(Bloomberg) -- An end-of-year push to attach a marijuana banking bill to a must-pass defense measure is facing stiff resistance from Senate Republicans and complicating the delicate lame duck endgame for Democratic leaders soon to lose control of the House.

Democrats are eyeing the defense bill, which has been enacted annually for more than 60 years, as a a vehicle for a host of other priorities “with no relationship whatsoever to defense,” Senate Republican leader Mitch McConnell said Tuesday. 

McConnell suggested controversial items like “making our financial system more sympathetic to illegal drugs or permitting reform in name only” should be dropped from the annual Defense bill.

The SAFE Banking Act, introduced by Democratic Senator Jeff Merkley and Republican Senator Steve Daines, would prohibit federal banking regulators from penalizing banks and other depository institutions for providing banking services to legal cannabis businesses. 

If it passes, it would be a boon for the cannabis industry, where companies are struggling to compete with a thriving illicit market in the drug, state regulators are questioning the health risks of THC, and a workaround to the banking system known as cashless ATMs has just begun to shut down.

Merkley has been leading a bipartisan group of senators negotiating a compromise that can be included in the defense bill, a person familiar with the negotiations said. Rachel Dumke, a Daines spokesperson, said Tuesday in a statement that the senator is in discussions and working to get the bill passed by the end of the year.

Proponents of the legislation, known as the SAFE Banking Act, have highlighted that blocking financial service access to cannabis business owners creates a safety risk because these businesses are forced to deal in cash. Many marijuana dispensaries had also adapted a fintech solution to take debit cards called cashless ATM. 

The legislation would be a boon to multi-state operators like Curaleaf Holdings Inc. and Green Thumb Industries Inc. Many companies have talked about whether the bill would let them raise money from institutional investors and list on major US stock exchanges.

The House passed its version of the bill last year with bipartisan support, but it has not been taken up in the Senate. The House attached the measure to the bipartisan Chips and Science Act earlier this year, but it was stripped out due to opposition in the Senate.

Majority Leader Chuck Schumer focused his efforts earlier this year on a comprehensive bill to federally decriminalize, regulate and impose taxes on cannabis products. However, that bill lacks the necessary 60 votes needed to pass in the Senate. Many Republicans and some Democrats have opposed federal decriminalization.

“It’s had bipartisan support. We’ve been working with Republicans. It’s a priority for me, I’d like to get it done,” Schumer said on Tuesday. 

In the evenly divided Senate, Democrats would need the support of at least 10 Republicans to avoid a filibuster and pass the SAFE Banking bill on the defense authorization bill. Daines and eight other Republicans have signed on as co-sponsors.

Democrats are also attempting to attach permitting legislation from West Virginia Senator Joe Manchin to the defense bill as part of his deal to support the Inflation Reduction Act. That, too, has angered McConnell and other Republicans.

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The situation is complicated because House Speaker Nancy Pelosi will likely need the backing for the rule governing debate from progressive lawmakers who often oppose the Defense measure and who oppose the permitting piece, but would likely back the marijuana provisions and other items that could get tucked into the bill. 

Republicans meanwhile, have a key demand of their own: ending the covid vaccine mandate for the military.

Time is running short with another major bill to follow — an full-year government spending package that could see assorted other items attached, including a rewrite of the law governing the counting of Electoral College votes.

--With assistance from Laura Litvan and Tiffany Kary.

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