An influential conservative organization is floating two cannabis-related resolutions that could be used as models for future state legislation.
Tasks forces of the American Legislative Exchange Council (ALEC), a nonprofit that brings together conservative lawmakers and private sector stakeholders to draft and distribute model policies for consideration by state legislatures, discussed banking issues in the marijuana industry and enacting hemp and CBD legalization bills at the group’s 46th annual meeting in Austin last week.
ALEC’s Commerce, Insurance and Economic Development (CIE) Task Force tackled cannabis financial services issues during Thursday’s session, weighing a draft resolution that urges Congress to “enact common-sense federal laws that respect state law and promote public safety without compromising federal enforcement of anti-money laundering laws against criminal enterprises.”
@ALEC_states Commerce, Insurance and Economic Development Task Force will be reviewing several draft model policies, from occupational license reform for ex-offenders to banking for cannabis businesses. #ALECinATX #ALECideas
— American Legislative Exchange Council (@ALEC_states) August 15, 2019
“Congress has sole authority to solve the cannabis banking issue by enacting legislation that provides protections for depository institutions that offer financial services to cannabis-related legitimate businesses and service providers for such businesses,” the resolution states.
The measure specifically says it does not take a position on marijuana legalization itself but rather focuses on how conflicting state and federal cannabis laws mean “the vast majority of financial institutions are unwilling to provide services [to marijuana businesses] and those that do could be subject to severe criminal and civil penalties.”
Because of that problem, many such businesses are operating on a largely cash basis, which ALEC described as “inefficient, expensive, opaque, and make illicit activity more difficult for law enforcement and state regulators to track.”
The resolution also emphasizes the bipartisan nature of resolving the banking issue, referencing a recent letter from 38 state and territory attorneys general that called on Congress to enact a legislative fix.
ALEC’s support for resolving financial uncertainty in the cannabis industry is just one of many recent indicators that legislation such as the Secure and Fair Enforcement (SAFE) Banking Act is considered a nonpartisan issue. The House Financial Services Committee approved the SAFE Banking Act in March, and the Senate Banking Committee held a hearing on the topic last month, despite its Republican chairman initially stating that the panel wouldn’t discuss it as long as marijuana remained federally illegal.
Over in ALEC’s Energy, Environment and Agriculture (EEA) Task Force, members debated draft legislation for states that would “legalize the agricultural production and sale of hemp as well as Cannabidiol oil, commonly known as CBD oil” but explicitly would “not legalize marijuana.”
The model policy seems to be targeted at the limited number of states that still have hemp prohibition on the books despite the crop’s federal legalization under the 2018 Farm Bill. Those states include Idaho, South Dakota and Mississippi, according to the National Conference of State Legislatures.
Provisions of the draft policy signal that the proposal would be in compliance with federal law, which defines hemp as cannabis that contains no more than 0.3 percent THC by dry weight. However, while the 2018 Farm Bill legalized hemp and its derivatives, the Food and Drug Administration has said that unless alternative rules are issued for CBD, it cannot legally be marketed in food items or dietary supplement.
ALEC’s draft policy would provide for such marketing, though. It stipulates that CBD products that contain no THC can sold be if the product is “intended for topical application, oral consumption, or inhalation, by humans, or for consumption by animals.”
It’s not clear how the task forces voted or what exactly the immediate next steps would be if the draft proposals were approved and made final at last week’s conference. Marijuana Moment reached out to representatives of ALEC for clarification but did not hear back by the time of publication.
Photo courtesy of Mike Latimer.
Bipartisan Lawmakers Circulate Letter Urging FDA To Back Off CBD Companies
A bipartisan pair of lawmakers are circulating a sign-on letter asking colleagues to join them in urging the Food and Drug Administration (FDA) to back off companies that are selling CBD products in a responsible manner.
The “Dear Colleague” letter, which is being led by Reps. Chellie Pingree (D-ME) and James Comer (R-KY), emphasizes that hemp and CBD were federally legalized under the 2018 Farm Bill and argues that the lack of regulations for such products is creating industry uncertainty that’s inhibiting economic opportunities.
The letter was first reported by the U.S. Hemp Roundtable, which is asking its supporters to encourage their representatives to sign on.
FDA has said it is in the process of developing rules for the non-intoxicating compound, including a potential alternative regulatory pathway allowing for CBD to be added to the food supply and as dietary supplements. That could take years, however, as former FDA Commissioner Scott Gottlieb has noted.
In the meantime, the agency is being selective about enforcement action against companies that make unsanctioned claims about their products while also maintaining that all businesses selling CBD food items are violating the law.
The lawmakers aren’t satisfied. They described FDA’s regulatory timeframe as “untenable,” particularly because the U.S. Department of Agriculture is expected to release its rules for hemp “any day now,” and an official revealed this month that its draft regulations are currently undergoing final White House and Department of Justice review.
The members of Congress added that FDA’s current approach to CBD has “created significant regulatory and legal uncertainty for participants in this quickly evolving industry.”
“Given the widespread availability of CBD products, growing consumer demand, and the expected surge in the hemp farming in the near future, it’s critical that FDA act quickly to provide legal and regulatory clarity to support this new economic opportunity,” they wrote.
“Please join us in signing this bipartisan letter to Acting FDA Commissioner Ned Sharpless urging the agency to adopt a risk-based policy of enforcement discretion that targets bad actors while eliminating uncertainty for responsible industry stakeholders and consumers. Additionally, we are requesting that FDA to issue an interim final rule to regulate CBD as a dietary supplement and food additive.”
In the letter to Sharpless that Pingree and Comer are asking fellow lawmakers to sign, they laid out two requests for FDA.
First, the agency should “promptly issue guidance announcing a policy of enforcement discretion that maintains FDA’s current risk-based enforcement approach towards hemp-derived CBD products.” And second, it should “consider issuing an interim final rule, pending issuance of a permanent final rule, to establish a clear regulatory framework for CBD as a dietary supplement and food additive.”
The lawmakers added that they appreciate that FDA has pursued “enforcement actions against the worst offenders,” but that “it can do so while eliminating regulatory uncertainty for farmers, retailers, and consumers.”
“Without a formal enforcement discretion policy, anyone participating in the growing marketplace for legal hemp-derived products will continue to face significant legal and regulatory uncertainty,” they wrote.
Though issuing guidance on a “policy of enforcement discretion” wouldn’t be a codified law allowing companies to market CBD in the food supply, it would demonstrate to the industry that some protections are in place while FDA continues to navigate the rulemaking process.
Lawmakers have until Tuesday to sign the letter to FDA.
Read the Dear Colleague invitation and CBD letter to FDA below:
Photo by Kimzy Nanney.
Marijuana Banking Bill Will Get A Full House Floor Vote This Month
A bipartisan bill to protect banks that service marijuana businesses will get a House floor vote by the end of the month, the office of Majority Leader Steny Hoyer (D-MD) confirmed to Marijuana Moment on Friday.
House leadership announced the decision to Democratic lawmakers at a closed-door meeting on Thursday.
“Mr. Hoyer said at the Whip meeting yesterday that he intends to move it this month,” a Hoyer staffer said in an email. “We’re discussing it with Members, but it hasn’t been scheduled just yet.”
Prior to confirmation from Hoyer’s office, four sources initially described the development to Marijuana Moment, with some saying the vote would be made under suspension of the rules—a procedure that is generally reserved for non-controversial legislation.
Voting on suspension would require two-thirds of the chamber (290 members) to vote in favor of the Secure and Fair Enforcement (SAFE) Banking Act in order for it to pass. The bill, which cleared the House Financial Services Committee in March, currently has 206 cosponsors, including 26 Republicans.
No amendments would be allowed to be added on the floor under the suspension process.
Problems could arise if lawmakers aren’t able to rally additional votes from conservative members or if there’s pushback over the strategy from progressive lawmakers, though it is unlikely Democratic leadership would advance the bill if they didn’t believe they have the votes for passage.
While interest in resolving the banking issue is generally bipartisan, it’s within reason to assume that lawmakers on both sides of the aisle might have wanted the opportunity to offer provisions such as extending protections to hemp businesses or adding language promoting social equity policies. That said, it is possible that leadership could file an entirely new piece of legislation that is similar to the SAFE Banking Act but contains modified provisions negotiated with key members and use that as the vehicle for floor action.
Many expected cannabis banking legislation to receive a floor vote before the August recess, but that did not come to fruition.
In any case, the development comes as the Senate Banking Committee is also preparing to hold a vote on marijuana banking legislation, with Chairman Mike Crapo (R-ID) announcing on Thursday that his panel is “working to try to get a bill ready.” He didn’t offer a timeline, however, other than saying he hoped to advance the legislation by the end of the year.
While sources told Marijuana Moment that Hoyer made his decision to allow cannabis banking vote following an earlier Wednesday meeting on the issue, it is likely that building momentum in the GOP-controlled Senate added to pressure on the House to act so that Democrats wouldn’t be seen as lagging behind Republicans on cannabis reform, an issue the party has sought to take political ownership of.
Following Crapo’s statement on advancing the banking legislation, Rep. Ed Perlmutter (D-CO), chief sponsor of the SAFE Banking Act, told Marijuana Moment that he welcomes the senator’s “commitment to resolve the banking conflicts that have been created by the misalignment in state and federal law on the issue of cannabis.”
“I remain focused on passing the SAFE Banking Act out of the House and look forward to working with my colleagues in the Senate as they take up the SAFE Banking Act or work to develop and pass similar legislation,” he said.
Banking access is largely seen as one of the most achievable pieces of cannabis legislation that stands to pass this Congress. Advocates and reform-minded lawmakers view it as one of the first steps on the path toward ending federal marijuana prohibition.
“We are seeing the blueprint in action and moving forward on critical legislation to protect state legal cannabis banking,” Rep. Earl Blumenauer (D-OR) told Marijuana Moment, referring to a memo he sent to House leadership last year outlining a committee-by-committee process for passing incremental cannabis bills leading up to major legislation to end federal prohibition. “Earlier this summer, the House passed protections for state and tribal cannabis laws. In the most cannabis friendly Congress in history, we need to keep up this momentum. There is still much to be done.”
There has been some disagreement within advocacy circles about whether it’s prudent to pass legislation viewed as primarily favorable to the industry before advancing comprehensive legislation that deschedules cannabis and takes steps to repair the harms of prohibition enforcement.
“It is our hope that after the successful passage of the SAFE Banking Act in the House, we will be able to advance legislation that ends the federal criminalization of cannabis once and for all,” Justin Strekal, political director of NORML, told Marijuana Moment. “Now is our time to demonstrate that marijuana law reform is both good policy and good politics.”
“We will not stop until otherwise law-abiding Americans are no longer discriminated against or criminalized due to the past or future choice to consume cannabis,” he said.
Neal Levine, CEO of the Cannabis Trade Federation, told Marijuana Moment that the group is “delighted that the U.S. House of Representatives is on the brink of passing a landmark piece of cannabis policy legislation that modernizes our antiquated banking laws to reflect the will of the people.”
“This is welcomed and long overdue news for the over 200,000 employees that work in the industry, cannabis businesses, and for public safety in the communities in which we operate,” he said. “Once the SAFE Banking Act passes the U.S. House, we call on the U.S. Senate to move quickly to protect our businesses and our workers.”
Pressure has been building all year from stakeholders and policymakers alike to get the legislation passed. Endorsements aren’t just coming from reform groups, either; 50 state banking associations, the National Association of State Treasurers, the top financial regulators of 25 states, a majority of state attorneys general and bipartisan governors of 20 states have also voiced support for the SAFE Banking Act.
Earlier this month, the head of the American Bankers Association predicted that the bill would be passed in the House “as early as September.”
This story was updated to add comment from Perlmutter and Hoyer’s office.
New ‘Marijuana 1-to-3 Act’ Would Reclassify Cannabis Under Federal Law
Another bill to reschedule marijuana was filed in Congress on Thursday.
Rep. Greg Steube (R-FL) introduced the legislation, which is titled the “Marijuana 1-to-3 Act.” True to its name, the bill would simply require the attorney general to move cannabis from Schedule I to Schedule III under the Controlled Substances Act, with the aim of increasing research on the drug’s effects.
“As marijuana is legalized for medical and recreational use across the United States, it is important that we study the effects of the substance and the potential impacts it can have on various populations,” Steube said in a press release. “By rescheduling marijuana from a schedule I controlled substance to a schedule III controlled substance, the opportunities for research and study are drastically expanded.
Today, I introduced a bill to reschedule marijuana from a schedule I to a schedule III controlled substance. The Marijuana 1-to-3 Act will allow additional research to be done on the benefits of marijuana by removing bureaucratic red tape. https://t.co/w45WAKHBr9
— Congressman Greg Steube (@RepGregSteube) September 12, 2019
“With this rescheduling, researchers can now access federal funds to research this substance and determine its medical value,” he said.
The press release came hours after a bipartisan pair of lawmakers introduced separate legislation to reschedule marijuana, also to Schedule III.
That bill contained additional provisions that would require federal agencies to develop research agendas for marijuana within one year of its enactment and also establish a system whereby universities could be designated as “Centers of Excellence in Cannabis Research” if they conducted comprehensive studies on issues related to marijuana.
Rep. Matt Gaetz (R-FL), who is a sponsor of the broader research bill, is also cosponsoring Steube’s more focused rescheduling proposal.
It’s not clear why Steube chose to file his own reclassification bill or whether the other legislation’s additional provisions were a factor.
The congressman’s two-page bill states that “the Attorney General of the United States shall, by order not later than 60 days after the date of enactment of this section, transfer marijuana…from schedule I of such Act to schedule III of such Act.”
“We hear every day about the positive health benefits of marijuana,” Steube said. “Whether it’s young children with seizure disorders, or veterans suffering from chronic pain, it is clear that there are medical benefits to marijuana and I think it’s time we remove the bureaucratic red tape that prevents us from thoroughly studying this substance.”
While he emphasized that the intent of his legislation is to encourage research into marijuana, placing cannabis in Schedule III would also have implications for marijuana businesses, who are currently ineligible for federal tax deductions under an Internal Revenue Code section that applies to anyone “trafficking in controlled substances” in Schedule I or II.
Read the full text of the bill below:
Photo by Ndispensable.