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Congressional Funding Bill Protects Cannabis Banking And Lets DC Legalize Marijuana Sales

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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.

Organizations representing state National Association of State Treasurers, the National Association of Attorneys General and all 50 state banking associations have endorsed the proposal.

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.”

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.

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.

This piece was first published by Forbes.

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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Federal Agency Loosens Marijuana-Related Grant Funding Restrictions For Mental Health Treatment

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The federal Substance Abuse and Mental Health Services Administration (SAMHSA) loosened restrictions this week on grant funding for state health providers and other entities that allow patients to use medical marijuana for mental heath treatment.

The Pennsylvania Department of Drug and Alcohol Programs flagged the new policy change in a notice to SAMHSA grant recipients on Monday. It said that the federal agency has removed language from its terms and conditions that until now has prevented grant funds from going to any institution that “provides or permits marijuana use for the purposes of treating substance use or mental disorders.”

This restriction led the state department to issue a memo in June warning recipients and applicants about the possible withholding of funding.

Despite the recent change, SAMHSA is still continuing a narrower ban that says federal funds themselves “may not be used to purchase, prescribe, or provide marijuana or treatment using marijuana.”

The broader prohibition, which has now been rescinded, prompted a notice last year from Maine’s Education Department, which said is was no longer eligible for certain federal funds to support mental health programs in schools because the state allows students to access medical marijuana.

It seems the federal agency is now being somewhat more permissive.

Here’s how SAMHSA’s updated marijuana restriction reads:

“SAMHSA grant funds may not be used to purchase, prescribe, or provide marijuana or treatment using marijuana. See, e.g., 45 C.F.R. 75.300(a) (requiring HHS to ensure that Federal funding is expended in full accordance with U.S. statutory and public policy requirements); 21 U.S.C. 812(c)(10) and 841 (prohibiting the possession, manufacture, sale, purchase or distribution of marijuana).”

The older, more broad prohibition read:

“Grant funds may not be used, directly or indirectly, to purchase, prescribe, or provide marijuana or treatment using marijuana. Treatment in this context includes the treatment of opioid use disorder. Grant funds also cannot be provided to any individual who or organization that provides or permits marijuana use for the purposes of treating substance use or mental disorders. See, e.g., 45 C.F.R. § 75.300(a) (requiring HHS to “ensure that Federal funding is expended in full accordance with U.S. statutory requirements.”); 21 U.S.C. §§ 812(c)(10) and 841 (prohibiting the possession, manufacture, sale, purchase or distribution of marijuana). This prohibition does not apply to those providing such treatment in the context of clinical research permitted by the DEA and under an FDA-approved investigational new drug application where the article being evaluated is marijuana or a constituent thereof that is otherwise a banned controlled substance under federal law.”

The marijuana restrictions were first added to grant award terms for Fiscal Year 2020. The language was initially carried over to Fiscal Year 2021 but was more recently switched out for the narrower language by the federal agency.

In a January 2020 FAQ that the Pennsylvania department shared from SAMHSA this June, the federal agency responded to a prompt inquiring whether grant recipients can serve patients who are “very clear about their wish to remain on their medical marijuana for their mental or substance use disorder.”

“No. The organization cannot serve a patient who is on medical marijuana for a mental or substance use disorder and wishes to remain on such treatment,” it said. “SAMHSA promotes the use of evidence-based practices and there is no evidence for such a treatment; in fact, there is increasing evidence that marijuana can further exacerbate mental health symptoms.”

While the agency seemed adamant in enforcing that policy at the time, it appears to have had a change of heart and has since loosened the restriction.

A SAMHSA spokesperson told Marijuana Moment that the new rules took effect on Sunday, but played down their significance.

“This Aug. 1 clarification simply made clearer what was already in place: SAMHSA funds should not be used to procure a federally prohibited substance,” he said in an email.

While it is true that the revised provision, as was the case in the prior language, states that federal funds cannot be used to pay for marijuana, the spokesperson avoided commenting on the new deletion of the broader prohibition on grants going to entities that otherwise allow patients to use medical cannabis to treat substance use or mental disorders.

After SAMHSA announced in 2019 that its marijuana policy would impact organizations applying for its two main opioid treatment programs and another that provides funding to combat alcoholism and substance misuse, the Illinois Department of Human Services and Oregon Health Authority issued notices on the impact of the rule.

Read the Pennsylvania department’s notice on the SAMHSA marijuana policy change below: 

Pennsylvania SAMHSA marijuana by Marijuana Moment

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Photo courtesy of Philip Steffan.

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Mexican Lawmakers Could Finally Legalize Marijuana Sales Next Month (Op-Ed)

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The legislature missed repeated deadlines, and then the Supreme Court moved to allow homegrow. What’s next?

By Zara Snapp, Filter

Mexico has never seemed so close and yet so far from fully regulating the adult-use cannabis market.

A first Supreme Court resolution determined in 2015 that the absolute prohibition of cannabis for personal use was unconstitutional because it violates the right to the free development of personality. To reach jurisprudence in Mexico, five consecutive cases, with the same or more votes each time, must be won before the Supreme Court. This was achieved in October 2018, which detonated a legislative mandate that within 90 days, the Senate should modify the articles in the General Health Law that were deemed unconstitutional.

The first deadline came and went without the Senate modifying the articles; so the Senate requested an extension, which was granted. The second deadline to legislate expired on April 30, 2020—but another extension was provided because of the COVID-19 pandemic.

At first, it looked like the third time was the charm. The Senate overwhelmingly approved the Federal Law to Regulate and Control Cannabis in November 2020 and passed it to the Chamber of Deputies, the lower house, for review and approval. Since the deadline of December 15, 2020, was fast approaching, the Chamber asked for its own extension. The Supreme Court granted it (until April 20, 2021) and the bill underwent significant changes before being approved by the Chamber on March 10, and so sent back to the Senate.

The Senate certainly had enough time to review and either reject or accept the changes made by the lower house. That would have made this a shorter story. However, the Senate had other plans. Rather than approve the bill or request an additional extension, it simply did not do anything. June’s national midterm elections were approaching, and political calculations were made. The legislative process came to a standstill.

Since the Senate did not approve the bill by the deadline, the Supreme Court basically did what it had mandated Congress to do. It activated a mechanism to guarantee rights that had only been undertaken once before in Mexican history: the General Declaration of Unconstitutionality (GDU).

On June 28, the Supreme Court approved, with a qualified majority of eight of the 11 Ministers, that two articles in the General Health Law must be modified to permit adults to cultivate cannabis for personal use in their homes.

These changes were officially published on July 15, with specific instructions to the Health Secretary to approve authorizations for any adult who applies.

The GDU has certain restrictions attached, including that this is only for personal use and cannot be used to justify any commercialization of cannabis or cannabis-derived products. Adults cannot consume in front of minors, or other adults who have not expressly given their permission. Nor can they operate heavy machinery or drive while under the effects.

With the GDU, the judicial process concludes. However, the Supreme Court was clear in its final recommendations: Congress can and should legislate to clear up inconsistencies and generate a legal framework for cannabis users.

Whether the Senate decides to take up the matter again in September when it returns to its legislative session will depend largely on its political whim. The body no longer has a deadline to meet; however, there are growing calls from society to regulate the market beyond home-grow, as well as several legal contradictions that obviously need to be harmonized.

The General Health Law has now been modified and the health secretary must approve permits or authorizations for adults to cultivate in their homes. But the Federal Criminal Code has not changed—it still penalizes those same activities with sanctions ranging from 10 months to three years or more in prison.

The Supreme Court decision ignores the need for a comprehensive regulation that would allow the state to apply taxes to commercial activities, which are currently still criminalized with penal sanctions. It also overlooks the urgency of an amnesty program for the thousands of people currently incarcerated on low-level cannabis charges, or hampered by criminal records for such charges.

The Senate should now revisit the bill it initially passed. It should maintain the positive aspects of the bill, which would improve things well beyond the scope of the Supreme Court decision. These include provision for cannabis associations (permitting up to four plants per person for up to 20 members), for home-grow without the need to request authorization, and for a regulated market with a social justice perspective—allocating 40 percent (or more!) of cultivation licenses to communities harmed by prohibition and imposing restrictions on large companies.

The Senate could also build upon the previous version of the bill by eliminating simple possession as a crime, by allowing the associations to operate immediately and guaranteeing the participation of small and medium companies through strong government support.

During the last three years, and before, civil society has closely accompanied the process of creating this legislation, providing the technical and political inputs needed to move forward in a way that could have great social benefits for Mexico.

By becoming the third country in the world to regulate adult cannabis use, after Uruguay and Canada, Mexico could transition from being one of the largest illegal producers to being the largest legal domestic market in the world. As well as economic benefits, this could have substantial impacts on how criminal justice funds are spent, freeing up law enforcement dollars to focus on high-impact crimes and changing the way the state has shown up in communities that cultivate cannabis.

Rather than eradicating crops, the government could accompany communities in gaining legal licenses, provide technical assistance and improve basic services. These positive externalities of regulation could signal a shift from a militarized state of war to a focus on rights, development and social justice.

Of course, this all depends on key political actors recognizing the benefits—and that requires political will. Mexico deserves better; however, it remains to be seen whether legislators will act.

This article was originally published by Filter, an online magazine covering drug use, drug policy and human rights through a harm reduction lens. Follow Filter on Facebook or Twitter, or sign up for its newsletter.

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Oregon Governor Plans To Veto Bill To Regulate Kratom Sales That Advocates Say Would Protect Consumers

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The governor of Oregon has announced her intent to veto a bill that’s meant to create a regulatory framework for the sale and use of kratom for adults.

The Oregon Kratom Consumer Protection Act is bipartisan legislation that would make it so only people 21 and older could purchase the plant-based substance, which some use for its stimulating effects and which others found useful in treating opioid withdrawals.

Vendors would have to register with the state Department of Agriculture to sell kratom. The agency would be responsible for developing regulations on testing standards and labeling requirements. The bill would further prohibit the sale of contaminated or adulterated kratom products.

But while the House and Senate approved the legislation in June, Gov. Kate Brown (D) said on Sunday that she plans to veto it, in large part because she feels the federal Food and Drug Administration (FDA) is better suited to regulate the products.

“Given there is currently no FDA-approved use for this product and there continues to be concern about the impacts of its use, I would entertain further legislation to limit youth access without the state agency regulatory function included in this bill,” the governor said.

This comes as a disappointment to advocates and regulators who share concerns about the risks of adulterated kratom but feel a regulatory framework could help mitigate those dangers and provide adults with a safe supply of products that have helped some overcome opioid addiction.

“Kratom has been consumed safely for centuries in Southeast Asia and Americans use it in the same way that coffee is used for increased focus and energy boosts. Many use kratom for pain management without the opioid side effects,” Rep. Bill Post (R), sponsor of the bill, wrote in an op-ed published in June. “The problem in Oregon is that adulterated products are being sold.”

“Kratom in its pure form is a natural product,” he said. “Adulterated kratom is a potentially dangerous product.”

Pete Candland, executive director of the American Kratom Association, said in written testimony on the bill in February that four other states—Utah, Georgia, Arizona and Nevada—have enacted similar legislation with positive results.

He said that “the number of adulterated kratom products spiked with dangerous drugs like heroin, fentanyl, and morphine in those states has significantly decreased” in those states.

Meanwhile, six states—Vermont, Alabama, Indiana, Wisconsin, Arkansas and Rhode Island—have banned kratom sales altogether.

Candland said that number is actually a testament to the noncontroversial nature of the plant, as prohibition is only in effect in six states despite “a full-throated disinformation campaign on kratom by the FDA with outrageously untrue claims about kratom being the cause of hundreds of deaths.”

After failing to get kratom prohibited domestically, FDA recently opened a public comment period that’s meant to inform the U.S. position on how the substance should be scheduled under international statute.

“Kratom is abused for its ability to produce opioid-like effects,” FDA wrote in the notice. “Kratom is available in several different forms to include dried/crushed leaves, powder, capsules, tablets, liquids, and gum/ resin. Kratom is an increasingly popular drug of abuse and readily available on the recreational drug market in the United States.”

Responses to the notice will help inform the federal government’s stance on kratom scheduling in advance of an October meeting of the World Health Organization’s (WHO) Expert Committee on Drug Dependence, where international officials will discuss whether to recommend the substance be globally scheduled.

Last week, the U.S. House of Representatives approved a report to spending legislation that says federal health agencies have “contributed to the continued understanding of the health impacts of kratom, including its constituent compounds, mitragynine and 7-hydroxymitragynine.”

It also directed the Health and Human Services secretary to continue to refrain from recommending that kratom be controlled in Schedule I.

Late last year, the Agency for Healthcare Research and Quality (AHRQ) asked the public to help identify research that specifically looks at the risks and benefits of cannabinoids and kratom.

The Centers for Disease Control and Prevention (CDC) last year separately received more than one thousand comments concerning kratom as part of another public solicitation.

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Photo courtesy of Wikimedia/ThorPorre.

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