Cannabis on K Street

For the good of cannabis reform, Saphira Galoob is twisting the arms of members of Congress

When cannabis reforms happen at the federal level — whether they’re sweeping, major pieces of legislation that affect tens of millions of people, or minor tweaks to laws only noticed by the most astute cannabis academics — they’re sure to have Saphira Galoob’s fingerprints all over them.

Galoob is the principal and CEO of The Liaison Group in Washington, D.C., which works with clients in three categories: state trade associations, a handful of private clients and two national trade associations (the National Cannabis Roundtable and the Cannabis Financial Industry Group).

While there are other individuals lobbying for cannabis reform on Capitol Hill, as well as lobbying firms that dabble in cannabis policy, Galoob believes The Liaison Group is the only lobbying firm in the country that only does cannabis and only at the federal level.

“It certainly gives us a subject-matter nuance that people who don’t work full-time in the cannabis space would never be able to have,” she says.

Before getting involved in the cannabis industry, Galoob gained experience in D.C. business and politics as a lawyer, then spent 13 years as a professional dancer and owner of a performing arts studio. She’s been working in the cannabis space ever since November 7, 2016, one day before Republicans won control of the House, Senate and presidency in the general election, and eight states passed measures to advance the legalization of medical or recreational marijuana.

Marijuana Venture: What was your experience like in the early stages of getting your bearings with members of Congress as a cannabis lobbyist?

Saphira Galoob

Saphira Galoob: I think, at the time, there were about 115 Republicans who came from states that now had some sort of legal cannabis; I visited 50 to 60 of those offices and I would say only 1 in 30 had ever even heard of cannabis. So it was just obvious that there was a dearth of federal policy, but there was also so much work to be done.

When you talk to people about the lack of thinking for the space, there’s a curiosity and you just can’t believe it. Of course, if members of Congress understood the issue, then it would all be resolved.

So I kind of came in with that hubris. And then I quickly moved from hubris to humility in terms of understanding what it was going to take to get there. Because Congress is not a body of logic. It’s not a pathway of pragmatism in the way people think it should be.

And that’s why reform is incremental. It can be really frustrating to folks outside the Beltway and outside the bubble.

MV: What’s it been like over these past few years, educating members of Congress and Republicans, in particular, on this subject?

SG: I’d say they all know about us, and they are hyper familiar with the issue around banking. And they know it’s federally illegal. And that is evidenced by the fact that every single mainstream article from conversations around the advancement of the National Defense Authorization Act all the way through the Appropriations Act, from 2022, mention SAFE Banking is one of the key negotiation points. They all know we’re relevant and they all know we’re looking to advance.

Where I still think there is a lack of appreciation is the sophistication of the industry and how actually complex and rigorous the regulatory fabric is within certain states, like how track-and-trace interfaces with Know Your Customer and Anti-Money Laundering and the additional auditing software and technology that ensures transparency and correctness in reporting.

There is also a concern, particularly generationally, about what happens if we move too quickly. Will it be too late to put guardrails up to ensure safety and protect vulnerable populations? Because you can’t forget that they are still grappling with the policy implications for opioids, and what implications those are on public health. That is the reality of our audience. And rather than demanding that they are where we are, which is where a lot of folks in industry stand, we don’t have a choice but to meet them where they are. That’s the only realistic way.

MV: What can people do on an individual level to help ensure that important cannabis legislation progresses in the right direction at the federal level?

SG: I think it’s a great question. If you have a business in cannabis, what role does that business serve in the broader community? Are you a part of your chamber of commerce? Are you a part of business groups? If everybody in the industry wrote a letter to their member of Congress and said, This is who I am. This is how many jobs I create. This is the economic benefit to the community. This is how many people I employ. This is how many people in my business own homes. This is what I paid in taxes. And we are a legitimate business and we need access to banking. If everyone did that to their member of Congress, that would actually be helpful, because more voices matter.

One of the things that I have tried to say, as frequently as I can, is that I don’t believe that legalization is a moment, I believe it’s a process. And the process, like any other process in our life, has a sequencing and a prioritization. I think, as an industry, it’s hard for us to get our head around that and agree to that, for many, many reasons.

Do I think cannabis can be descheduled? Absolutely. Are we fighting for descheduling? Absolutely. Are there 60 votes (in the Senate) to deschedule cannabis? Not even close. So my role, as the pragmatist, is to say, what are we closest to getting? We’re closest to getting 60 votes on acknowledging that states should have the authority and the autonomy to make decisions about what’s going on in their state. That’s not descheduling, but that is movement toward legalization.

MV: How important is it for cannabis companies to get involved with their local chamber of commerce or law enforcement agencies in terms of making progress toward legalization and normalizing this industry?

SG: If you asked me, what is the single biggest concern or reluctance for lawmakers around cannabis, I’d say public safety.

One of the big vulnerabilities our industry has faced is the lack of understanding from law enforcement and other public safety organizations. If they understood and believed that a regulated industry is better for their community than an unregulated industry, more law enforcement could come out of their cannabis closet and say, yeah, cash in the banks is safer than cash on the streets for my community.

If we could get them to say that publicly, that would be huge in Washington. Right now, the only public voice of law enforcement weighing in on this issue is coming from the Fraternal Order of Police, and many of those folks represent rural police departments and sheriffs, and there are a lot of reasons they’re against cannabis reform, including civil asset forfeiture and other motivations for stop and seizure. The more we can get sheriffs, chiefs of police and other heads of law enforcement communities to say, no, I believe that a regulated marketplace is a more effective tool for delineating between legal behavior and criminal activities, that would certainly reduce some of the public safety concerns.

So I do believe that getting involved with your law enforcement community is crucial. Bring local law enforcement into your facility. That’s the real sign of whether or not we’re just like any other business.

MV: Where do things stand with SAFE Banking and what is your outlook on it moving forward?

SG: SAFE Banking not passing in 2022 had nothing to do with safe banking, and it had everything to do with a political dynamic between the two party leaders, Chuck Schumer and Mitch McConnell. Because the vehicle that SAFE Banking would have been included in a larger package called the omnibus that keeps the federal government funded, there was a broad political dynamic about what’s in and what’s out. As you can imagine, if you’re at the negotiating table, and you’re the majority leader, and you want something in, and the minority leader, either doesn’t care that it’s in there, or doesn’t want it in there, he’s going to say, Well, what are you going to give me in return?

And if it’s not a high enough priority for the guy who wants it, then the guy who doesn’t want it is going to win that battle. And that is what happened to us.

The sanity piece for me is that SAFE Banking can no longer try to ride on a larger vehicle, at least in terms of its next phase.

The next thing that has to happen to SAFE Banking is that it has to get its approval in the Senate. And that likely will come in the form of what we refer to as “regular order.” Senator Sherrod Brown, who is the chairman of the Senate Banking Committee, needs to hold a hearing on SAFE Banking expeditiously. And that piece of policy needs to be voted out of the committee. And then Leader Schumer needs to put SAFE Banking on the floor of the Senate. And even though there is a higher threshold in the Senate — we need 60 votes — the Senate would pass SAFE if just given a vote. Once we get out of the Senate, then we can talk about how we move forward from there.

MV: To put you on the spot, do you think 2023 is the year we see the passage of SAFE Banking or a similar measure protecting cannabis businesses and financial institutions?

SG: It depends on Leader Schumer. If Leader Schumer lets SAFE move through regular order, we’ve got a really good chance of getting it there. If Leader Schumer continues to hedge on moving this bill forward through regular order and putting it on the floor as a standalone bill, we have a very poor chance. So, in this great democracy that we call America, it all rides on one senator – the leader to bring it to the floor and knowing any one Senator can try to block it.

And frankly, the growing New York industry should demand that Senator Schumer do something about it because their program depends on it. And every senator from any of the 37 states that have a cannabis program should demand that their leaders do something about it. The pressure points, in this case, coming out of the cannabis industry, I don’t think are as persuasive as when its coming from constituents and the caucus.

MV: Then, from a state level perspective, how important is it that New York has passed its legalization bill, is in the process of implementing its regulated program and has at least one adult-use cannabis shop open for business, considering that so much rests on the shoulders of one man, and he happens to be a U.S. senator from New York?

SG: I think it’s our tipping point, frankly. And I think that because New York has very intentionally prioritized social equity license-holders in the market, and of course, it’s key for businesses to have banking. Unless there’s some magic way to capitalize a business other than money, I don’t see what the recipe for success is.

And I also think there is an inevitability of crime around these businesses having cash. There’s going to be more robberies and crime associated with cash businesses in New York, and that is going to be on Leader Schumer. Yes, as Senate Majority Leader, he is responsible for SAFE not getting across the finish line in 2022 and it’s his responsibility to advance it now. Hard stop.

MV: Do you find any sort of struggle in having three “buckets” of clients, with the state associations, the private businesses and the national trade groups? Is there a challenge in balancing their goals and their needs at the federal level?

SG: There is a perspective that West Coast businesses want one thing and East Coast businesses want another and Mid-Atlantic businesses are somewhere stuck in between. For me, the answer is no, because the type of client who understands the way we work in Washington understands that our approach actually results in high water raising all ships and creating a stable industry for all.

MV: We’ve seen the cannabis industry come up against hard times as of late. While there are reasons to remain excited, federal legislation seems to be moving at a glacial pace, taxes are killing profits and we’re seeing the effects of a slowing economy, crashing wholesale prices and a lull in the cannabis business for the first time in more than a decade. What is your level of optimism for the industry as we look forward into the future?

SG: I am still optimistic. And I’m not even cautiously optimistic. Think about the word: OPTIMISTIC. I’m optimistic, but I’m also patient and pragmatic around what’s possible. We’ve got more states coming online this year. We’ve got more states expanding from medical to adult use. We have states that have come online that haven’t even begun to build out and show their growth. And I think all of that is going to see itself in the trajectory.

Some will say the trajectory is flattening, but I think any industry grows and balances. And not all businesses in any industry are going to be successful.

For me, based on what I’m seeing in Washington, there is an inevitability toward reform. The question is whether the current business owners can withstand the pace that it takes for Washington to get anything done and whether or not the industry can learn from things that have worked in the past and adjust from things that haven’t worked and find their way through the landscape. That gives us the most chance for progress and, eventually, policy change.

This interview has been edited for length and clarity.