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.
Michigan Prosecutor Won’t Pursue Psychedelics Possession Cases Following Local Decriminalization Vote
A soon-to-be county prosecutor in Michigan said his office will not be pursuing psychedelics possession cases following a City Council vote to decriminalize entheogenic substances in Ann Arbor.
Eli Savit, who won in a three-way Democratic primary for Washtenaw County prosecutor last month and is running unopposed in the general election, said in a statement to the advocacy group Decriminalize Nature Ann Arbor that he supports the measure and will extend the policy county-wide, rather than just at the city level.
“I support the decriminalization of entheogenic plants. I believe the War on Drugs has been an abject failure, and I see no reason to criminalize—or prosecute—people for their use of such plants,” he said. “That was my position before the Ann Arbor City Council resolution, and it’s true with even greater force afterwards.”
The official, who campaigned on a pro-reform platform, said that drug criminalization has “created a cruel roulette wheel of sorts” and “it’s a weighted wheel, as the data clearly shows that Black people and people of color are far more likely to face criminal consequences related to drug use than white people.”
“The Ann Arbor City Council resolution of course applies only in Ann Arbor,” he said. “But, consistent with the resolution, I do not plan to prosecute the use or possession of entheogenic plants in any other part of the county.”
The unanimous City Council vote earlier this month made Ann Arbor the third city in the U.S. to make it so enforcement of laws against a wide range of psychedelics such as psilocybin, ibogaine and ayahuasca are among the lowest police priorities. Oakland was the first to do so, followed by Santa Cruz. Washington, D.C. could be next, as activists successfully placed the issue on the November ballot.
The broader reform movement kicked off in earnest shortly after Denver voters approved a measure last year focused on decriminalizing psilocybin.
Savit’s support for the Ann Arbor policy change stands out as an example of how the messaging behind these local reforms can have an impact beyond the individual jurisdiction it directly applies to.
“While we were not surprised, we were absolutely thrilled to find out that Eli Savit supports the DNA2 resolution! This left us feeling very hopeful for the future of our county,” Julie Barron, chair of Decriminalize Nature Ann Arbor, told Marijuana Moment. “Mr. Savit spoke extensively during his campaign about ending the war on drugs. It is great to know that he will continue this promise to the county with an action plan not to prosecute the possession and use of entheogenic plants/fungi.”
“We have a strong drug reform advocate here, and we cannot wait for him to take his position of Washtenaw County Prosecutor,” she said.
Several other prosecutors have similarly enacted policy changes to avoid low-level marijuana cases. For example, the top cop in Fairfax County, Virginia said in January that he “directed my office to dismiss prosecutions of adults for simple possession of marijuana.”
The top prosecutor in Baltimore is proactively closing warrants and dismissing hundreds of cases for certain offenses, including simple drug possession, that her office is no longer pursuing amid the coronavirus pandemic.
Montana Marijuana Legalization Initiative Endorsed By Environmental Conservation Groups
Montana activists behind a marijuana legalization initiative are being backed by a uniquely “Big Sky Country” coalition: environmental conservation groups.
The state—widely known for its public lands and parks that attract tourists from across the country—would see a significant influx of revenue for environmental conservation programs from cannabis taxes if the legalization measure passes in November. Half of the public revenue from marijuana sales would be earmarked for such purposes.
Organized by the legalization campaign New Approach Montana, a new Public Lands Coalition (PLC) is comprised of four conservation organizations, including the Montana Conservation Voters and Montana Wildlife Federation.
“All Montanans share the values of open space, as Montanans we collectively own and steward some of the most special places on earth. We are in fact, the Last Best Place, and that’s a central part of our identity as Montanans,” Pepper Petersen, political director for New Approach Montana, told Marijuana Moment.
“The allocations in I-190 reflect our values as Montanans and you see that in the initiative,” he said. “Montanans know that marijuana revenue should be invested wisely, and our public lands in Montana are a great investment.”
The group said in an op-ed published in The Missoulian newspaper on Sunday that there is currently $60 million in “unmet conservation needs in Montana” for services such as “funding for landowners who want to offer access for hunting and fishing.” Legalizing cannabis could help fill that gap, the coalition said.
“In order to continue to offer Montanans and our millions of guests an experience worth coming back for, we need to invest in our public lands,” PLC, which also includes Wild Montana Action Fund and the Trust for Public Land, wrote. “A vote for 118 and 190 is a vote to maintain and create trails, protect land for wildlife, and fund our state parks.”
The new coalition’s website says that legalization “would provide more than $18 million per year to benefit our public lands; both maintaining current access and opening up new opportunities for recreation.”
“These additional funds would help to address the state’s backlog of repairs to campgrounds, trails, wildlife habitat, opening access and increasing maintenance on our public lands,” the groups said.
Interestingly, the campaign is also making the case that legalizing federally illegal cannabis on the state level will help open up access to additional federal funding.
“The Land and Water Conservation fund is the largest piece of federal funding for our public lands. Now that the LWCF is fully and permanently funded, there are $900 million federal dollars per year that can be leveraged with matching state resources,” the coalition website says. “Tax revenue from I-190 could allow Montana to access more of this funding through matched federal grants. Montana should take every opportunity to use this money, and I-190 represents a golden opportunity to do so.”
There will be two separate marijuana measures on the state’s November ballot.
One initiative, a statutory change, would create a system of legal cannabis access for adult-use. A separate constitutional amendment would ensure only those 21 and older can participate in the market.
If the statutory measure is approved by voters, possessing up to an ounce of cannabis would be allowed, and people could cultivate up to four plants and four seedlings at home.
The Montana Department of Revenue would be in charge of regulating the legal industry and would issue business licenses by January 1, 2022. Existing medical cannabis businesses would be first in line to enter the adult-use market.
There would be a 20 percent sales tax on recreational marijuana, while the tax on medical cannabis products would be reduced from two to one percent. Besides public land funding, those tax dollars would also go toward veteran services, substance misuse treatment, health care, local governments that allow cannabis businesses and the state general fund.
“We are excited to have the support of our neighbors and friends from the PLC,” Petersen said. “Countless Montanans will continue to enjoy this special place because of the funding I-190 is creating and because of the hard work of the folks like those who make up the Public Lands Coalition who believe and invest in Montana’s public lands and waters.”
Montana voters approved a medical cannabis legalization initiative in 2004 and later passed a 2016 expansion measure.
For the current cycle, New Approach Montana submitted their petitions for the cannabis initiatives in June. That came after they initially suspended signature gathering activities amidst the coronavirus pandemic, which they later relaunched with social distancing measures in place.
In July, the group announced that data from county officials indicated they would make the ballot. And in August, state officials officially qualified the measures.
The Montana Democratic Party adopted a platform plank endorsing marijuana legalization in June.
Photo courtesy of Chris Wallis // Side Pocket Images.
House Democrats Keep Marijuana Banking Protections In Revised COVID Bill After Delaying Legalization Vote
A slimmed-down coronavirus relief bill that House Democrats released on Monday again includes marijuana banking protections.
Despite pushback from GOP lawmakers who challenged the germaneness of including the cannabis language in a prior version that the House approved in May, the text of the Secure and Fair Enforcement (SAFE) Banking Act was again inserted into the new legislation. It could get a floor vote as early as this week—and that would mark the third time the chamber has taken up the banking measure in some form in the past year.
The SAFE Banking Act would protect financial institutions that service state-legal marijuana businesses from being penalized by federal regulators, and on its own has significant bipartisan support. But its inclusion in the COVID-19 relief legislation was widely criticized by Republicans who insisted that it was part of an expansive Democratic wishlist of items not related to the health crisis.
Senate Majority Leader Mitch McConnell (R-KY) has been particularly critical of the House proposal, specifically taking issue with industry diversity reporting provisions of the SAFE Banking Act, for example. Other vocal opponents include Vice President Mike Pence and Sens. James Lankford (R-OK) and John Kennedy (R-LA).
The Senate did not add cannabis banking language to its own version of COVID relief legislation filed in July.
“We appreciate that Democratic leadership is standing firmly behind the bipartisan SAFE Banking Act, despite some Republicans in Congress preferring to treat this public safety issue like some kind of comic relief,” Steve Fox, president of VS Strategies, told Marijuana Moment. “Far from being non-germane, the pandemic has only underscored the importance of this legislation.”
“At a time when businesses all across the country are relying on electronic transactions to protect public health, cannabis businesses are being forced to exchange currency. This bill is timely and necessary,” he said.
A summary of the banking provision prepared by House leaders states that it would “allow cannabis-related legitimate businesses, that in many states have remained open during the COVID-19 pandemic as essential services, along with their service providers, to access banking services and products, as well as insurance.”
Notably, the document highlights the diversity reporting language that some Republicans have slammed, signaling that Democrats are not shying away from those components despite the criticism. It explains that the legislation “requires reports to Congress on access to financial services and barriers to marketplace entry for potential and existing minority-owned cannabis-related legitimate businesses.”
Advocates, stakeholders and lawmakers have argued that providing marijuana banking protections will mitigate the spread of the coronavirus by making it so cannabis businesses don’t have to rely on cash transactions. House Speaker Nancy Pelosi (D-CA) said she agrees that the measure is an appropriate component of the bill.
“The inclusion of the SAFE Banking Act in the HEROES 2.0 package is a positive development,” NORML Political Director Justin Strekal said. “In the majority of states that regulate the marijuana marketplace, cannabis businesses have been deemed essential during this pandemic.”
“Unfortunately, at the federal level, prohibition compounds the problems that this emerging industry faces,” he said. “Small cannabis businesses in particular are facing tough economic times and access to traditional financial tools will help ensure that they can weather this pandemic.”
While the incremental reform measure would help alleviate financial complications in the cannabis market, news that House Democrats opted to stick to their guns on the industry-focused marijuana banking legislation could frustrate advocates who were disappointed when the chamber’s leadership decided to postpone a planned vote on a comprehensive cannabis legalization and social equity bill earlier this month.
The banking provisions are generally considered industry friendly without addressing the systemic problems resulting from the war on drugs. In the past, some activists have made the case that lawmakers should’t approve the SAFE Banking Act until marijuana is descheduled and restorative justice policies are implemented.
The House was expected to hold a floor vote on the Marijuana Opportunity, Reinvestment and Expungement (MORE) Act to federally legalize cannabis last week, but leaders announced they were delaying it after certain centrist Democrats expressed concern about the optics of advancing marijuana reform legislation without first passing additional COVID relief.
All that said, others do view the banking protections as a boon for social equity in that they would help minority-owned cannabis businesses that currently struggle to get access to capital and financial services.
“Without access to much needed capital to maintain throughout the crisis, it is possible that we could see an acceleration of the corporatization of the cannabis industry in a manner that is inconsistent with the values and desires of many within the cannabis space,” Strekal said. “Enactment of the SAFE Banking Act would ensure that small businesses could compete in this emerging marketplace.”
In July, bipartisan treasurers from 15 states and one territory sent a letter to congressional leadership, urging the inclusion of the SAFE Banking Act in any COVID-19 legislation that’s sent to the president’s desk. Following GOP attacks on the House proposal, a group of Democratic state treasurers renewed that call.
The House last year approved the standalone SAFE Banking Act. For months, the legislation has gone without action in the Senate Banking Committee, where negotiations have been ongoing.