A federal financial agency released updated guidelines on banking in the hemp industry on Monday, following up on requests from multiple lawmakers to provide clarity on the issue.
The National Credit Union Administration (NCUA) said in its interim guidance that providing banking services to hemp businesses is allowable since the crop and its derivatives were federally legalized under the 2018 Farm Bill. The notice also emphasized the economic potential of hemp and the role credit unions can play as the industry continues to develop.
“Lawful hemp businesses provide exciting new opportunities for rural communities,” NCUA Chairman Rodney Hood said in a press release. “I believe today’s interim guidance keeps with the mission of the nation’s cooperative credit system to serve people who have been overlooked and underserved.”
“Many credit unions have a long and successful history of providing services to the agriculture sector,” he said. “My expectation is that credit unions will thoughtfully consider whether they are able to safely and properly serve lawfully operating hemp-related businesses within their fields of membership.”
Growth in hemp-related commerce will create a need for capital & financial services. Interim guidance gives #creditunions the ability to step in & provide hemp-related businesses these customary financial services. Learn more: https://t.co/otTzUt3tL7
— The NCUA (@TheNCUA) August 19, 2019
— The NCUA (@TheNCUA) August 19, 2019
In a letter sent to Sen. Michael Bennet (D-CO) last month, which the presidential candidate’s Senate office shared exclusively with Marijuana Moment, Hood noted that NCUA was “working on possible future guidance to financial institutions” but that such guidance would be subject to change depending on what regulations the U.S. Department of Agriculture (USDA) ultimately develops.
In the meantime, the new interim guidance notes that “growth in hemp-related commerce could provide new economic opportunities for some communities, and will create a need for such businesses to be able to access capital and financial services” while clarifying that credit unions “may provide the customary range of financial services for business accounts, including loans, to lawfully operating hemp related businesses within their fields of membership.”
While NCUA said that it is “generally a credit union’s business decision as to the types of permissible services and accounts to offer,” it highlighted the need to comply with the Bank Secrecy Act (BSA) and with Anti-Money Laundering (AML) requirements, in particular:
—Credit unions need to maintain appropriate due diligence procedures for hemp-related accounts and comply with BSA and AML requirements to file Suspicious Activity Reports (SARs) for any activity that appears to involve potential money laundering or illegal or suspicious activity. It is the NCUA’s understanding that SARs are not required to be filed for the activity of hemp-related businesses operating lawfully, provided the activity is not unusual for that business. Credit unions need to remain alert to any indication an account owner is involved in illicit activity or engaging in activity that is unusual for the business.
—If a credit union serves hemp-related businesses lawfully operating under the 2014 Farm Bill pilot provisions, it is essential the credit union knows the state’s laws, regulations, and agreements under which each member that is a hemp-related business operates. For example, a credit union needs to know how to verify the member is part of the pilot program. Credit unions also need to know how to adapt their ongoing due diligence and reporting approaches to any risks specific to participants in the pilot program.
—When deciding whether to serve hemp-related businesses that may already be able to operate lawfully–those not dependent on the forthcoming USDA regulations and guidelines for hemp production–the credit union needs to first be familiar with any other federal and state laws and regulations that prohibit, restrict, or otherwise govern these businesses and their activity. For example, a credit union needs to know if the business and the product(s) is lawful under federal and state law, and any relevant restrictions or requirements under which the business must operate.
“Hemp provides new opportunities for communities with an economic base involving agriculture,” the notice states. “The NCUA encourages credit unions to thoughtfully consider whether they are able to safely and properly serve lawfully operating hemp-related businesses within their fields of membership.”
“Lending to a lawfully operating hemp-related business is permissible.”
After USDA releases its rules for the hemp industry, which are expected to come ahead of the 2020 planting season, NCUA said it “will issue additional guidance on this subject.”
Senate Majority Leader Mitch McConnell, who like Bennet has also pressured federal regulators to clear up confusion around hemp banking, took credit for NCUA’s response and celebrated the new guidance.
At @senatemajldr’s request, @TheNCUA issues guidance to assist legal #hemp industry. Hearing concerns from his constituents, McConnell urged NCUA to provide clarification to help address this barrier in #Kentucky. @KYCreditUnions applauds the positive news https://t.co/5kaQmxJE1x
— Senator McConnell Press (@McConnellPress) August 19, 2019
“I’m delighted to hear the NCUA has answered my call on behalf of Kentuckians to ensure the legal hemp industry can access much-needed financial services,” McConnell said in a press release. “Although President Trump signed into law my initiative last year to remove hemp from the federal list of controlled substances, many of my constituents have told me about their difficulty receiving loans and other services that are necessary to successfully run a hemp business.”
“Through this guidance by the NCUA, I look forward to more hemp farmers, processors and manufacturers starting or growing their operations with the help of Kentucky’s credit unions,” he said. “As Senate Majority Leader, I’ll continue advocating for Kentucky’s priorities throughout the federal government, and I’m proud of today’s positive news.”
Credit unions have generally been friendlier to the marijuana and hemp industries than have conventional banks, and NCUA has similarly taken a more proactive role in evolving to meet the demands of these burgeoning markets.
For example, the agency’s head clarified earlier this month that credit unions wouldn’t be punished simply for serving hemp businesses so long as they were following standard procedures. NCUA also released a draft rule in July that would allow people with past drug convictions to work at credit unions.
Cannabis banking issues have received significant congressional attention this session, with a bipartisan consensus emerging around creating a legislative fix so that hemp and marijuana businesses are able to access financial services.
The hemp industry in particular has enjoyed bipartisan support since the crop was legalized, but while marijuana remains a federally controlled substance, more lawmakers from across the aisle are expressing interest in affording cannabis businesses the same access in order to increase financial transparency and mitigate public safety risks associated with operating on a largely cash-only basis.
The House Financial Services Committee approved a bill in March that would protect banks that service marijuana businesses from being penalized by federal regulators, and the Senate Banking Committee also held a hearing on the issue last month.
Banking Chairman Mike Crapo (I-ID), who suggested earlier this year that his panel wouldn’t convene to discuss the matter as long as cannabis is federally illegal, has since taken a stance that the issue needs to be resolved.
But while advocates hoped that legislation to address marijuana banking problems would be taken up by the full House ahead of the August recess, that window closed and attention is now turned to a potential hearing in the fall.
Photo courtesy of Brendan Cleak.
GOP Congressman Says Marijuana Shops Near Churches Is Evidence Of ‘Spiritual War’
A U.S. congressman said on Saturday that marijuana dispensaries operating on the same streets as churches is “evidence” of the “spiritual war our nation is entrenched in.”
Rep. Doug Lamborn (R-CO) made the comment in a video statement that was presented at an “In God We Trust Rally” organized by the non-profit Truth & Liberty Coalition.
After giving a brief history lesson on the origin of the official U.S. motto and decrying socialism, Lamborn said it was necessary to acknowledge religious strife in the country.
“We need to look no further than our own streets to see evidence of this conflict,” the congressman said. “Marijuana dispensaries are on the same streets as thriving churches.”
Despite representing one of the first states to legalize cannabis, Lamborn has actively worked against the will of Colorado voters who approved the measure in 2012.
For example, he applauded then-Attorney General Jeff Sessions last year after he rescinded Obama-era guidance on federal marijuana enforcement priorities, stating that “legalizing marijuana has been bad for the state of Colorado” and Sessions was “upholding the law and recognizing the serious and proven harms associated with marijuana.”
Every other member of Congress from Colorado signed a bipartisan letter opposing the move.
More recently, Lamborn voted against a spending bill amendment that would prohibit the Justice Department from using funds to enforce prohibition in legal states.
The most that the congressman has said he’s willing to do in terms of cannabis reform is rescheduling the plant to facilitate research into its therapeutic potential. “I’m not sure I could support going beyond that,” he said.
During his video address over the weekend, which was highlighted by Right Wing Watch, Lamborn said evidence of a religious war also includes “abortion clinics” near “pregnancy centers” and legislators attempting to “impose radical gender theory on young students while parents in godly homes teach their children the virtue of marriage.”
“It is easy to despair in the face of ignorance and evil, but today we gather to declare where our trust lies. Our trust lies in god,” he said. “Colorado needs the grace of god more than ever.”
Photo courtesy of YouTube/Truth & Liberty Coalition.
Former White House Drug Czar Offers Marijuana Legalization Advice To Mexico
A former top White House drug official told Mexican officials last week that they will need “robust regulations” in place when the country implements a legal marijuana system.
Gil Kerlikowske, who served as the director of the the Office of National Drug Control Policy under President Barack Obama, made the comments during a panel hosted by the Mexican Senate as part of a series of cannabis conversations lawmakers are holding as the country prepares to enact legalization.
He also acknowledged that state-level legalization in the U.S. has reduced the “appetite” for drugs that are trafficked illegally across the border.
The official’s participation is particularly noteworthy given that he previously said that the word “legalization” was not even in his vocabulary, nor in Obama’s. But according to translated reports of his speech, Kerlikowske, who also served as commissioner of U.S. Customs and Border Protection, now seems decidedly familiar with the concept and offered detailed advice for Mexican lawmakers as they prepare to legalize.
“Tax collection is important because income is used for health and to enforce the law,” he said. “In other words, the marijuana consumer is paying the regulation in taxes, so this is a dynamic and emerging market.”
“I think that frankly, although the taxation can be prohibitive for some people and for some producers, I would say that you still have to have a very robust regulation,” the former drug czar added.
A punto de comenzar la última conferencia del ciclo ‘Rumbo a la regulación del cannabis’, organizado por las comisiones de Justicia, Salud, Estudios Legislativos, Segunda, y Seguridad Pública del @senadomexicano. 🌱 pic.twitter.com/RJxmkieurN
— Cáñamo México (@canamo_mexico) September 13, 2019
Kerlikowske stressed that measures must be taken to ensure that young people don’t have access to marijuana and that policymakers should “do everything possible to eliminate the black market.”
“I believe that governments want to do things slowly—particularly because there is still research being carried out about marijuana and use and the problems it causes in brain formation or decision-making,” he said, adding that alcohol and cannabis shouldn’t be viewed as “benign” products.
He also said that regulating marijuana should involve enforcing labeling and packaging standards so that consumers are fully informed and that steps should be taken to prevent smoking in public.
Sobre permitir fumar cannabis en lugares públicos, Gil Kerlikowske dice que es un tema que se necesita resolver en EU, ya que en lugares como en Seattle el olor es particularmente fuerte. ❔💨❔
— Cáñamo México (@canamo_mexico) September 13, 2019
The event was the last in a five-part “Heading for the Regulation of Cannabis” series that the Senate put together as the chamber’s ruling MORENA party readies legislation to legalize marijuana.
After deeming the prohibition of cannabis possession and cultivation for personal use unconstitutional last year, Mexico’s Supreme Court set a deadline of October 2019 for lawmakers to codify marijuana legalization policy.
Earlier this month, Sen. Julio Menchaca Salazar of the MORENA party filed a bill that would provide for a legal cannabis market for adults by amending federal drug laws.
While legalization is imminent in Mexico, however, Kerlikowske said that he does not believe that the U.S. will legalize within the next two years, stating that the “problem is that medicinal cannabis products have not passed all the tests of the [Food and Drug Administration].”
No creo que en los próximos dos años el Congreso de EU legalice a nivel federal el uso de la marihuana medicinal🌱🔬🧪. El problema es que los productos cannábicos medicinales no han pasados todas las pruebas de la @US_FDA como los demás medicamentos: Gil Kerlikowske 🇺🇸
— Cáñamo México (@canamo_mexico) September 13, 2019
Photo courtesy of Mike Latimer.
Three Federal Agencies Take Public Comments On Cannabis Topics
Three federal agencies—the Food and Drug Administration (FDA), the Environmental Protection Agency (EPA) and the Drug Enforcement Administration (DEA)—are now accepting comments from the public on cannabis-related topics such as hemp pesticides and the legal classification of marijuana globally.
In a notice published in the Federal Register last month, FDA said that it is seeking input on potential changes to the status of marijuana under international treaties.
EPA invited comments on applications for pesticides to be used on hemp, which comes months after the crop was federally legalized.
Meanwhile, people have the chance to share their perspective on a proposal DEA released last week that calls for the cultivation of more than three million grams of cannabis for research purposes next year. That 3.2 million gram quota would be 30 percent higher than this year’s. At the same time, DEA said its quota for prescription painkillers such as fentanyl and oxycodone would be decreased next year by more than 50 percent.
The comment period opened last week, and 25 people have weighed in at this point. Submissions received so far are primarily focused on DEA’s proposed reduction opioid production, with several chronic pain patients arguing that they will be negatively impacted. People can send comments on the cannabis and other drug quotas through October 15.
FDA initially made its request for input on cannabis’s global treaty status in March, but it was closed because an expected United Nations (UN) vote on a proposal to remove marijuana from the most strictly regulated category was postponed.
Last month, FDA said it was reopening the comment period until September 30, in anticipation that the UN will make a decision on the possible changes in the coming months. So far, a total of about 3,000 comments have been received, including those posted since August 29. The vast majority voice support for legalization, with many sharing personal anecdotes about the plant’s therapeutic benefits.
“Please lift the ban and prohibition of marijuana. Marijuana isn’t ruining the lives of countless Americans… America’s drug laws are doing that all by themselves via mass incarceration,” Zach Fowler wrote.
“I am 30 years old and suffer from a progressive neurologically condition that leaves me in constant debilitating pain along with a host of other symptoms. Without cannabis, I could not function enough to work for even care for my children,” Amanda Wood-Devore said. “Cannabis calms my pain, eases corresponding anxiety, and helps my constant nausea and vomiting.”
Alex Rol said that the “current marijuana laws are more destructive than protective.”
“We have seen extensive reports that cannabis can be used for medical purposes and many find its effects increase the ease of life,” he said. “While I understand the concern of those less familiar with cannabis on its legalization it simply isn’t right to incarcerate people for possession of a generally harmless substance.”
“I agree with the [World Health Organization] that cannabis should be removed from the Schedule 1 classification,” Michael Ochipa wrote, referring to a recommendation WHO released in February urging the rescheduling of marijuana and descheduling of CBD.
“Most of the research to date indicates that cannabis has a very positive risk/reward profile,” he wrote. “Side effects are lower, and medicinal benefits are greater than many over the counter drugs. It can also be grown easily at home making it more economical.”
Though it’s not clear how much stock FDA will put into personal stories of individuals who’ve benefited from marijuana in shaping the Trump administration’s position on scheduling changes, the volume of comments and consistency of support for legalization is significant. While there has been a focus on the medical potential of cannabis, several others emphasized the consequences of prohibition, particularly for communities of color.
If the United Nations does decide to adopt WHO’s recommendations, it wouldn’t mean that member nations would be free to legalize marijuana without technically violating the treaties. However, even under its current strict status, Canada and Uruguay have moved forward with legalization models, with Mexico expected to follow suit as early as next month.
Over at EPA, there hasn’t been quite as much interest from the public in submitting comments on pesticides applications for hemp. The agency announced last month that it was accepting input on 10 existing applications and said it hoped “this transparent and public process will bring hemp farmers and researchers increased regulatory clarity in time for next growing season.”
EPA said it’s not required to take public comment on the applications but is doing so “because of the potential significant interest from the public in these initial applications and in furtherance of being completely transparent about these applications.”
There may be significant interest from the public on hemp legalization generally, particularly among stakeholders who are eagerly awaiting federal regulations to unlock the crop’s potential, but that isn’t being reflected on the Federal Register notice page yet when it comes to pesticides. Only five people have commented on the proposal.
One person noted that the 10 pesticides under review contain almost the same ingredients and said “it really limits the ability of producers to manage pests and diseases.”
“I highly recommend expanding the list of compounds available to producers to increase the ability to suppress pests and diseases,” the anonymous commenter wrote. “There are many more bio-pesticides on the market that are safe for humans that specifically target agricultural pests.”
Another individual who said he and his partner are making a transition from growing cannabis in California to hemp in North Carolina wrote in support of the proposed pesticides.
“We have used the products under discussion with great effectiveness, especially the biological controls,” the person said. “Because hemp can be so susceptible to mold, fungus, and pests, it is imperative to have these tools to ensure a healthy and plentiful product.”
Finally, there was one comment in opposition to allowing any pesticides on hemp because, they wrote, “IT WILL JUST TURN IT IN TO POISON.”
EPA’s public comment closes on September 23. The agency did not say when decisions would be made about the applications, but it did state that it planned to give hemp farmers approval to use the tools before the 2020 planting season.
The fact that three separate federal agencies are now accepting comments on separate cannabis issues is another sign that the public has more opportunity than ever before to influence the government’s position on marijuana policy.
Photo courtesy of Nicholas C. Morton.