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A Key Senate Committee Is Becoming Less Marijuana-Friendly

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For the past several years, the U.S. Senate Appropriations Committee has been more responsible for marijuana reform victories in Congress than any other panel of lawmakers.

Bipartisan measures to protect state medical cannabis laws, allow medical marijuana for military veterans and shield state industrial hemp research programs from the feds have all advanced there.

Those wins have been especially valuable for legalization supporters because in the other chamber, the House Rules Committee has blocked cannabis-related amendments from advancing to the floor over the same period of time.

But in recent weeks the Senate committee, which handles funding levels and spending riders covering federal agencies, has begun to make a number of anti-cannabis moves.

Last week, for example, it prevented a measure to allow marijuana businesses to access banks from advancing by a vote of 21-10. Nearly identical amendments were approved by the committee in 2015 and 2016, but this time several Democrats who position themselves as supporters of cannabis law reform spoke out against the proposal on procedural grounds.

Earlier this month the panel released a report incorrectly alleging an increase in impaired driving in states that have reformed their cannabis laws.

In a separate report this month the committee expressed concern about illegal marijuana cultivation on public lands, singling out states with legalization.

And now, in a new development that hasn’t yet been reported elsewhere, the committee is making moves to block Washington, D.C. from further legalizing marijuana.

“No funds available for obligation or expenditure by the District of Columbia government under any authority may be used to enact any law, rule, or regulation to legalize or otherwise reduce penalties associated with the possession, use, or distribution of any schedule I substance under the Controlled Substances Act (21 U.S.C. 801 et seq.) or any tetrahydrocannabinols derivative for recreational purposes,” reads a provision of the Financial Services and General Government funding bill approved by the committee on Thursday.

Unlike the House Appropriations Committee, which has consistently moved to block cannabis reform in the nation’s capital, the Senate panel for the past several years has kept its version of funding bill free of marijuana-related D.C. riders (though the spending bans have been enacted into law anyway because the House language has prevailed in bicameral conference committees that reconcile both chambers’ bills into final legislation).

Now that the Senate committee has moved to adopt the D.C. cannabis prohibition as well, its continuance into Fiscal Year 2019 is a virtual certainty, meaning that local officials will not be able to spend locally raised funds adding a system of taxed and regulated marijuana sales to the city’s existing law that allows low-level possession and home cultivation.

“I am disappointed that the committee chose to depart from their past practice of not including anti-D.C. riders,” Congresswoman Eleanor Holmes Norton (D-DC) said in a press release. “I will be fighting here in the House and Senate to strike all anti-D.C. riders and prevent any new riders from being included in the final spending bill.”

Also, committee report attached to the new funding bill also goes out of its way to wag its finger at Indian tribes that might be considering entering the marijuana industry.

“The Committee expects the CDFI Fund to ensure no funding is allocated to tribes to support marijuana production, manufacturing, or distribution and report to the Committee on any Tribe who engages in such activities and receives funding appropriated by this act,” the report says, referring to the Community Development Financial Institutions Fund, which focuses on economic revitalization in distressed communities.

None of this is to say that the Senate panel has defeated all recent marijuana reform measures. For example, this month it opted to continue protecting states where medical marijuana is legal from federal interference and approved an amendment that would allow Department of Veterans Affairs (VA) doctors to issue medical cannabis recommendations to veterans. And last month, it directed the Department of Agriculture to set aside half a million dollars to build a hemp seedbank.

Significantly, the language protecting state medical cannabis laws was included in the initial Justice Department bill as introduced by Republican leaders for the first time, whereas its enactment in past years has required a specific votes on amendments to add it.

But, in other ways noted above, the committee has clearly become less friendly to marijuana law reform efforts in recent months, and one major factor is its new chairman.

Sen. Richard Shelby (R-AL) ascended to the top position on the panel in April, following the retirement of Sen. Thad Cochran (R-MS). While Cochran was not exactly a champion of cannabis legalization, he left advocates with the sense that he just didn’t care much about the issue by allowing amendments to be voted on without applying significant behind-the-scenes pressure.

Shelby, on the other hand, who for years served alongside U.S. Attorney General Jeff Sessions in representing Alabama in the Senate, has made it clear that he doesn’t like the idea of attaching policy riders — marijuana or otherwise — to spending bills.

“Chairman Shelby was very anti-amendments this year,” Michael Liszewski of the Enact Group, told Marijuana Moment. “If you watched this year’s hearings, you probably noticed a decrease in the number of amendments offered. That’s because Shelby made it clear that he had very little tolerance for legislating through approps.”

And, he appears to be making deals with Democrats to accomplish his goal of reducing the number of policy riders on appropriations legislation.

That’s the conclusion that can reasonably be drawn from an exchange between Shelby and Sen. Patrick Leahy (D-VT), who has been a champion of marijuana law reform efforts in the committee, that could be faintly heard on the committee’s audio feed just moments after the Vermont Democrat helped lead the charge to kill the cannabis banking measure last week:

SHELBY: “Thank you, Pat.”

LEAHY: “I told you I would.”

While Leahy said during a debate before the vote to table the measure that he objected to its advancement on procedural grounds concerning the alleged inappropriateness of legislating policy on spending bills, the fact is that Leahy himself is more responsible than any other senator for the continuance of the separate rider preventing Justice Department interference in state medical cannabis laws, so his public argument seems at least a little disingenuous.

Advocates who did not wish to be quoted for this story speculated that Democrats may have extracted some concessions on immigration policy in exchange for not pushing the marijuana banking rider, but that could not be immediately confirmed.

Another key change on the appropriations panel is the fact that Sen. James Lankford (R-OK), a vocal cannabis opponent, recently became chair of its Financial Services and General Government Subcommittee, which handles Washington, D.C.

His ascendancy to the subcommittee chairmanship likely explains the panel’s inclusion of anti-marijuana language in the relevant funding bill for the first time in years. (Of note, however, the Senate bill covering D.C. doesn’t contain language from the House version of the legislation that would add a new restriction on the use of funds to support opening safe consumption facilities where people could consume illegal drugs under the supervision of medical professionals.)

Justin Strekal of NORML told Marijuana Moment in an interview that the committee’s seeming shift away from support for marijuana law reform in recent weeks may, perhaps counterintuitively, have to do with cannabis legalization’s growing political support.

“We’ve gained more momentum,” he said, referring to the fact that numerous lawmakers — including party leaders like Sen. Chuck Schumer (D-NY) — are embracing legislation that would provide more permanent fixes to the federal-state cannabis law gap than annual appropriations riders can.

“The stark realities are much crisper now,” he said. “Every amendment that tinkers with [cannabis enforcement] is still dancing around the fact that we still live under a regime of complete prohibition.”

“It’s increasingly going to be more difficult to get lawmakers to be OK with cutesy little fixes when the need for comprehensive reform is crystalizing.”

But in order to enact broader solutions, it’s going to take movement by committees that set federal drug policy and enact authorizations for relevant federal agencies.

Unfortunately, those panels — the House and Senate Judiciary Committees — at least for now, are controlled by ardent legalization opponents. But with a midterm election coming up that observers believe could reverse party control of one or both chambers, anything can happen in 2019.

Marijuana Moment is made possible with support from readers. If you rely on our cannabis advocacy journalism to stay informed, please consider a monthly Patreon pledge.

Tom Angell is the editor of Marijuana Moment. A 20-year veteran in the cannabis law reform movement, he covers the policy and politics of marijuana. Separately, he founded the nonprofit Marijuana Majority. Previously he reported for Marijuana.com and MassRoots, and handled media relations and campaigns for Law Enforcement Against Prohibition and Students for Sensible Drug Policy. (Organization citations are for identification only and do not constitute an endorsement or partnership.)

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GOP Senator Presses Treasury Secretary On Tax Credits For Marijuana Businesses

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A Republican senator recently pressed the head of the Treasury Department on whether marijuana businesses qualify for a federal tax benefit.

During a Senate Finance Committee hearing on Wednesday, Treasury Secretary Steven Mnuchin was asked about the “opportunity zone” tax credit, which is meant to encourage investments in “distressed,” low-income communities through benefits such as deferrals on capital gains taxes.

Sen. James Lankford (R-OK), whose state’s voters approved a medical marijuana ballot measure in 2018, told Mnuchin that businesses that derive more than five percent of their profits from things like alcohol sales are ineligible for the tax credit, but there’s “not a definition dealing with cannabis businesses.”

“Are they within that five percent amount or are they not at all because there’s a federal prohibition on cannabis sales?” the senator asked.

“I’m going to have to get back to you on the specifics,” Mnuchin replied.

“That’d be helpful to get clarity because there are cannabis businesses across the country that, if they fall in opportunity zones, they’ll need clarification on that,” Lankford said. “When you and I have spoken about it before—it’s difficult to give a federal tax benefit to something that’s against federal law.”

 

Lankford, who opposes legalization and appeared in a TV ad against his state’s medical cannabis ballot measure, has raised this issue with the Treasury secretary during at least two prior hearings. When he questioned whether cannabis businesses qualify for the program last year, he clarified that he personally does not believe they should.

While Mnuchin’s department has yet to issue guidance on the issue, he said in response to the earlier questioning that his understanding is that “it is not the intent of the opportunity zones that if there is this conflict [between state and federal marijuana laws] that has not been cleared that, for now, we should not have those businesses in the opportunity zones.”

Mnuchin has also been vocal about the need for Congress to address the lack of financial resources available to state-legal marijuana businesses. Because so many of these companies are forced to operate on a largely cash-only basis, he said the Internal Revenue Service has had to build “cash rooms” to store their tax deposits.

“There is not a Treasury solution to this. There is not a regulator solution to this,” he said during one hearing. “If this is something that Congress wants to look at on a bipartisan basis, I’d encourage you to do this. This is something where there is a conflict between federal and state law that we and the regulators have no way of dealing with.”

Last week’s Finance Committee hearing was centered around President Trump’s Fiscal Year 2021 budget request, which separately includes a provision calling for the elimination of an appropriations rider that prohibits the Justice Department from using its fund to interfere in the implementation of medical cannabis laws as well as a continued block on Washington, D.C. spending its own local tax dollars to legalize marijuana sales.

American Bar Association Wants Protections For Marijuana Banking And Lawyers Working With Cannabis Clients

Photo courtesy of C-SPAN.

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American Bar Association Wants Protections For Marijuana Banking And Lawyers Working With Cannabis Clients

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The American Bar Association (ABA) approved two marijuana-related resolutions during its midyear meeting on Monday.

The group’s House of Delegates voted in favor of proposals endorsing pending federal legislation to protect banks that service cannabis businesses and calling for a clarification of rules to ensure that lawyers will not be penalized for representing clients in cases concerning state-legal marijuana activity.

Under the banking resolution, ABA “urges Congress to enact legislation to clarify and ensure that it shall not constitute a federal crime for banking and financial institutions to provide services to businesses and individuals, including attorneys, who receive compensation from the sale of state-legalized cannabis or who provide services to cannabis-related legitimate business acting in accordance with state, territorial, and tribal laws.”

ABA added that “such legislation should clarify that the proceeds from a transaction involving activities of a legitimate cannabis-related business or service provider shall not be considered proceeds from an unlawful activity solely because the transaction involves proceeds from a legitimate cannabis-related business or service provider, or because the transaction involves proceeds from legitimate cannabis-related activities.”

A bill that would accomplish this goal was approved by the House of Representatives last year, but it’s currently stalled in the Senate, where it awaits action in the Banking Committee. That panel’s chair, Sen. Mike Crapo (R-ID) is under pressure from industry stakeholders to advance the legislation, but he’s also heard from anti-legalization lawmakers who’ve thanked him for delaying the bill.

“Passage of the [Secure and Fair Enforcement] Banking Act or similar legislation will provide security for lawyers and firms acting to advise companies in the industry against having their accounts closed or deposits seized,” a report attached to the ABA resolution states. “This will also foster the rule of law by ensuring that those working in the state-legalized legitimate cannabis industry can seek counsel and help prevent money laundering and other crimes associated with off-the-books cash transactions.”

“Currently, the threat of criminal prosecution prevents most depository institutions from banking clients, including lawyers, who are in the stream of commerce of state-legalized marijuana. This Resolution is necessary to clarify that such provision of legal and other services in compliance with state law should not constitute unlawful activity pursuant to federal law.”

The second marijuana-related resolution ABA adopted on Monday asks Congress to allow attorneys to serve clients in cannabis cases without facing federal punishment.

Text of the measure states that the association “urges Congress to enact legislation to clarify and explicitly ensure that it does not constitute a violation of federal law for lawyers, acting in accord with state, territorial, and tribal ethical rules on lawyers’ professional conduct, to provide legal advice and services to clients regarding matters involving marijuana-related activities that are in compliance with state, territorial, and tribal law.”

Such a change would provide needed clarity for lawyers as more states legalize cannabis for adult use. ABA’s own rules of conduct have been a source of conflict for attorneys, as it stipulates that they “shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent.” Federal law continues to regard marijuana as an illegal, strictly controlled substance.

An ABA report released last year made the case that there’s flexibility within that rule, however, as “it is unreasonable to prohibit a lawyer from providing advice and counsel to clients and to assist clients regarding activities permitted by relevant state or local law, including laws that allow the production, distribution, sale, and use of marijuana for medical or recreational purposes so long as the lawyer also advises the client that some such activities may violate existing federal law.”

A new report attached to the resolution states that “statutory guidance is needed that explicitly ensures that attorneys who adhere to their state ethics rules do not risk federal criminal prosecution simply for providing legal counsel to clients operating marijuana businesses in compliance with their state law.”

“This Resolution accomplishes this elegantly by harmonizing federal criminal liability with States’ ethical rules regarding the provision of advice and legal services relating to marijuana business. If a state has legalized some form of marijuana activity and explicitly permitted lawyers to provide advice and legal services relating to such state-authorized marijuana activity, such provision of advice and legal services shall not be unlawful under the Controlled Substances Act or any other federal law.”

Last year, ABA adopted another cannabis resolution—arguing that states should be allowed to set their own marijuana policies.

Border Patrol Union Head Admits Legalizing Marijuana Forces Cartels Out Of The Market

Photo elements courtesy of rawpixel and Philip Steffan.

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Border Patrol Union Head Admits Legalizing Marijuana Forces Cartels Out Of The Market

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The head of the labor union that represents U.S. Border Patrol agents acknowledged on Friday that states that legalize marijuana are disrupting cartel activity.

While National Border Patrol Council President Brandon Judd was attempting to downplay the impact of legalization, he seemed to inadvertently make a case for the regulation all illicit drugs by arguing that cartels move away from smuggling cannabis and on to other substances when states legalize.

Judd made the remarks during an appearance on C-SPAN’s Washington Journal, where a caller said that “the states that have legalized marijuana have done more damage to the cartels than the [Drug Enforcement Administration] could ever think about doing.”

“As far as drugs go, all we do is we enforce the laws. We don’t determine what those laws are,” Judd, who is scheduled to meet with President Trump on Friday, replied. “If Congress determines that marijuana is going to be legal, then we’re not going to seize marijuana.”

“But what I will tell you is when he points out that certain states have legalized marijuana, all the cartels do is they just transition to another drug that creates more profit,” he said. “Even if you legalize marijuana, it doesn’t mean that drugs are going to stop. They’re just going to go and start smuggling the opioids, the fentanyl.”

One potential solution that Judd didn’t raise would be to legalize those other drugs to continue to remove the profit motive for cartels. Former presidential candidate Andrew Yang made a similar argument in December.

Federal data on Border Patrol drug seizures seems to substantiate the idea that cannabis legalization at the state level has reduced demand for the product from the illicit market. According to a 2018 report from the Cato Institute, these substantial declines are attributable to state-level cannabis reform efforts, which “has significantly undercut marijuana smuggling.”

Additionally, legalization seems to be helping to reduce federal marijuana trafficking prosecutions, with reports showing decreases of such cases year over year since states regulated markets have come online.

In his annual report last year, Supreme Court Chief Justice John Roberts also noted reduced federal marijuana prosecutions—another indication that the market for illegally sourced marijuana is drying up as more adults consumers are able to buy the product in legal stores.

Top Mexican Senator Says Marijuana Legalization Bill Will Be Approved This Month

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