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The deal on the must-pass defense bill, which congressional lawmakers unveiled late Tuesday, is likely to mean a significant and costly increase in the administrative burden on state and local governments. Although it has nothing to do with the nation’s military, new requirements are included on how states and localities share financial information with the public.
But perhaps more significant to states, cities and counties across the country was what was not included in the National Defense Authorization Act.
To reach an agreement on a bill that could pass the House and Senate in the coming days, negotiators left out a reform proposal endorsed by Democratic Sen. Joe Manchin of West Virginia that would, among other things, limit how states can consider the effects of projects like which are pipelines and power plants on the environment, in accordance with Article 401 of the Clean Water Act.
Also left out are provisions that allow cannabis companies in states that have legalized marijuana to open bank accounts. State and local government associations have long called for the change, saying banning companies from opening accounts increases the risk of crime and tax fraud because businesses handle large amounts of cash.
After voters in Maryland and Missouri approved ballot measures in November, the recreational use of marijuana by adults is now legal in 21 states, two territories and Washington, DC. However, because marijuana remains illegal federally, banks are at risk of being prosecuted for violating laws such as “aiding and abetting” a federal crime or money laundering statutes if they do business with cannabis firms, leaving them wary of with that sector.
The cannabis-banking provisions, pushed by Rep. Ed Perlmutter, D-Colorado, and Senate Majority Leader Charles Schumer, D-New York, would bar federal regulators from prosecuting banks that provide services to marijuana-related businesses that are licensed by a state or local government. to produce, grow or manufacture cannabis products.
Speaking at a House Rules Committee meeting Wednesday morning, Perlmutter, who is retiring at the end of the year, said he couldn’t sleep Tuesday night after House Speaker Nancy Pelosi of California told him, “I have bad news for you.” , when negotiators reached an agreement on the defense bill.
Perlmutter raised the possibility of trying to include the proposal in a one-year or temporary spending bill that Congress must pass this month to avert a government shutdown.
“People are dying,” Perlmutter said, referring to the public safety risks created by all the money changing hands in the marijuana industry.
A resolution passed in June by the U.S. Conference of Mayors in support of a change in banking laws noted that one out of every two cannabis dispensaries has been robbed or burglarized, according to the National Credit Union Association, with thefts averaging $20,000 to $50,000.
“Preventing legal cannabis businesses from accessing financial institutions creates a reliance on cash-only models that involve transporting large sums of paper money through cities, increasing the risks of theft and tax evasion,” Michael Gleason, National League of Cities Legislative Director of Finance, Administration and Intergovernmental Affairs relations, he said in a statement to Route Fifty
Rep. Adam Smith, the Washington Democrat who chairs the House Armed Services Committee and is leading negotiations on the defense bill, also complained that he was unable to include a “crucial piece of legislation” in leaving out provisions on cannabis banking.
Smith, however, also left open the possibility that Congress could tie the measure to a spending bill or pass it in the Senate as a stand-alone bill. Smith said the proposal, which has already passed the House of Representatives, has the support of 59 senators and needs just one more to meet the Senate’s 60-vote requirement to bring up the measure.
Khadijah Tribble, chief executive officer of the American Cannabis Council, said in a statement that the group was disappointed that banking provisions were not included in the defense bill. But Tribble added: “We remain optimistic that we will see cannabis reforms appear in another legislative instrument in the coming weeks.”
David Culver, vice president of government relations at Canopy Growth, a cannabis company based in Ontario, Canada, told Route Fifty in a statement that the banking provisions will help minority-owned businesses.
“Smaller and often minority businesses that have traditionally relied on loans will have access to the capital they need to get started.” “The cannabis industry will no longer have to deal with cash only, making dispensaries and the places where they work safer,” he said.
Allow the plan to explode again
Manchin, meanwhile, continued to urge the Senate on Wednesday to include his energy infrastructure proposal in the defense bill when it comes up for a vote.
“Failure to pass bipartisan, comprehensive licensing reform that our country desperately needs is not an acceptable option,” Manchin he wrote on Twitter. “As our energy security becomes more threatened every day, Americans are demanding that Congress put politics aside and act on common-sense solutions to solve the problems we face.”
The defense bill was the second time in the past three months that Manchin has tried and failed to include his proposal in must-pass legislation, even though Democratic leaders have promised to bring the bill to a vote in exchange for support from the Biden administration. a comprehensive climate and tax package, the Inflation Reduction Act.
Manchin also tried to build the permit review into the temporary spending bill that Congress passed in September. But then senators of both parties opposed it.
This time, Republicans, including Senate Minority Leader Mitch McConnell, opposed Menchin’s proposal, along with cannabis banking legislation. McConnell derided the provisions as “a nest of various pet priorities, such as making our financial system more friendly to illegal drugs or allowing reforms in name only that have already failed to pass.”
Progressive Democrats also lined up against wrapping Manchin’s permitting plan in the NDAA. He is also likely to oppose attaching it to a spending bill later this month. “We can advance clean energy permitting without taking a hatchet to protect the environment for frontline communities,” House Natural Resources Committee Chairman Raul Grijalva, D-Ariz., said on Twitter during negotiations over the legislation. about defense.
Environmental groups, including the League of Conservation Voters, also opposed the proposal’s inclusion in the defense bill and celebrated Wednesday.
“Hopefully the focus can now shift to working with communities to build together the infrastructure we need for a clean energy future, rather than continuing to try to literally bulldoze through them,” John Reuter, vice president of the League of Conservation Voters for state and local strategies mentioned in the text.
One of the controversial provisions in Manchin’s proposal would be to insert into law a Trump administration rule that limits how states can review the environmental effects of projects like pipelines and power plants, under Section 401 of the Clean Water Act.
That rule prevents states from considering broad environmental impacts, such as how a project would contribute to climate change, instead limiting them to how discharges from projects would affect water bodies.
It would also derail the Environmental Protection Agency from proceeding with a rule it proposed in June, under the Biden administration, to restore the broader authority states had to review Section 401 projects, before the Trump-era changes. That updated EPA rule is expected to be final in the spring.
Environmental groups are also concerned that the two-year time limit Manchin wanted to create for federal permitting agencies under the National Environmental Policy Act would lead to less scrutiny of energy projects.
But clean energy industry advocates supported Manchin’s efforts, saying it would allow wind, solar and other projects to be built more quickly. Public utilities also called for a simplification of the permitting process for the construction of transmission lines from wind farms and other power plants to customers. Increasing the supply of clean energy will be important to meet growing demand as more people switch to electric vehicles.
Another sticking point with Manchin’s plan is that it would require federal approval of the Mountain Valley Pipeline, a controversial natural gas project in West Virginia and Virginia.
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