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.
Mitch McConnell Presses FDA Nominee On CBD And Hemp
Senate Majority Leader Mitch McConnell (R-KY) met with the nominee to become the next Food and Drug Administration (FDA) commissioner on Wednesday and discussed the need for a regulatory framework for CBD products.
While there are few specific details available about their conversation, McConnell said he emphasized the importance of hemp legalization for Kentucky farmers and pointed out that those producers are also facing challenges given the lack of FDA regulations concerning CBD.
“I look forward to working closely with Dr. Hahn on several important issues for Kentucky,” McConnell said in a press release. “Like many Kentuckians who are taking advantage of hemp’s legalization, I am eager for FDA’s plans to create certainty for CBD products.”
As @senatemajldr, Senator Mitch McConnell advocates for #Kentucky priorities with the Trump Administration and discussed his Tobacco 21 legislation, #hemp, and CBD with President @realDonaldTrump’s nominee for @US_FDA Commissioner: https://t.co/GZhkVgPeFV pic.twitter.com/a0gBs9z42u
— Senator McConnell Press (@McConnellPress) November 20, 2019
The majority leader has previously pressed FDA to issue enforcement discretion guidance that prioritizes action against only CBD companies making especially unfounded medical claims about their products while allowing responsible businesses to continue to market their products as the agency continues to develop rules.
McConnell similarly raised his concerns about the importance of expediting CBD regulations during a separate meeting with Acting FDA Commissioner Ned Sharpless in June.
Stephen Hahn, the FDA nominee, was also pressed on CBD issues during a confirmation hearing on Wednesday. Sens. Jacky Rosen (D-NV) and Pat Roberts (R-KS) noted that there’s wide consumer interest in the cannabis products but stressed that more research is needed, barriers to research should be lifted and public health interests should be balanced with policies that support the industry.
Hahn replied that he believed there’s untapped therapeutic potential in the cannabis compound, but he also agreed that there are “unanswered questions that need to be filled in by data and science and research.”
In related developments, several consumer groups have recently expressed concerns about the current status of the CBD market.
Three groups—National Consumers League, Consumer Federation of America and Community Anti-Drug Coalitions of America—announced on Tuesday that they are launching an initiative called “Consumers for Safe CBD” that is designed to “warn the public of the potential risks related to CBD products.”
According to a press release, the coalition will also encourage FDA “to use its existing authority to protect consumers, provide guidance to manufacturers, and encourage further research for FDA-approved CBD treatments.”
Another group, the Consumer Healthcare Products Association (CHPA), launched a citizen petition to FDA last week that implores the agency to quickly develop rules for CBD so that the products can be lawfully marketed as dietary supplements.
“Intense consumer demand and commercial interest has resulted in a flood of CBD products of uncertain quality and unapproved claims already in the marketplace, and this scenario has created an urgent need for FDA action,” CHPA President Scott Melville said in a press release.
“The request in our petition seeks to have FDA utilize the authority it already has to establish a lawful regulatory pathway for manufacturers to bring dietary supplements containing CBD to market,” he said. “Only then will consumers be able to purchase CBD-containing dietary supplements in a manner that ensures product quality, safety, and a level-playing field for enforcement.”
Photo courtesy of Twitter/Senate Majority Leader.
Senators Push USDA To Adopt Five Changes To Proposed Hemp Regulations
Sens. Ron Wyden (D-OR) and Jeff Merkley (D-OR) sent a letter to the head of the U.S. Department of Agriculture (USDA) on Wednesday, requesting a series of changes to draft rules for hemp that the department released last month.
The senators said they appreciate that USDA issued the proposed regulations, which is a “necessary step to establish a domestic federal hemp production program.” However, they wanted to highlight “several concerns about the unintended and potentially harmful effects this interim final rule would have on hemp production in Oregon and across the country.”
In the letter to Agriculture Sec. Sonny Perdue, they listed five issues with the regulations and suggested potential fixes. Many of the concerns echoed those that stakeholders have submitted to USDA as part of a public comment period the department launched on October 31. Here’s what the senators highlighted:
—As written, the draft rules call for hemp to be tested within 15 days before harvest. Farmers have argued that’s far too little time, and the senators said it presents an “impossible obstacle for growers to overcome.” Oregon regulations require testing within 28 days, so they said USDA should adopt a similar timeline.
—USDA said that testing must be completed at a laboratory registered with the Drug Enforcement Administration. The senators said that will produce a bottleneck and delays for hemp producers, and that independent laboratories such as those operating in Oregon should be allowed to conduct the tests.
—The senators said that USDA should allow for forms of THC concentration testing that do not involve post-decarboxylation and also argued that the congressional intent of hemp legalization was not to require testing of all THC compounds but rather just delta-9 THC in particular.
—USDA requires that testing samples come from the top one-third of the flower portion of the plant. Instead, the senators said, samples should follow established protocol in states like Oregon, which stipulates that samples should be taken from the flowering tops when they’re present and be eight inches long.
—While the Farm Bill defines hemp as cannabis containing no more than 0.3 percent THC on a dry weight basis, USDA gave slight margin of error and considers any plants with more than 0.5 percent THC to be in violation of the regulations. Farmers have called that limitation arbitrary and the senators said it would be more reasonable to set the negligence threshold at 1 percent, if there must be a THC restriction at all.
“Farmers in Oregon and across the country are on the precipice of an agricultural boom that, with the right regulatory framework, stands to boost rural economies in every corner of the country,” they wrote.
Wyden and Merkley have been some of the most vocal proponents of developing USDA regulations that bolster the hemp industry since the passage of the Farm Bill, through which they worked to legalize the crop in the first place. As early as February, Wyden and Senate Majority Leader Mitch McConnell (R-KY) were knocking at USDA’s door, urging the department to expedite the rulemaking process.
Read the full senators’ letter to USDA on hemp regulations below:
Photo courtesy of Brendan Cleak.
Virginia Attorney General Hosts ‘Cannabis Summit’ To Advance Reform In New Democratic Legislature
Virginia’s attorney general is inviting state lawmakers to a “Cannabis Summit” next month as talk about advancing marijuana decriminalization and other reforms during the 2020 legislative session picks up.
Officials from other states that have legalized or decriminalized cannabis will speak at the event, as will academics who study the issue.
“This upcoming General Assembly Session policymakers will be considering legislation related to cannabis use in the Commonwealth,” an invitation states. “This summit is designed to better inform those discussions and offer perspectives from states that have implemented similar changes at the state level.”
“The summit will consist of 4 panels of experts from around the country to speak on the following topics related to cannabis policy: decriminalization of marijuana, social equity, regulating CBD & Hemp products, pathways towards legalization through legislative efforts and other topics that will better inform the upcoming legislative work,” reads the invitation sent out by the attorney general’s office, which was first reported by The Virginia Mercury.
Attorney General Mark Herring (D) said last month that the legislature will first move to pass a cannabis decriminalization bill—something that Gov. Ralph Northam (D) had campaigned on and talked about in his State of the State address.
Lawmakers will then “get to work on a larger study about how and when we could move toward legal and regulated adult use,” Herring said.
It's time for Virginia to decriminalize, address past convictions, and move toward legal, regulated adult use.https://t.co/aqWxQCVPIg
— Mark Herring (@MarkHerringVA) November 20, 2019
“Criminalizing marijuana possession is not working. It is needlessly creating criminals, saddling people with convictions and costing taxpayers millions each year,” the attorney general wrote in an op-ed for the Virginian-Pilot this week. “The social and human costs are tremendous, and the weight of the system falls disproportionately on African Americans and people of color. There are smarter, better ways we can handle cannabis and that begins with decriminalizing simple possession of small amounts, addressing past convictions and moving towards legal, regulated adult use.”
The chances of getting cannabis reform policies through the General Assembly significantly increased after this month’s election, which saw Democrats reclaim control of both chambers for the first time in decades.
Accordingly, a lawmaker prefiled a cannabis decriminalization bill this week that would make possession of up to one ounce of marijuana punishable by a maximum $50 civil penalty.
The announcement of the Cannabis Summit, which will take place in Richmond on December 11, is another signal that political support for reforming Virginia’s marijuana laws is strong. And while Northam has not endorsed adult-use legalization, the inclusion of that issue in panel discussions indicates that decriminalization is just the beginning of the conversation. Advocates are also pushing the state to expand its limited medical cannabis program.
“The attorney general’s public support for advancing evidence-based cannabis policy, coupled with the recent formation of the Virginia Cannabis Caucus, set the stage for a robust and unprecedented exploration of real-world experiences with decriminalization, legalization and regulation in other states,” Jenn Michelle Pedini, executive director of Virginia NORML, told The Virginia Mercury.
NORML honored Herring with its “Vanguard Award” as part of its national conference in September.
Photo courtesy of Mike Latimer.