Federal officials would be blocked from punishing banks for working with marijuana businesses under an annual spending bill released by congressional Democratic leaders on Sunday.
The legislation, which is set to be considered by a House subcommittee on Monday, would also remove a longstanding rider that prevents the city of Washington, D.C. from spending its own money to legalize and regulate recreational cannabis sales.
Bill Protects Banks That Work With Marijuana Businesses
Although a growing numbers of states are moving to legalize and regulate marijuana—with Illinois lawmakers becoming the latest to pass a bill ending cannabis prohibition on Friday—many banks remain reluctant to work with licensed businesses in the industry out of fear of being subject to ongoing federal penalties.
Those hesitations could be at least partially allayed by the new House bill, which includes language barring federal regulators from punishing financial services providers for maintaining accounts for state-legal cannabis businesses:
SEC. 633. None of the funds made available in this Act may be used to penalize a financial institution solely because the institution provides financial services to an entity that is a manufacturer, a producer, or a person that participates in any business or organized activity that involves handling marijuana, marijuana products, or marijuana proceeds, and engages in such activity pursuant to a law established by a State, political subdivision of a State, or Indian Tribe: Provided, That the term ‘‘State’’ means each of the several States, the District of Columbia, and any territory or possession of the United States.
The provision only applies to spending legislation covering the Treasury Department, however, and thus would not shield banks from any enforcement activities carried out by the Justice Department, which is funded under a separate bill. It is also attached to the annual appropriations process, meaning it would have to be proactively renewed year after year if it is enacted.
Meanwhile, though, a more comprehensive and permanent proposal to shield banks from being punished for serving cannabis businesses is advancing in Congress.
In March, the House Financial Services Committee approved the bill, known as the Secure And Fair Enforcement (SAFE) Banking Act, in a bipartisan vote of 45 to 15. Advocates expect that House Democratic leadership will bring the legislation, which currently has 191 cosponsors—nearly half of the chamber’s membership—to the floor within the next several weeks.
An identical proposal in the Senate has 30 lawmakers—almost a third of the body’s members—signed on. While Banking Committee Chairman Mike Crapo (R) has so far refused to commit to bring the bill up for a hearing in his panel, pressure is mounting.
Last month, the Congressional Budget Office issued a report projecting that the bill would generate an increase in deposits in banks and credit unions, and would ultimately lead to savings for the federal government after initial implementation expenses are accounted for.
And a handful of other Republican senators, including at least one who is a member of Crapo’s committee, have lobbied him to give the cannabis banking bill due consideration.
In 2014, the House of Representatives approved a floor amendment similar to the provision currently included in the new spending bill, but it was not enacted into law. The full House Appropriations Committee defeated a cannabis banking rider last year under Republican control, so its inclusion in the base subcommittee legislation as introduced by Democrats marks a significant shift.
“The provision takes another step to protect financial institutions who are providing services to cannabis-related legitimate businesses,” Rep. Ed Perlmutter (D-CO), chief sponsor of the standalone cannabis banking bill, said of the new appropriations rider. “I look forward to the House passing the SAFE Banking Act soon so we can fully address the issue and get this cash off the streets.”
This provision takes another step to protect financial institutions who are providing services to legitimate marijuana businesses. I look forward to the House passing the #SAFEBankingAct soon so we can fully address the issue & get cash off the streets.https://t.co/HDp9DQoaol
— Rep. Ed Perlmutter (@RepPerlmutter) June 3, 2019
Legalization advocates agreed that the spending bill language was a good sign but that the broader bill’s passage is still needed.
“The inclusion of cannabis banking reform language in the Appropriations bill is indicative of the level of support this issue has in Congress,” Morgan Fox, medial relations director for the National Cannabis Industry Association, said, “If passed, this would only be a temporary fix and should not be viewed as a substitute for the SAFE Banking Act, but could provide the cannabis and banking industries with a much-needed reprieve while stand-alone legislation gains more support in the Senate.”
D.C. Could Finally Spend Its Own Money To Legalize Cannabis Sales
The draft House appropriations bill also removes a provision that for years has blocked the city government in the nation’s capital from spending its own locally raised tax dollars to legalize and regulate the production and sales of marijuana.
Washington, D.C. voters approved a ballot measure in 2014 that allows low-level possession and home cultivation of cannabis, but consumers who are not medical marijuana patients have no legal way to purchase the drug. That’s because Congress has repeatedly enacted an appropriations rider pushed by Rep. Andy Harris (R-MD) that stands in the way.
Here’s how the anti-marijuana rider appeared in last year’s version of the spending legislation:
Sec. 809. (a) None of the Federal funds contained in this Act may be used to enact or carry out 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.
(b) 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.
In addition to completely deleting the language standing in the way of D.C. using local money to pay for marijuana legalization, the legislation as introduced also cuts out the provision blocking the use of federal funds to lower cannabis penalties.
Last month, District of Columbia Mayor Muriel Bowser (D) referred a marijuana legalization bill to councilmembers in anticipation of Congress removing the ban under the newly Democratic-controlled House of Representatives. She cheered the new congressional legislation in a tweet on Sunday.
Illinois just approved legal sales of #marijuana for adults
Now, the @AppropsDems have a bill to remove the reprehensible rider so that we will be able to legalize/regulate its sale
— Muriel Bowser (@MurielBowser) June 3, 2019
The spending proposal, as introduced by the House Appropriations Subcommittee on Financial Services and General Government, if approved by that panel, would next head to the full Appropriations Committee and then to the House floor. It could be amended at either stage and will later be merged with parallel legislation in the Republican-controlled Senate, meaning that it is far from certain that the marijuana policy implications in the initial House draft will be enacted into law as currently drafted.
Still, their inclusion in the base bill on the House side bodes well for legalization advocates, as the Senate Appropriations Committee has historically been more favorable to cannabis amendments—even under GOP control—than its House counterpart has, although it did block consideration of a banking-related provision last year.
And while the Senate panel issued initial versions of the spending legislation free of D.C.-related marijuana riders in years past, in 2018 it included the ban under new subcommittee chairman Sen. James Lankford (R-OK), who opposes cannabis reform.
The pending appropriations bill covers Fiscal Year 2020, which begins on October 1.
California Governor Says Marijuana Legalization Is A ‘Civil Rights’ Matter Amid Mass Protests Over Racial Injustice
The governor of California discussed systemic racism and injustice that is inspiring mass protests across the country in a Friday speech, and he touted the state’s legalization of marijuana as an example of how it has addressed racial disparities in the criminal justice system.
Gov. Gavin Newsom (D) said at a press conference that he’s “very proud of this state” for going beyond issues such as implicit bias in policing and the “deadly use of force.” California’s leadership helped advance “a conversation about broader criminal justice reform to address the issues of the war on drugs” and “race-based sentencing,” he said.
“That’s why the state was one of the early adopters of a new approach as it relates to cannabis reform. Legalization around adult-use of marijuana,” he said. “It was a civil rights call from our perspective.”
“I was proud to be out in front in those efforts,” he added. “It was about addressing the disparities. It was about addressing incarceration. It was about addressing the ills of this war on drugs.”
Newsom also discussed the racially discriminatory sentencing of crack versus powder cocaine and other mandatory minimum sentencing policies. While the federal disparity was reduced over time since Congress passed the sentencing provision—a policy presumptive Democratic presidential nominee Joe Biden helped enacted during his time in the Senate and later sought to undo—California eliminated the distinction in terms of state sentencing in 2014.
Even so, the governor recognized that the reforms the state has enacted to date are “not enough” and more work needs to be done. He’s also not alone in drawing a connection between drug policy reform and racial justice.
Earlier this week, the governor of Virginia said that the passage of marijuana decriminalization legislation this year represents an example of how his state has addressed racial inequities that are inspiring mass protests over recent police killings of black Americans such as George Floyd and Breonna Taylor.
Sen. Cory Booker (D-NJ) also recently said racial disparities in marijuana criminalization is an example of a systemic injustice that underlies the frustration of minority communities.
Last week, 12 House members introduced a resolution condemning police brutality and specifically noting the racial injustices of the war on drugs. It now has 160 cosponsors.
The measure came one week after 44 members of the House sent a letter to the Justice Department, calling for an independent investigation into a fatal police shooting of Taylor in a botched drug raid.
In New York, there’s a renewed push to pass a package of criminal justice reform legislation that includes a bill to legalize marijuana. Sen. Julia Salazar (D) told Marijuana Moment that “in this particular moment, I think what’s the important factor here is that [criminalization] disproportionately impacts black and brown New Yorkers.”
“Because of the criminalization of the use of marijuana, more black and brown New Yorkers have interactions with police than they need to,” she said. “More people end up in the criminal justice system in the first place than is necessary at all.”
Image element courtesy of Gage Skidmore.
American Bar Association Says Firms Working ‘Indirectly’ With Marijuana Industry Should Get COVID Relief
The American Bar Association (ABA) sent a letter to the heads of the Treasury Department and Small Business Administration (SBA) on Friday, urging them to end a current policy preventing law firms that service state-legal marijuana businesses from receiving federal coronavirus relief.
SBA has made clear that cannabis companies are ineligible for its Paycheck Protection Program (PPP) loans—but its policy also bars those that work with marijuana businesses indirectly from getting the aid. ABA, which has nearly 200,000 dues-paying members, said it wants clarification or a formal policy change to make it so indirect businesses are not impacted.
“The ABA supports amending federal law to ensure that lawyers do not face the threat of criminal charges when they represent clients in states that have legalized marijuana,” the organization said. “Even before those changes are made to federal law, lawyers should also not be penalized for providing legal services to cannabis-related businesses that comply with state laws.”
ABA also argued that the policy is excessively broad in that it stipulates that companies that derive any revenue from servicing a cannabis business cannot receive relief during the pandemic. “Thus, a law firm where a single lawyer provided advice to a single marijuana business client on legal issues for a nominal fee would arguably be ineligible under this language for the SBA PPP loan program,” the organization wrote.
ABA’s letter further notes that 78 percent of firms are located in states where marijuana is legal in some form.
“We urge SBA to provide further guidance that it will not treat otherwise eligible businesses, including law firms, as disqualified from the PPP program based solely on having provided legal, financial/accounting, policy, or regulatory advice to a Direct Marijuana Business,” Judy Perry Martinez, ABA’s president, wrote.
Steve Fox, strategic advisor at the Cannabis Trade Federation, told Marijuana Moment that it’s “wonderful to see an organization with the reputation and stature of the ABA engage on this issue.”
“As they note, the SBA guidance is overly broad and unjustly punishes companies and firms all across the country. In fact, in some states, the cannabis industry is so ingrained in the economy, you have many hundreds of companies providing goods or services to cannabis businesses,” he said. “According to the plain language of the SBA guidance, they are all, with very minor exceptions, ineligible for PPP loans.”
“We stand with the ABA in urging the Treasury and Small Business Administration to issue further guidance, clarifying that ‘indirect marijuana businesses’ are eligible for PPP loans. If they fail to do so, Congress should remedy this situation at the earliest possible opportunity,” he added.
In February, ABA’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.
Rep. Earl Blumenauer (D-OR) introduced a bill last month that would fix the COVID-19 relief access problem, calling for SBA eligibility for cannabis businesses and ancillary companies. That came after he led a letter with 34 bipartisan members of the House urging leadership to include the policy change in future coronavirus-related bills.
Sens. Jacky Rosen (D-NV) and Ron Wyden (D-OR) made a similar request to Senate leaders in a separate letter.
Separately, the ABA-supported Secure and Fair Enforcement (SAFE) Banking Act was included in a House-passed COVID-19 relief package last month.
A bipartisan coalition of 34 state and territory attorneys general asked Congress to pass the bill with that language, which would protect banks that service marijuana businesses from being penalized by federal regulators.
The head of the Federal Deposit Insurance Corporation said this week that marijuana business banking represents one of the most “challenging issues that I have encountered” at the agency.
Read ABA’s letter to the Treasury and SBA below:
Bermuda Government Releases Marijuana Legalization Bill For Public Feedback
The government of Bermuda released a draft bill on Wednesday to establish a legal marijuana market in the self-governing British overseas territory.
“Surprising for some, public attitudes have evolved apace with global legislative reforms and in recognition that opening up pathways for new economic opportunities and activity is needed,” Attorney General Kathy Simmons said in a video on the proposal.
Under the proposed legislation, adults 21 and older would be able to possess and purchase up to seven grams of cannabis from licensed retailers.
A regulatory body called the Cannabis Advisory Authority would be responsible for issuing licenses and regulating the market. There would be seven types of licenses available: cultivation, retail, research, import, export, transportation and manufacturing.
Individuals with prior marijuana convictions would not be barred from participating in the industry.
Fees for the licenses would be set in a way designed to both stimulate the territory’s economy while also ensuring that they are not prohibitively expensive for “underserved and marginalized communities,” a summary of the bill states.
People with convictions for possessing seven grams or less would be eligible for expungement.
The Attorney-General and Minister of Legal Affairs, Senator the Hon. Kathy Lynn Simmons, JP has announced new regulations by the Government of #Bermuda to reform Cannabis laws.
— Bermuda Government (@BdaGovernment) June 4, 2020
Last year, Bermudan lawmakers unveiled draft legislation to create a medical cannabis program. Public feedback signaled that people felt the bill imposed excessive regulations and that the territory should more broadly legalize marijuana altogether for adult use.
Now that this new draft legislation has been released, the government is again asking for public input up until July 3. On its site, individuals are prompted with seven specific questions that feedback is being sought on. That includes queries about licensing requirements and penalties.
Premier David Burt, who pledged last year to introduce marijuana legalization legislation, also encouraged individuals to weigh in on the proposed regulations.
We want to hear from you! Share your thoughts by July 3rd.https://t.co/kkGtsuQ1ES
— Premier David Burt (@BermudaPremier) June 5, 2020
“The Government has made a commitment to progressively liberalize cannabis laws in Bermuda and to create economic opportunities for citizens wishing to participate in a regulated cannabis scheme,” the site states. “The Government again wishes to ‘take it to the people’ by commencing a one month public consultation exercise on the proposed scheme.”
The attorney general said in her video that the government plans to “move ahead with a more simplified, regulated cannabis scheme, which builds on the strength of the original medicinal cannabis policy and which embraces the public feedback.”
“The revised proposal with provide for a regulated cannabis program which has been hybridized to meet Bermuda’s requirements while modeling the best available legal provisions in Canada, both provincial and federal, and to a lesser degree, examples from the Caribbean,” she said.
Several Caribbean nations have started exploring marijuana reform in recent years. Importantly, in 2018, the heads of 19 Caribbean nations agreed to “review marijuana’s current status with a view to reclassification,” emphasizing “human and religious rights” issues stemming from criminalization as well as “the economic benefits to be derived” from legalization.
Since then, lawmakers in the dual-island nation of St. Kitts and Nevis said they would be introducing legalization legislation. The government of Trinidad and Tobago brought two cannabis reform bills before Parliament last year—one to decriminalize low-level possession and another to legalize cannabis for medical and religious purposes.
Meanwhile, the governor of the U.S. Virgin Islands has been stressing the need to legalize marijuana in order to generate tax revenue for the U.S. territory’s fiscal recovery from the coronavirus pandemic.
The Jamaican government also recently announced that it will be allowing medical cannabis patients to make marijuana purchases online for pickup at “herb houses” as a means to combat the coronavirus pandemic.
Read the draft bill to legalize marijuana in Bermuda below: