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Credit Unions Can Bank Hemp Businesses, Federal Agency Announces

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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.”


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.

“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.

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Photo courtesy of Brendan Cleak.

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.

Kyle Jaeger is Marijuana Moment's Los Angeles-based associate editor. His work has also appeared in High Times, VICE and attn.

Politics

Border Patrol Union Head Admits Legalizing Marijuana Forces Cartels Out Of The Market

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The head of the labor union that represents U.S. Border Patrol agents acknowledged on Friday that states that legalize marijuana are disrupting cartel activity.

While National Border Patrol Council President Brandon Judd was attempting to downplay the impact of legalization, he seemed to inadvertently make a case for the regulation all illicit drugs by arguing that cartels move away from smuggling cannabis and on to other substances when states legalize.

Judd made the remarks during an appearance on C-SPAN’s Washington Journal, where a caller said that “the states that have legalized marijuana have done more damage to the cartels than the [Drug Enforcement Administration] could ever think about doing.”

“As far as drugs go, all we do is we enforce the laws. We don’t determine what those laws are,” Judd, who is scheduled to meet with President Trump on Friday, replied. “If Congress determines that marijuana is going to be legal, then we’re not going to seize marijuana.”

“But what I will tell you is when he points out that certain states have legalized marijuana, all the cartels do is they just transition to another drug that creates more profit,” he said. “Even if you legalize marijuana, it doesn’t mean that drugs are going to stop. They’re just going to go and start smuggling the opioids, the fentanyl.”

One potential solution that Judd didn’t raise would be to legalize those other drugs to continue to remove the profit motive for cartels. Former presidential candidate Andrew Yang made a similar argument in December.

Federal data on Border Patrol drug seizures seems to substantiate the idea that cannabis legalization at the state level has reduced demand for the product from the illicit market. According to a 2018 report from the Cato Institute, these substantial declines are attributable to state-level cannabis reform efforts, which “has significantly undercut marijuana smuggling.”

Additionally, legalization seems to be helping to reduce federal marijuana trafficking prosecutions, with reports showing decreases of such cases year over year since states regulated markets have come online.

In his annual report last year, Supreme Court Chief Justice John Roberts also noted reduced federal marijuana prosecutions—another indication that the market for illegally sourced marijuana is drying up as more adults consumers are able to buy the product in legal stores.

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Mike Bloomberg Attacks Marijuana Legalization In Controversial Resurfaced Recording

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Before Mike Bloomberg launched his 2020 Democratic presidential bid, he really wasn’t shy about his disdain for marijuana legalization.

The former New York City mayor has been widely criticized this week after a recording surfaced of him defending controversial stop-and-frisk practices and racially disparate marijuana arrests during a 2015 Aspen Institute speech. But while that short clip went viral on social media, the full audio recording from the event also features Bloomberg condemning cannabis legalization efforts at length.

Asked by an audience member about his thoughts on Colorado’s decision to end marijuana prohibition, Bloomberg said, “I think it is just a terrible, terrible idea.”

Some of the remarks from the talk were previously reported by The Aspen Times, such as when Bloomberg asserted that marijuana use is associated with reduced IQ among young people—something President Trump also said in a recently revealed secret recording.

“What are we going to say in 10 years when we see all these kids whose IQs are 5 and 10 points lower than they would have been?” Bloomberg told the Aspen audience. “Kids’ brains are being formed while they are teenagers.

But much of his anti-cannabis commentary from the talk has not been reported until now.

“If you’re my age, of course you smoked a joint in the 60s—but it was very different and just because we did doesn’t make it right,” the former mayor, who has previously acknowledged his own past marijuana consumption, said. “It was not easily accessible compared to today. Today it’s much stronger and potentially much more damaging.”

Listen to Bloomberg’s anti-marijuana remarks below: 

“We are making progress in reducing smoking. We are making progress in reducing obesity and diabetes. We are making progress in reducing automobile deaths and a variety of other things,” he said. But cannabis reform is going in “exactly in the other direction.”

Bloomberg also disparaged the idea that a regulated market can prevent youth from accessing cannabis, stating that “even if you have a law that says we’re not going to sell it to them, let’s get serious: if there’s more of it around, they’re going to get it.”

“I just can’t imagine why society is doing this,” he said. “I couldn’t feel more strongly about it, and my girlfriend says it’s no different than alcohol. It is different than alcohol. This is one of the stupider things that’s happening across our country.”

Erik Altieri, executive director of NORML, told Marijuana Moment that the newly revealed remarks show just how much work Bloomberg has ahead of him if he intends to reform his image as a tough-on-crime, anti-cannabis candidate.

“Bloomberg and his wealthy friends may be able to sit around and joke about how he was able to smoke a joint in the 60’s and be just fine, but that is cold comfort to the over 440,000 Americans who were put in handcuffs for marijuana possession in New York City during his tenure as mayor,” Altieri said. “He is painfully ignorant and out of touch with sound public policy and basic scientific facts.”

“If he expects voters to treat him as anything other than an awful relic of a bygone drug war era he needs to correct himself on marijuana law reform issues immediately and somehow attempt to make amends for the countless lives he had a role in ruining,” he said. “Unfortunately, given the number of other candidates vying for the presidency who are leaps and bounds ahead of him on this, that still might be too little too late for his self-funded presidential aspirations.”

Bloomberg has been sharply rebuked this week over a different clip from the same 2015 recording where he defended the use of stop-and-frisk policing that disproportionately impacted communities of color.

An “unintended consequence” of targeting policing in those communities, he said, is that “people say, ‘oh my god, you are arresting kids for marijuana that are all minorities.’”

“Yes, that’s true. Why? Because we put all the cops in minority neighborhoods,” he said. “Yes, that’s true. Why do we do it? Because that’s where all the crime is.”

Bloomberg has taken steps since launching his campaign to pivot away from his reputation as anti-reform, voicing support for decriminalizing cannabis possession and allowing states to set their own policies.

But he continues to oppose cannabis legalization, and his past comments haven’t been forgotten. A Denver-based reporter brought up the candidate’s 2019 statement that legalization is  “perhaps the stupidest thing anybody has ever done” and asked whether that meant he felt Colorado voters were stupid for approving the policy change.

“Colorado has a right to do what they want to do,” he replied. “I would advise going slowly to any other state because it’s not clear, doctors aren’t sure whether or not it’s doing damage. But if a state wants to do it, and Colorado and Washington were the first two that did it, that’s up to the state.”

“But what I really object to is putting people in jail for marijuana,” he added. “That’s really dumb.”

Bloomberg and former Vice President Joe Biden are the only two Democratic candidates in the 2020 race who oppose federally legalizing cannabis.

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Bipartisan Lawmakers Ask Colleagues To Cosponsor Medical Marijuana Research Bill For Veterans

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A bipartisan duo of lawmakers sent a letter to fellow members of the House this week, asking for additional cosponsors on a bill to promote research into the therapeutic potential of marijuana for veterans.

Reps. Lou Correa (D-CA) and Clay Higgins (R-LA) cited a survey from the advocacy group Iraq and Afghanistan Veterans of America (IAVA) that showed 83 percent of its members support medical cannabis legalization and 90 percent are in favor of researching medical marijuana.

“Therefore, medical research into the safety and efficacy of cannabis usage for medical purposes is timely, necessary, and widely supported by the veteran community,” the lawmakers, who are the sponsors of the VA Medicinal Cannabis Research Act, wrote in the Wednesday letter.

That legislation currently has 102 cosponsors—representing nearly one-forth of the House’s membership. It would require the U.S. Department of Veterans Affairs (VA) to conduct double-blind clinical trials on the safety and effectiveness of various forms of marijuana in the treatment of post-traumatic stress disorder and chronic pain.

“Congress made great progress in reforming our cannabis laws in 2019, proving that Americans are ready for change. Veterans deserve to be a part of this change and have their medical needs taken seriously by the Department of Veterans Affairs,” Correa told Marijuana Moment. “My bill puts veterans’ health front and center. With over 100 bipartisan co-sponsors, it’s time to move the Medicinal Cannabis Research Act and take care of our vets.”

After the bill’s introduction last year, the House Veterans’ Affairs Subcommittee On Health and the full panel held hearings on the issue, but it has not received a vote yet. During the subcommittee meeting, VA officials voiced opposition to the proposal, arguing that the scope of its research requirements is too large.

“As many veterans are currently using cannabis for medicinal purposes, it is important that clinicians be able to fully advise veterans on the potential impacts, harms, and benefits of cannabis use on post-traumatic stress disorder (PTSD) and chronic pain,” the letter from Correa and Higgins states.

The bill would also “authorize a long-term observation study of participating veterans,” require the VA to “preserve all data collected or used and require the department to submit reports on the implementation of the legislation annually for five years.

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Photo courtesy of WeedPornDaily.

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