An informal task force formed by Connecticut Gov. Ned Lamont (D) has issued a series of recommendations on how to legalize marijuana with an eye toward social justice for communities most harmed by prohibition.
The group—which was comprised of about 20 lawmakers, advocates and community leaders—tackled two main sets of issues: those related to licensing and regulations, as well as community reinvestment. It was formed by the administration on a largely ad hoc basis in December and has stayed relatively under-the-radar in the weeks since.
“I think the overarching theme In the recommendations is the governor’s proposal needs to have strong equity provisions on the licensing side and on the back end, specifically a significant portion of the revenue going to communities hard hit by the war on drugs,” DeVaughn Ward, senior legislative counsel with the Marijuana Policy Project, told Marijuana Moment.
There was a recognition among task force members that there was a “lack of diversity and inclusion in the current medical market,” he said. “Without those two things, the governor’s [adult-use legalization] bill will have a really hard time gaining traction from progressive legislators, urban legislators and legislators of color, all which make up a large chunk of the Democratic majorities in both chambers.”
Here are some of the key recommendations to come out of the task force:
-Social equity licenses should go to businesses that have at least 67 percent ownership by individuals who meet at least two criteria: 1) those who have been arrested over a cannabis-related offense, 2) those with an immediate family member who has been arrested over marijuana, 3) those with an annual income lower than 150 percent of the median wage or 4) those from communities most harmed by prohibition as dictated by an equity study.
-A capital fund for zero-interest loans should be established and made available for equity operators.
-Equity licenses should match traditional licenses in the state “at each part of the supply chain.”
-If medical cannabis dispensaries are prioritized for adult-use licenses, equity applicants should also get licensing priority for microcultivator, delivery and transportation businesses.
-Each marijuana company must “implement policies that encourage diversity in employment, contracting and other professional opportunities.”
These recommendations come as the governor is circulating a draft bill to legalize marijuana, soliciting feedback from state agencies as he prepares a push to enact the policy change this year.
Lamont reiterated his support for legalizing marijuana during his annual State of the State address last month, stating that he would be working with the legislature to advance the reform this session.
Under the governor’s draft proposal, wholesale marijuana flower would be taxed at $1.25 per gram under the proposal, while trimmed plants would be subject to a 50 cents tax per gram. The state’s 6.35 percent sales tax would be imposed on retail cannabis purchases, as well as a three percent surcharge, with revenue partly going to local jurisdictions.
It also provides for automatic expungements for people with prior low-level marijuana possession convictions from October 1, 2015 or earlier. For those convicted after that date, they will be able to petition the courts for relief.
Other provisions of the draft bill would restrict marketing to prevent appealing to youth, increasing law enforcement resources for drug recognition experts to identify impaired driving and incorporating cannabis smoking and vaping to the state’s indoor clear air laws.
It’s not clear how much the informal proposal will change in light of the task force’s recommendations and other feedback from lawmakers and stakeholders by the time Lamont formally issues his legalization plan, which could be attached to a budget he will release on Wednesday.
The legislature has considered legalization proposals on several occasions in recent years, including a bill that Democrats introduced last year on the governor’s behalf. But while those stalled, there’s increased optimism that 2021 is the year for reform.
House Speaker Matt Ritter (D) said in November that legalization in the state is “inevitable.” He added later that month that “I think it’s got a 50–50 chance of passing [in 2021], and I think you should have a vote regardless.”
Should that effort fail, Ritter said he will move to put a constitutional question on the state’s 2022 ballot that would leave the matter to voters. A poll released last year found that nearly two-thirds of voters (63.4 percent) either “strongly” or “somewhat” supported recreational legalization.
Certain lawmakers have already made clear that they will not support legalization unless is adequately supports social equity and reinvestments in communities most impacted by the war on drugs.
Sen. Douglas McCrory (D), cochair of the Education Committee, said in a recent interview that “Frosty the Snowman would have a better chance of passing summer school in hell than any piece of legislation in Connecticut if it doesn’t deal with equity, economics and the communities that have been targeted and devastated by this fake war on drugs.”
The governor has compared the need for regional coordination on marijuana policy to the coronavirus response, stating that officials have “got to think regionally when it comes to how we deal with the pandemic—and I think we have to think regionally when it comes to marijuana, as well.”
He also said that legalization in Connecticut could potentially reduce the spread of COVID-19 by limiting out-of-state trips to purchase legal cannabis in neighboring states such as Massachusetts and New Jersey.
Read the full list of recommendations from the governor’s informal marijuana equity task force below:
1. Equity applicants are defined as businesses which are owned 67%or more by individuals who meet (two) of the following:
-Personally been arrested convicted or incarcerated for a cannabis crime
-Has an immediate family member(Parent or sibling) who has been arrested convicted or incarcerated for a cannabis crime
-Has an average annual income not more than 150% of median wage
-Is of a group disproportionately harmed by cannabis prohibition as determined by the equity study
2. Establish a study commission (DCP or indy) to oversee an impact study that will quantify the various negative repercussions of cannabis prohibition and submit a full report by Jan 1 2022. This report will inform the governing body that will determine the number of licenses to be awarded and the qualifications and benefits for each license type.
-Study commission will research how to create an equitable cannabis industry as it’s #1 priority, not maximizing revenue or speed of opening
-Study shall include specific recommendations on year 1, 5, and year 10 needs
-Appropriate checks and balances needed to ensure plenty of opportunities for course correction
3. The ratio of equity licenses to traditional must be at least 1 to 1 at each part of the supply chain
-Oakland and Boston model
-This will require the licensing of a significant number of equity businesses to bring the current ratio to 1 to 1 before sales can begin
4. Establish a capital fund for zero interest loans for certified equity operators
-All grantees must complete a “entrepreneurship in the cannabis industry” course/training]
5. Establish a workforce development program in cooperation with equity owners to provide owners and employees with technical support including but not limited to creation of SOPs, commercial buildout plans, legal assistance with real estate, permitting and zoning, human resources and payroll processing, and tax compliance.
6. Independence of equity commission should be encouraged as much as is possible
-Majority of votes on the commission should be non-regulatory agency appointments(?)
-Mix of stakeholders and regulators on commission
-Citizen’s ethics advisory board is an example
7. Develop a license type(s) specifically for equity applicants, if medical is given head start.
8. Require each cannabis business to include a social equity impact plan to be considered by in granting and renewal of license. Require each cannabis business to implement policies that encourage diversity in employment, contracting, and other professional opportunities and to report annually on the diversity of its workforce, management, and contracts.
-First mover advantage only able after funding given for economic uplift program
Read additional notes from the task force’s Community Economic Development Grant Revenue subgroup:
-We did not come up with a comprehensive definition of equity and instead decided to utilize the disparity study to help inform our work once its completed.
-We discussed the potential structure of an Equity Commission, including membership, oversight/responsibilities, appointments, and relationship with regulatory agency but made no final decisions.
-We determined that some independence from the state would be recommended so progress is not disrupted when new administrations are elected.
-We discussed the need to focus some funding into infrastructure projects for a community, meaning that we would attempt to create systemic change while investing into communities that have been traditionally disinvested in for many years.
-It was unanimously agreed that members of the community must have a voice in the process and that the commission needed to cultivate a space to allow those voices to be elevated.
-We discussed using indicators to determine need, an example of this could be income level, graduation rates, or arrests.
-Funding could be made available through targeted grants, but we would need to provide support systems to ensure organizations who may not have the capacity to manage/apply for the grants could still take advantage of the funding especially if they have been doing this work for years.
-Specific to funding, we agreed that after operational costs are deducted from excise tax revenue we would allocate 90% of left over revenue to community investment, 5% to the general fund, and 5% to drug education, treatment, counseling etc.
-It was also agreed that the larger group would help us determine a more specific breakdown of that 90% community investment allocation.
Photo courtesy of Kimberly Lawson.
Top IRS Official Says Marijuana Banking Reform Would Help Feds ‘Get Paid’
The Internal Revenue Service (IRS) would like to get paid—and it’d help if the marijuana industry had access to banks like companies in other legal markets, an official with the federal department said. She also talked about unique issues related to federal tax deductions for cannabis businesses.
At an event hosted by UCLA’s Annual Tax Controversy Institute on Thursday, IRS’s Cassidy Collins talked about the “special type of collection challenge” that the agency faces when it comes to working with cannabis businesses while the product remains federally illegal.
While IRS isn’t taking a stand on federal marijuana policy, Collins said that the status quo leaves many cannabis businesses operating on a cash-only basis, creating complications for the agency, in part by making it harder for banks to “pay us.”
“The reason why [the marijuana industry is] cash intensive is twofold,” she said. “Number one, a lot of customers don’t want a paper trail showing that they’re buying marijuana, and number two, the hesitancy of banks to allow marijuana businesses to even bank with them.”
Of course, the reason why many financial institutions remain hesitant to take on cannabis companies as clients is because the plant is a strictly controlled substance under federal law.
“There’s been a number of legislative bills that have been introduced—and I am definitely not expressing any opinion personally or on behalf of the IRS about any pending or proposed legislation,” Collins, who is a senior counsel in the IRS Office of Chief Counsel, said. “But it is interesting to note that, if the law changed so that the marijuana businesses could have banks, that would make the IRS’s job to collect [taxes] a lot easier. As part of collection, we want the money. That’s our end goal there.”
A major part of what makes cannabis businesses unique is that they don’t qualify for traditional tax credits under an IRS code known as 280E. That policy “prohibits them from claiming deductions for business expenses because they’re technically being involved in drug trafficking,” Collins explained at the event, from which small excerpts of her comments were reported by Bloomberg.
There are some options available to lessen the burden on marijuana firms, however. At the end of the day, “IRS will work with marijuana companies because, again, we want to get paid,” Collins said.
One of the ways the agency works with marijuana business operators is to have them visit designated IRS “tax assistance centers” that accept cash payments in excess of $50,000. But the official warned businesses to “be prepared to be there for a little while” as the center checks—and double checks—the amount of cash being submitted.
“Revenue officers will assist the marijuana companies in paying us,” she said.
IRS officials could also help cannabis firms by having officials accompany them “to the bank in order to try to help the taxpayer secure a cashier’s payment to pay the IRS, as well as using money orders,” she said, adding that “our revenue officers are are wanting to work with the marijuana companies to help assist them to pay us.”
“When the revenue officers are there in person with the taxpayer, that could potentially help increase the likelihood that the bank will cooperate and help the taxpayer transition into a cashier’s check,” she continued. “And that has been a trend since this first became legal [at the state level], that more and more banks are allowing cannabis companies to bank with them.”
In a report published earlier this year, congressional researchers examined tax policies and restrictions for the marijuana industry—and how those could change if any number of federal reform bills are enacted.
IRS, for its part, said last month that it expects the cannabis market to continue to grow, and it offered some tips to businesses on staying compliant with taxes while the plant remains federally prohibited.
As it stands, banks and credit unions are operating under 2014 guidance from the Financial Crimes Enforcement Network (FinCEN) that lays out reporting requirements for those that choose to service the marijuana industry.
Leaders in both chambers of Congress are working on legalization bills to end federal marijuana prohibition. But stakeholders are hopeful that, in the interim, legislators will enact modest marijuana banking reform. Legislation to protect financial institutions from being penalized for working with cannabis businesses passed the House for the fifth time last month.
Rodney Hood, a board member of the National Credit Union Administration, wrote in a Marijuana Moment op-ed this month that legalization is an inevitability—and it makes the most sense for government agencies to get ahead of the policy change to resolve banking complications.
IRS separately hosted a forum in August dedicated to tax policy for marijuana businesses and cryptocurrency.
Earlier this year, IRS Commissioner Charles Rettig told Congress that the agency would “prefer” for state-legal marijuana businesses to be able to pay taxes electronically, as the current largely cash-based system under federal cannabis prohibition is onerous and presents risks to workers.
Former Treasury Secretary Steven Mnuchin said in 2019 that he’d like to see Congress approve legislation resolving the cannabis banking issue and he pointed to the fact that IRS has had to build “cash rooms” to deposit taxes from those businesses as an example of the problem.
IRS released updated guidance on tax policy for the marijuana industry last year, including instructions on how cannabis businesses that don’t have access to bank accounts can pay their tax bills using large amounts of cash.
The update appears to be responsive to a Treasury Department internal watchdog report that was released earlier in the year. The department’s inspector general for tax administration had criticized IRS for failing to adequately advise taxpayers in the marijuana industry about compliance with federal tax laws. And it directed the agency to “develop and publicize guidance specific to the marijuana industry.”
Luxembourg Set To Become First European Country To Legalize Marijuana Following Government Recommendation
Luxembourg is poised to become the first European country to legalize marijuana, with key government agencies putting forward a plan to allow the possession and cultivation of cannabis for personal use.
The ministers of justice and homeland security on Friday unveiled the proposal, which will still require a vote in the Parliament but is expected to pass. It’s part of a broader package of reform measures the agencies are recommending.
Under the marijuana measure, adults 18 and older could grow up to four plants. However, under the non-commercial model that is being proposed, possessing more than three grams in public would still be a civil offense, carrying a fine of €25-500 ($29-581). Currently, the maximum fine for possession is €2,500 ($2,908).
In terms of access, adults would be able to buy and trade cannabis seeds for their home garden.
Justice Minister Sam Tamson said the government felt it “had to act” and characterized the home cultivation policy change as a first step, The Guardian reported.
👉🏻élaboration du projet de loi usage privé du #cannabis : jusqu’à 4 plantes à domicile & décorrectionnalisation <3g
👉🏻renforcement de la prévention & de l’accompagnement
👉🏻⬆️des moyens de la police
👉🏻élaboration d’un projet de production/vente #Luxembourg pic.twitter.com/8yre0Udt8J
— Sam Tanson (@SamTanson) October 22, 2021
“The idea is that a consumer is not in an illegal situation if he consumes cannabis and that we don’t support the whole illegal chain from production to transportation to selling where there is a lot of misery attached,” he said. “We want to do everything we can to get more and more away from the illegal black market.”
While limited in scope, the reform would make Luxembourg the first country in Europe to legalize the production and possession of marijuana for recreational use. Cannabis has been widely decriminalized in certain countries in the continent, but it has remained criminalized by statute.
Government sources in Luxembourg told The Guardian that plans are in the works to develop a program where the state regulates the production and distribution of marijuana. Tamson said they are working to resolve “international constraints” before taking that step, however, referring to United Nations treaty obligations that multiple U.S. states and other countries like Canada and Uruguay have openly flouted.
The measures include:
🟢 Regulation of cannabis use and cultivation: adults will be able to legally cultivate up to four cannabis plants for their own use, provided the cultivation is happening at their place of residence.
— European Greens (@europeangreens) October 22, 2021
For now, the country is focusing on legalization within a home setting. Parliament is expected to vote on the proposal in early 2022, and the ruling parties are friendly to the reform.
This has been a long time coming, as a coalition of major parties of Luxembourg agreed in 2018 to enact legislation allowing “the exemption from punishment or even legalization” of cannabis.
Meanwhile in the U.S., congressional lawmakers are working to advance legalization legislation. A key House committee recently approved a bill to end marijuana prohibition, and Senate leadership is finalizing a separate reform proposal.
In Mexico, a top Senator said this week that lawmakers could advance legislation to regulate marijuana in the coming weeks. The Supreme Court has already ruled that adults cannot be criminalized over possession or cultivation, but there’s currently no program in place to provide access.
Photo courtesy of Mike Latimer.
New Bipartisan Marijuana Research Bill In Congress Would Let Scientists Study Dispensary Products
A bipartisan group of federal lawmakers introduced a bill on Thursday to remove barriers to conducting research on marijuana, including by allowing scientists to access cannabis from state-legal dispensaries.
The Medical Marijuana Research Act, filed by the unlikely duo of pro-legalization Rep. Earl Blumenauer (D-OR) and prohibitionist Rep. Andy Harris (R-MD), would streamline the process for researchers to apply and get approved to study cannabis and set clear deadlines on federal agencies to act on their applications.
“Congress is hopelessly behind the American people on cannabis, and the quality of our research shows why that is an urgent problem,” Blumenauer told Marijuana Moment. “Despite the fact that 99 percent of Americans live in a state that has legalized some form of cannabis, federal law is still hamstringing researchers’ ability to study the full range of health benefits offered by cannabis, and to learn more about the products readily available to consumers.”
“It’s outrageous that we are outsourcing leadership in that research to Israel, the United Kingdom, Canada, and others. It’s time to change the system,” he said.
Late last year, the House approved an identical version of the cannabis science legislation. Days later, the Senate passed a similar bill but nothing ended up getting to the president’s desk by the end of the last Congress. Earlier this year, a bipartisan group of senators refiled their marijuana research measure for the current 117th Congress.
Meanwhile, lawmakers are also advancing a separate strategy to open up dispensary cannabis to researchers. Large-scale infrastructure legislation that has passed both chambers in differing forms and which is pending final action contains provisions aimed at allowing researchers to study the actual marijuana that consumers are purchasing from state-legal businesses instead of having to use only government-grown cannabis.
The new bill filed this week by Blumenauer and Harris, along with six other original cosponsors, would also make it easier for scientists to modify their research protocols without having to seek federal approval.
Marijuana Moment is already tracking more than 1,200 cannabis, psychedelics and drug policy bills in state legislatures and Congress this year. Patreon supporters pledging at least $25/month get access to our interactive maps, charts and hearing calendar so they don’t miss any developments.
Learn more about our marijuana bill tracker and become a supporter on Patreon to get access.
It would additionally mandate that the Drug Enforcement Administration (DEA) license more growers and make it so there would be no limit on the number of additional entities that can be registered to cultivate marijuana for research purposes. It would also require the U.S. Department of Health and Human Services (HHS) to submit a report to Congress within five years after enactment to overview the results of federal cannabis studies and recommend whether they warrant marijuana’s rescheduling under federal law.
“The cannabis laws in this country are broken, including our laws that govern cannabis research,” Blumenauer said in remarks in the Congressional Record. “Because cannabis is a Schedule I substance, researchers must jump through hoops and comply with onerous requirements just to do basic research on the medical potential of the plant.”
The new legislation will “both streamline the often-duplicative licensure process for researchers seeking to conduct cannabis research and facilitate access to an increased supply of higher quality medical grade cannabis for research purposes,” he said, adding that expanded studies will help make sure “Americans have adequate access to potentially transformative medicines and treatments.”
For half a century, researchers have only been able to study marijuana grown at a single federally approved facility at the University of Mississippi, but they have complained that it is difficult to obtain the product and that it is of low quality. Indeed, one study showed that the government cannabis is more similar to hemp than to the marijuana that consumers actually use in the real world.
There’s been bipartisan agreement that DEA has inhibited cannabis research by being slow to follow through on approving additional marijuana manufacturers beyond the Mississippi operation, despite earlier pledges to do so.
In May, the agency finally said it was ready to begin licensing new cannabis cultivators. Last week, DEA proposed a large increase in the amount of marijuana—and psychedelics such as psilocybin, LSD, MDMA and mescaline—that it wants produced in the U.S. for research purposes next year.
Under the new House bill, the agency would be forced to start approving additional cultivation applications for study purposes within one year of the legislation’s enactment.
HHS and the attorney general would be required under the bill to create a process for marijuana manufacturers and distributors to supply researchers with cannabis from dispensaries. They would have one year after enactment to develop that procedure, and would have to start meeting to work on it within 60 days of the bill’s passage.
In general, the legislation would also establish a simplified registration process for researchers interested in studying cannabis, in part by reducing approval wait times, minimizing costly security requirements and eliminating additional layers of protocol review.
Read the full text of the new marijuana research bill below: