can be.
But historic dysfunction in the House ate through weeks of floor time following the ouster of former Speaker Kevin McCarthy. Brown told us that “chaos” affected the Senate’s ability to function, too.
“All the chaos in the House and the fact that they all acted like children kept this stuff from [happening],” Brown said. “We should have passed Ukraine [aid] in October. We should have passed Israel [aid] by now.”
“None of it’s resolved, and there just is not time on the floor,” Brown added. “I don’t like to point fingers, but this is all in the House.”
The Senate had its own problems, to be clear, including glacial funding negotiations, Sen. Tommy Tuberville’s (R-Ala.) months-long hold on military promotions and more.
“Senate inaction is the reason,” Rep. Andy Barr (R-Ky.) said. “Yes, we need floor time, but we’re busy. We’re sending over a lot of good bills to the Senate, and unfortunately, it’s a graveyard over there for good ideas.”
We’re broadly optimistic about the opportunities for moving policy in the first quarter of next year, thanks to unusual government funding deadlines coming up in January and February. A lot of lawmakers are too.
“You either have an expansive view of the year that’s 15 months long, or you have to acknowledge that the first quarter of next year has a hot set of opportunities to move major legislation in other vehicles,” McHenry said. That’s “traditionally how we’ve done [policy] for the last 20 years, frankly, for financial services,” he added.
But this is a pretty tight window, thanks to the general election. “My hope is that we can bring some of these things over the finish line in the limited period next year before people get very November focused,” Rep. Jim Himes (D-Conn.) said.
Politico Pro Cannabis (12/18): RETIRED LAW ENFORCEMENT, MILITARY NOW PROTECTING WEED SHOPS — A company focused on protecting state-legal cannabis businesses is harnessing expertise from a surprising place: former law enforcement, military and regulatory agency employees.
Operational Security Solutions is a California-based company founded by former California Department of Fish & Game enforcement officer Robert Simpson. The risk management company employs a wide range of former government employees from individuals who formerly ran large federal programs — including some focused on emergency response — to retired Navy SEALS and Army Rangers.
“All of these folks who are very familiar with … how to gain access to a building or a compound,” Solomon told Natalie in an interview last week. That knowledge now helps them advise companies on how to prevent their own breaches in security. OSS also employs former regulators and agency staff who can advise on compliance.
One of OSS’ most popular services is a cash transit system where the company will pick up and transport large amounts of cash, which is often done for tax payments. The transfer is done by former law enforcement or military employees and occurs in an armored car.
“We quickly get it off premise, validate the count and get it into their bank account as quickly as possible, sometimes as quickly as 24 hours,” Solomon added.
Cannabis companies are frequently targeted by thieves due to the heavy reliance on cash, since federal illegality makes it difficult to access banking services.
The biggest security threat, though, is typically from inside the walls of the business.
“The vast majority is internal theft: An employee, a group of employees or employees in collaboration with external individuals execute the theft,” Solomon said. Those thefts include everything from emptying a safe after a busy weekend to stealing large amounts of product.