“We’re seeing the cost of capital go down for large cannabis companies, but we are seeing it remain high for social equity operators.”
This article was reported by the News Station, a national alt weekly
Something strange is afoot in the nation’s capital, with top Senate Democrats seemingly shunning Wall Street when it comes to allowing marijuana businesses access to the U.S. banking system. Looks are deceitful in a town fueled by outside money though, and many advocates accuse Senate Democrats of playing politics with cannabis, especially when it comes to the party’s new “promise” to put social equity for people of color ahead of efforts to normalize access to the financial sector for this burgeoning new industry.
Senate Majority Leader Chuck Schumer (D-NY), Sen. Cory Booker (D-NJ) and Finance Chair Ron Wyden (D-OR) are now vowing to oppose any marijuana normalization efforts – like enabling cannabis firms to join the American finance system, which the broadly bipartisan Secure and Fair Enforcement (SAFE) Banking Act would do now – until they can muster the votes to decriminalize the plant altogether.
But here’s the not-so-secret-secret: Democrats don’t have the votes to decriminalize cannabis in the Senate (and it’s still unknown if President Joe Biden would even sign such a measure).
“This is performative,” Amber Littlejohn, a regulatory attorney by trade and now the executive director of the Minority Cannabis Business Association, tells The News Station of Senate Democrats’ latest pronouncement. “We likely don’t have the votes to get to 50, let alone 60, if we are talking equitable, justice-centered cannabis reform. So that is not a choice. To make this into a choice – and let me be careful in the word I choose here – it’s a false narrative. Everybody knows there is not actually a path.”
If there was a path to opening millions of steel cages and letting all those cannabis captives free, Littlejohn would be on board and would put their freedom ahead of the banking measure. But no Democrat on Capitol Hill claims the party has the votes; rather, they report the opposite.
Littlejohn may live in Washington, but she isn’t afforded the same luxuries enjoyed by the nation’s political class, including the Beltway-sized bubble they live in while in town for a few days here and there.
“If there was an actual choice between passing Banking right now in this Congress and getting people out of prison due to cannabis offenses, seven days a week—over and over again—we would wholeheartedly say, ‘Table banking, let’s get this done,’” Littlejohn continues. “Nobody, however, can tell me that there is a path to pass equitable, comprehensive cannabis reform.”
This new tactic from Sens. Schumer, Booker and Wyden is a smokescreen, if it can even be called one at all, according to Littlejohn.
“It’s aimed at the midterms. And even if we could be honest about that, I could actually even go in harder, doing like, more expressive, performative dances for them,” Littlejohn says of her willingness to do anything to get her fellow Americans out of prison, “but the problem is, they want to make this about something else and the narrative is incorrect, because this is directly hurting minority businesses.”
It’s Black and White Outside the Beltway
Minority business owners – or those lined up, begging, even demanding they get their shot – report the same: Washington political games around marijuana are hurting them and their families.
“Shit, I need SAFE Banking. I need access to capital,” Kika Keith tells The News Station.
From South Central L.A., where Keith owns and operates Gorilla Rx. Wellness – which became the first black women owned dispensary in Los Angeles when its doors opened some five weeks ago – it appears the nation’s political class is picking individual winners and losers in this new cannabis space. And she can’t play those games, even as she desperately needs what these politicians are promising.
Besides being a single mother of three girls, Keith co-founded the Social Equity Owners and Workers Association, which filed a lawsuit against L.A. and won a settlement with the city council, which resulted in it doubling the number of social equity licensees they had slated, from 50 to 100. Keith never envisioned getting into politics. She was a successful entrepreneur, with Whole Foods selling her natural drinks in more than 300 stores until she moved to marijuana.
“I knew there was no other time in my lifetime that I’d be able to be a part of a brand-new industry,” Keith recalls.
Cannabis transformed Keith into an advocate, so these days she’s not focused on her bottom line alone. She’s terrified she won’t make it home to her family without the protection SAFE Banking promises (sadly, federally-mandated piles of cannabis cash have cost lives in L.A. and elsewhere), but on principle—something she has seen little of from Washington politicians—she can’t support a measure to protect and expand her business until her neighbors are made whole too.
“Maybe I’ll get it, but is the system set up for the rest of my people in the community who’ve been impacted by the War on Drugs to get those opportunities? Absolutely not,” Keith says of why she can’t support the SAFE Banking Act as it stands. “Absolutely not.”
After raising a million dollars from investors, she’s now weighing whether to give up equity in her own thriving company just so she can solidify more capital to keep her day-to-day operations humming, including the $45,000 a month she’s forced to drop on “some Fort Knox security,” because, like all marijuana companies, she’s federally forced to be, basically, an all-cash business. That’s a lot of cash anywhere, especially for a mother in her neighborhood.
“It puts women in this business at a particular position of vulnerability,” Keith says without hesitation. But it’s more than that for this entrepreneur. “I would love to take debit and credit cards. Do you know how much more money I could be making?”
A lot more. She knows it. The bankers know it. The nation’s politicians – of all stripes—know it.
That’s why Senate Democrats’ new strategy – or their latest attempt to cloak their lack of votes needed for passage in a rosy, midterm election-focused package – is lost on Keith. She calls it a “Trojan horse” aimed at placating bankers and suburban voters and appeasing multi-million-dollar cannabis corporations, which she expects to win at the end of the day – no matter when Senate Democrats can muster the votes they promised the party’s voters the past two presidential election cycles—because she’s seen it before.
“In actuality it’s a mask,” Keith says. “White men who own these big cannabis companies don’t give a damn about social equity or social justice, but it’s cloaked with that.”
Capitol Hill: Still Wall Street’s Favorite Bank
The nation’s big banks are lined up—hands, maybe a few fedoras too, fully extended – at the feet of the political power brokers. This is nothing new though.
As the War on Drugs raged on for the past 50 years, leaving countless millions of Americans, mostly Blacks and Latinos, shackled and locked out of the so-called American Dream, the nation’s financial elite basically hand-picked an ever-evolving cast of political characters—some corrupt, some comical, most comically corrupted.
Nuanced political differences aside, the political power players share a sugar mommy: Wall Street.
Those financial power brokers hedged their political bets between one party or the other based on the prevailing winds of the moment. As they spent decades buying up overpriced Manhattan condos, ordering entrees they can’t pronounce and consuming street drugs wrapped in TGIF napkins, they were silent—or day-trading private prisons out in the open—while witnessing a steady stream of anti-drug policies be decreed by the political class they bought in Washington. But bankers and investors have been getting louder and louder these days. Not because they had a change of heart and want to end their own private prison industrial complex or because they’re enjoying sweet wafts of legal marijuana floating through so much freedom-loving American air these days. They smell the billions of dollars—$17.5 billion in 2020 alone—being reaped by one of the nation’s newest and fastest-growing economic sectors.
“All of my bankers are very enthusiastic about the language,” Rep. Frank Lucas (R-OK)—a senior conservative member of the House Finance Committee—has told The News Station of the SAFE Banking Act.
From Wall Street to Main Street, the financial service industry is now all in on marijauna.
“Every single state banking association has weighed in on this, and there’s a lot of conservative support for the right bill,” former Senate Banking Chair Mike Crapo (R-ID) told The News Station about this time last year.
Top conservatives are surely listening to local and national financial institutions on all things marijuana, but any talk of racial justice components being added to the equation makes them skittish.
“Social equity” looks a lot like the redistribution of wealth, and even straight up racial reparations, to many conservatives, according to Crapo.
“I agree with that,” Crapo told The News Station at the Capitol last month.
While chair of the Senate Banking Committee, Crapo laid out some broad principles he needed addressed before he could support—let alone encourage his fellow Republicans to support—SAFE Banking. He says, if anything, Democrats are now running in the opposite direction of a deal he could have potentially rallied behind.
Democratic leaders seem well aware they’re losing GOP votes.
“I just disagree with their strategy,” Crapo contends. “I had conditions on the SAFE Banking Act that needed to be addressed, but they won’t address any of those issues. And then if they expand the scope of the bill on both marijuana, as well as other issues, then I think that they are assuring that there will be less support for the bill.”
American Marijauna vs. Biden’s Democratic Party
Most Democrats aren’t naive. They know there’s a crisis on American streets—the local streets they swore an oath to protect—because marijuana businesses remain congressionally-mandated to be all-cash enterprises.
“It’s gotten to the point—from a public safety standpoint—where people, you know, in the cannabis business are practically taking wheelbarrows full of cash and moving them from place A to place B,” Sen. Wyden of Oregon opined to The News Station while walking back to his Capitol office. “It’s a real law enforcement challenge.”
That “challenge” can wait. Or so senior Senate Democrats contend.
“We’ve decided in the Senate – the majority leader, Sen. Booker and myself – that we’re going to push for our big reform package,” Wyden says, “because, you know, a lot of what’s still going on, after millions of Americans have voted to legalize, is still not that different than the reefer madness days.”
Big Cannabis is Fine; Ma and Pop Hurting
Big banks are now being told, publicly at least, they have to wait at the end of the line—a line they bought, paid for and maintained—even as small and independent cannabis operations are still left tapping aluminum mugs on the pavement, wondering when they get their first serving.
“We disagree that passing SAFE Banking would disproportionately serve large cannabis companies,” Littlejohn, of the Minority Cannabis Business Association, tells The News Station. “Large cannabis companies are not hurting for funding. They are not having any challenges with access to capital. They don’t have problems with insurance; they often self-insure. They just don’t have these issues.”
More so, when it comes to marijuana, even currently available capital comes in too late for many. These entrepreneurs need access to financing during the application process, because, in most states, even scoring one out of a limited number of licences is pricey.
“If we don’t have classic avenues for lending, the cost of capital is extraordinary,” Littlejohn continues. “And we’re seeing the cost of capital go down for large cannabis companies, but we are seeing it remain high for social equity operators. We’ve seen loan rates as high as 20 and 40%.”
Those rates are astronomical, but they’re not the entire picture. The political math just doesn’t add up. Democrats in the Senate seem to be arguing momentum for comprehensive cannabis reform would be slowed down if they move bipartisan measures like SAFE Banking.
“Personally, I disagree with that assessment,” Morgan Fox, media relations director for the National Cannabis Industry Association, tells The News Station. “Every single cannabis policy reform has taken place incrementally so far, with very, very few exceptions.”
Fox has been in this space for more than a decade. While he can spout off accurate stats, poll numbers and other figures showcasing what’s happening on the ground coast to coast, he also knows how the nation’s lawmakers, guided by the Beltway consulting clique, operate.
“Whenever you can get somebody who might be kind of on the fence about broader comprehensive reform to vote in favor of a narrowly tailored, discrete bill—particularly one that’s revenue neutral—it makes it that much easier for them to be able to stomach voting for something that is a little bit more comprehensive,” Fox maintains.
SAFE Banking had massive bipartisan support until Democrats in the Senate loaded it up, if GOP supporters are to be believed.
“If you expand the scope, we’re going to lose Republican votes, including my own,” Sen. Steve Daines of Montana tells The News Station, without hesitation. “I could not have been clearer with everybody on that.”
Daines is the lead Republican sponsor of SAFE Banking in the Senate. Even after his constituents overwhelmingly voted to legalize marijauna in 2020, the senator remains dubious of the plant, but that’s not the question before the Senate.
“This is not about cannabis; it’s about safety for our communities,” Daines maintains. “There is a path forward to get the SAFE Banking Act passed with Republican and Democrat votes, but it needs to be limited to that act.”
As for GOP support?
“Attorney generals [sic] across the United States—Republican attorney generals [sic]—are asking for this to be passed,” Daines says, “because it’s an issue of safety. Anytime you have suitcases of cash involved in businesses, it attracts a lot of crime.”
On the other side of the aisle, Democrats view red state math differently.
“A lot more red states are changing their marijuana laws in a pretty significant way. That’s why I’m pretty confident this is not a matter of if, it’s a matter of when,” Sen. Booker tells The News Station while riding the tram under the Capitol.
When it comes to Senate math, Booker demurs.
“I have not counted all the votes we could get or not get,” Booker says, even as he stands by Schumer and company in demanding SAFE Banking be coupled with marijauna decriminalization. “At the end of the day, it should all pass together.”
The former mayor of Newark is out of step with the people on the ground, according to Kika Keith of L.A.’s Gorilla Rx. Wellness.
“There always seems to have to be a compromise in order to get all of the votes,” Keith bemoans. “They use very general talking points, and, to me, that’s the problem, especially when you have a Cory Booker who can speak for the community, and nobody’s being the voice of the people. It’s just being the voice of the politicians and the interests of the license holders. And we know Black people only represent 2% of the license holders. They’re not speaking to us, and that’s not us speaking.”
Some marijuana advocacy groups, including the progressive Drug Policy Alliance, fully support Senate Democrats’ latest effort, but there are also outliers, seen by many advocates as putting the perfect ahead of the present and attainable.
To Keith, the present is both her lack of access to capital and the need to free imprisoned neighbors.
“Let’s remember that this is off of the backs of the blood that has been shed in the streets and those that are still incarcerated for something that we’re all [legally enjoying] right now,” Keith maintains, “so let’s make sure we right those wrongs while we’re eating and enjoying the fruits of this plant.”
The easiest way to enshrine those principles in federal law, according to Keith, is to include stout protections in the law itself, like the language enshrined in the Equal Credit Opportunity Act, which explicitly “prohibits discrimination on the basis of race, color, religion, national origin, sex, marital status, age, receipt of public assistance.”
The Schumer-Booker-Wyden effort is still in draft form, but Keith is dubious as to why these Democratic senators aren’t copying and pasting already existing federal protections into their new effort on marijuana.
“I don’t hear that language in the talking points,” Keith laments. “I don’t hear them saying, ‘As we’re developing this, we’re going to use the model of the Equal Credit Opportunity Act…we’re going to make sure to set up community development financial institutions in the communities that were affected by the War on Drugs to make sure that they have access to this capital.’”
Based on Capitol Hill, Matt Laslo is a reporter who’s been covering campaigns and every aspect of federal policy since 2006. He’s the Managing Editor of TheNewsStation.com – a national alt-weekly.
