In January, Vermont became the ninth state to legalize marijuana—and the first to end cannabis prohibition through an act of lawmakers, rather than a ballot initiative. But with the law set to take effect on July 1, questions remain about how the recreational system will actually function.
What you need to know
Vermont Governor Phil Scott (R) signed the adult-use legalization bill, H. 511, into law on January 22. The governor said that he had “mixed feelings” about the legislation, but added that he believed “what adults do behind closed doors and on private property is their choice, so long as it does not negatively impact the health and safety of others, especially children.”
The law permits adults 21 and older to:
- Possess up to an ounce of cannabis, or five grams of hashish.
- Grow “two mature and four immature marijuana plants” on private property in a secured enclosure that’s kept out of public sight.
- Those plants wouldn’t count toward the one ounce possession limitation.
- If you don’t own the property, you’d have to get the property owner’s permission before cultivating cannabis.
“Consumption of marijuana in a public place or in a vehicle is prohibited as is possession of an open container of marijuana in a vehicle, and violations are subject to civil penalties,” a summary of the bill text explains. There are also penalties for providing or “enabling consumption” of marijuana to individuals under 21.
The legislation doesn’t explicitly address marijuana “gifting,” which has served as a way to circumvent market restrictions in certain legal jurisdictions like the District of Columbia.
Employers are still allowed to enforce policies against consuming, cultivating or displaying marijuana in the workplace.
Are you an employer with questions about VT's recreational marijuana law that goes into effect 7/1? Today, we released a guidance for employers on how to navigate the law. Comments? email our Civil Rights Unit at [email protected] #vtbusinesseshttps://t.co/Xl955mOZNq
— Vermont AG Donovan (@VTAttorneyGen) June 14, 2018
If an employer has a no-tolerance drug policy, employees can be fired for violating that policy even if they use cannabis outside the workplace. However, the Vermont Attorney General’s office cautioned employers when it comes to penalizing medical cannabis patients suffering from debilitating conditions in a recent guidance report:
“Under [Vermont’s Fair Employment Practices Act], it is unlawful for any employer, employment agency, or labor organization to discriminate against a “qualified individual with a disability.” Discrimination means not only intentional mistreatment of a disabled employee or applicant, but also failure to provide a reasonable accommodation to that individual… employees carrying a medical marijuana card and those dealing with substance abuse issues may be protected under VFEPA’s disability provisions.”
The new system does not provide access to cannabis seeds or products at dispensaries, as is the case in other states where recreational marijuana is legal. And that’s where things start to get tricky.
Where are adult users supposed to obtain cannabis or seeds to grow their own plants if there’s no legal retail system in place? If you’re a registered medical marijuana patient, who does have access to dispensaries that sell cannabis and seeds, then you could hypoathetically circumvent that issue; but for adults outside the medical system, the conflicting regulations could create headaches.
“Legalization advocates argue that people who are interested in growing marijuana probably have access already,” The Burlington Free Press reported. “The main difference after legalization, they say, will be the lifting of penalties and stigma.”
The winding road to non-commercial legalization in Vermont
While Vermont made history in January by becoming the first state to pass a legalization measure through the legislature, it wasn’t necessarily a smooth path to reform. It’s taken about two years, since the state Senate first voted in favor of a tax and regulate legalization bill—which the House ultimately rejected.
Even as recently as April, Vermont lawmakers attempted to rally support for a commercial legalization bill but were defeated in a floor vote. But House Speaker Mitzi Johnson (D) and others cautioned that the timing wasn’t right, considering the fact that the governor had just signed the non-commercial legalization bill into law just three months prior.
Lt. Gov. David Zuckerman (D) told Vermont Public Radio in April that regardless of the fate of the eleventh-hour effort to move a tax and regulate legalization bill forward, it would only be a matter of time.
“This vote does not reflect the sentiment of the people, and when the sentiment of the people is reflected in this body, it will move forward,” Zuckerman said.
Are medical marijuana patients being left behind as the state prepares to implement its recreational system?
Though adult users won’t have a legal way to obtain cannabis or seeds under the law, there are a number of other differences in how laws apply to medical patients and recreational consumers. For example, adults over 21 are allowed to grow up to six plants outdoors, whereas medical patients can grow up to nine plants—but they’re required to keep their grows indoors.
Also, while harvested cannabis doesn’t count toward a recreational user’s one ounce possession restriction, harvested plants do count toward medical patients two ounce possession restriction.
“I’ve heard concerns from several medical cannabis patients and their loved ones that they cannot get clear guidance from anyone in state government regarding how many plants they are allowed to grow for their own use, and how they may grow them,” Dave Silberman, a Middlebury, Vermont attorney and pro bono drug policy reform advocate, told Marijuana Moment.
“Many patients are wondering whether these rights can be ‘stacked,’ such that, for example, a married couple consisting of one registered medical patient and one non-patient could legally grow four mature plants (two for “adult use” and two for “symptom relief”),” he said.
There is currently a bill being considered in special session that aims to reconcile some of these regulatory differences, according to The Burlington Free Press. Among other things, the bills seeks to impose “locked container transport” requirements that are currently in effect for medical patients but do not apply to adult users. It would also clarify the state’s prohibition on providing cannabis to individuals under 21 under the recreational system, as medical patients may be under 21 and the law doesn’t offer assurances to medical caregivers that they wouldn’t be penalized under the new law.
“Vermont’s homegrow law is a great first step, but is incomplete,” Silberman said. “Despite the failure to move [a more wide-ranging legalization bill, H. 490] forward this past session, I’m optimistic that we’ll be able to move forward quickly in 2019 with a comprehensive bill to establish a regulated market and clear up the inconsistencies between the current ‘adult use’ and ‘medical’ regimes, as more and more legislators are coming to understand the reality that it’s the same damned cannabis either way.”
In the meantime, beginning on July 1, adults over 21 in Vermont will finally be able to legally use, possess and grow marijuana without a doctor’s recommendation.
Marijuana Banking Bill Would Save Federal Money, Congressional Budget Office Says
The federal government would save money if a bipartisan bill to give marijuana businesses access to banks is approved, according to a report released by the Congressional Budget Office (CBO) on Friday.
The legislation, which cleared the House Financial Services Committee in a bipartisan vote of 45 to 15 in March, would change federal law to protect financial institutions that service the cannabis industry from being penalized by regulators. That reform would set off a chain of events, beginning with a likely increase in the number of banks accepting deposits from those businesses, CBO reasoned.
Assuming the bill takes effect near the end of the 2019 fiscal year, the office estimates that starting in 2022, banks would see a $1.2 billion increase in deposits, and credit union deposits would grow by $200 million. By 2029, the amounts “would rise to $2.1 billion and $350 million, respectively.”
Because those deposits would have to be insured through the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA), the CBO took into account the possibility that individual financial institutions will fail, and the estimated cost of resolving those failures is $5 million.
That said, those direct spending costs would be “offset by assessments levied on insured financial institutions,” which would amount to about $9 million.
“As a result, CBO estimates, H.R. 1595 would decrease net direct spending by $4 million over the 2019-2029 period,” the office reported.
Rep. Ed Perlmutter (D-CO), the bill’s chief sponsor, told Marijuana Moment that its enactment would have benefits beyond fiscal savings.
“Getting cash off our streets and making our communities safer will come at no cost to the federal government and actually save money while providing a much-needed long-term banking solution for legitimate marijuana businesses across the country,” he said.
“This CBO score should only increase the significant momentum in Congress behind passing the SAFE Banking Act,” Neal Levine, CEO of the Cannabis Trade Federation, told Marijuana Moment. “It is now apparent that we can help diminish a serious threat to public safety at no net cost to the federal government. We look forward to the bill passing through the House and hope the Senate will follow suit.”
There are some implementation costs to take into account, CBO says. The administrative costs are estimated to be $3 million. But the FDIC and NCUA are able to charge premiums on the financial institutions they regulate to cover much of those costs. The total net administrative costs would, therefore, be about $1 million.
The Federal Reserve would also have to spend funds to implement the bill, and that would reduce remittances to the Treasury Department. Those remittances are considered revenue, which is expected to decrease by about $1 million if the legislation is implemented.
Then there are costs related to other provisions of the bill. Financial regulators would have to update and issue new guidance, which would “cost less than $500,000 over the 2019-2024 period.”
The legislation also requires the Government Accountability Office to study barriers to entry in the marijuana industry and to financial services for minority- and women-owned cannabis businesses. The costs are estimated to be less than $500,000 annually from 2020 to 2024.
The CBO also estimated that enacting the legislation “would not increase on-budget deficits by more than $5 billion in any of the four consecutive 10-year periods beginning in 2030.”
The CBO outlined “several noteworthy areas of uncertainty” that could change the calculus.
1. New guidance from federal financial regulators could be more or less stringent than existing guidance implemented under the Obama administration, which could impact the amount of deposits banks and credit unions will receive.
2. Data on cannabis-related deposits is currently “limited,” as federal restrictions have forced marijuana businesses to operate on a largely cash basis. That means CBO’s estimates on the amount of deposits financial institutions will see could end up being “greater or smaller.”
3. If those estimates do end up being different, costs associated with the bank and credit union insurance funds “could be higher or lower depending on the amount of premium collections and capital deposits and on changes in the resolution costs for financial institutions.”
Sahar Ayinehsazian, an associate attorney at Vicente Sederberg LLP who specializes in cannabis banking, told Marijuana Moment that most of the figures lined up with her expectations. However, given that many marijuana businesses have gravitated toward credit unions rather than banks, she said the estimate increase in deposits to those financial institutions may well end up being larger.
“Looking at the chances of this legislation passing from an economic standpoint, I think [the CBO score is] good news,” she said.
Other advocates agreed that the CBO estimate should help efforts to advance the bill.
“For years, cannabis advocates have been preaching the net benefits SAFE Banking would have on consumers, patients, financial institutions, regulators and taxpayers. This CBO cost estimate confirms that,” Michael Correia, director of government relations for the National Cannabis Industry Association, told Marijuana Moment. “The increase of insured deposits, coming from the added certainty this legislation brings, far outweighs the minor administrative costs to implement this bill.”
The House marijuana banking bill currently has 184 cosponsors, and a companion Senate version has 30 lawmakers signed on. The committee of jurisdiction in the upper chamber has not yet set a hearing or a vote, but pressure is increasing.
Banking associations from all 50 states urged the Senate to take up the legislation earlier this week. Other organizations that have called for a resolution to the cannabis banking dilemma include the National Association of Attorneys General, which has endorsed the bill, and the National Association of State Treasurers, representing state treasurers and finance officials, which adopted a resolution last week in favor of the legislation’s passage.
Want 4 million more reasons why members of Congress should support the #SAFEBankingAct, which would allow cannabis businesses to access the banking system in the 33 states where it’s legal? @USCBO says the legislation will save taxpayers $4M over 10 years.
— American Bankers Association (@ABABankers) May 24, 2019
The new analysis is just the third time that the CBO, which is mandated to score bills that pass full committees, has issued a report on the economic impact of standalone cannabis legislation. The agency scored two marijuana research bills that cleared committees last year.
This story was updated to include comment from Perlmutter and Correia.
Federal Small Business Administration Pressed On Supporting Marijuana Industry
Sen. Jacky Rosen (D-NV) pressed a federal official responsible for advocating for small businesses on Wednesday about whether existing laws and regulations are preventing the growth of state-legal marijuana markets.
The line of questioning comes as members of Congress are preparing legislation aimed at removing barriers to small business assistance for cannabis industry participants.
The senator said at a hearing of the Senate Small Business and Entrepreneurship Committee that her state’s legal industry is attracting small businesses and entrepreneurs who are selling millions of dollars of product each month. She asked Major Clark, acting chief counsel of the office of advocacy at the Small Business Administration (SBA), about the unique barriers these companies face under federal prohibition.
“Senator, that’s a difficult question,” Clark replied. “We have not actually studied the issue of marijuana in that regard, and we have not because the federal government has not yet legalized it.”
“We do, in conversations with a lot of businesses, get inquires as to what they can do and how they can do it. But to actually do an analysis of it, we have not yet done that,” he said. “I’m sure that as soon as the federal government decides to legalize this substance, we will begin to study its impact and the ability to use it in a more economical context within the state.”
Watch the conversation about small business assistance for cannabis operators at 35:50 in the video below:
Rosen followed up to get Clark’s opinion about whether marijuana companies would benefit from some of the guidelines and resources the SBA offers to small businesses in other industries.
“These types of businesses can benefit from some of these types of things, but again, because this issue is an issue that has not reached the surface of being legalized, we have actually stayed away from trying to advise these businesses on these particular aspects,” he said.
Nevada’s cannabis industry cannot thrive without access to financial services. At yesterday’s @SmallBizCmte hearing, I asked what steps @SBAgov is taking to break down regulatory barriers for our nation’s legal marijuana businesses to ensure they can continue to grow. pic.twitter.com/lyfXGwpoRf
— Senator Jacky Rosen (@SenJackyRosen) May 24, 2019
Sen. James Lankford (R-OK), chair of the committee, weighed in on the issue after the Rosen’s time expired, saying that he recognizes the difficulty that federal agencies face when it comes to regulating a controlled substance.
“It is a unique challenge dealing with a Schedule I drug on the federal side and to also know that some states, including my own, have said that they want to allow it,” Lankford said, referring to the medical cannabis law that Oklahoma voters approved in 2018. “And the federal government and the [Food and Drug Administration] continues to study it and say there’s no medicinal gain from this product.”
“It’s a Schedule I drug. I get it,” he said. “The science, and whether it is SBA or whoever it is continues to be able to deal with that.”
While lawmakers push to get marijuana businesses access to federally authorized financial services, industry advocates say that SBA-specific reform legislation may be on the horizon.
The day after Rosen questioned the SBA official about cannabis policy, Khurshid Khoja, a board member for the National Cannabis Industry Association, said at a press conference on Capitol Hill that a bill was being drafted to “essentially get SBA services for cannabis businesses and for cannabis businesses from disproportionately impacted communities.”
Watch the SBA reform discussion at about 32:15 in the video below:
“The House Small Business Committee is looking into the issue and is interested in holding a hearing and drafting legislation this summer that addresses these issues,” a cannabis policy lobbyist who didn’t wish to be named in order to discuss plans that are in development, told Marijuana Moment separately.
Photo courtesy of Brian Shamblen.
GOP Congressman Exposes Flaws In VA Marijuana Research Projects
Rep. Matt Gaetz (R-FL) emphasized the importance conducting clinical trials on medical marijuana at the U.S. Department of Veterans Affairs (VA) on Tuesday, a topic on which he has often focused.
He also criticized the catch-22 of VA cannabis research, arguing that while the department is able to conduct clinical trials on marijuana, it doesn’t effectively publicize those studies, leaving veterans who might be interested in participating in the dark.
The congressman started by asking whether Mike Colston, director of mental health policy and oversight at the Department of Defense, felt that giving veterans access to medical cannabis could reduce suicides.
Colston said “there’s far more research to be done” and that there’s “insufficient evidence for or against that position.”
Gaetz cited research showing reductions in opioid use in states that have loosened cannabis laws, and he questioned whether “the current offramp for opioid addiction,” which typically involves prescribing long-term opioids that are less potent and less prone to abuse, “is a more effective offramp than medical cannabis.”
“I just think those are the three evidence-based therapies right now that meet the medical bar,” Colston said, referring to bupenehprine, methadone and naltrexone. “Obviously more research can change that.”
That prompted Gaetz to expand on VA policy as it pertains to medical cannabis. He asked for confirmation that the department’s doctors cannot currently recommend marijuana to veterans in states where it’s legal.
They can’t do that because “there’s a federal law against it right now,” Keita Franklin, national director of suicide prevention at the VA, claimed. (This has been a point of contention for legalization advocates, who argue that only the VA’s own internal administrative policies, and not an overarching federal law, blocks such recommendations.)
But VA officials can conduct clinical trials on marijuana, Franklin said.
“We have two ongoing research studies going on right now in this space,” she said. “I think we are open to research, yes.”
The congressman wanted to know if the VA publishes information about these studies and where to find it. The VA official wasn’t sure—and that was exactly Gaetz’s point.
“I don’t think anyone is clear, which is the source of my frustration because I think that there are a lot of these clinical trials that are seeking veterans,” he said. “The VA, due to a lack of clarity, won’t publicize that information or make it available, and then we’re unable to do the research that Captain Colston says is necessary to advance additional options for veterans trying to get off opioids and to stop them from killing themselves.”
Lawmakers have introduced legislation this session that would allow VA doctors to issue medical cannabis recommendations and require the department to conduct clinical trials on the plant’s potential therapeutic benefits for veterans, among other cannabis and veterans-related bills.
But if the VA is mandated to research the plant, Gaetz wants the department to better publicize the studies so that would-be participants actually know about them.
Photo courtesy of YouTube.