Banks in New York should feel free to open accounts for medical marijuana and hemp business without fear of being punished by state regulators, Gov. Andrew Cuomo’s administration said on Tuesday.
Despite the fact that a growing number of states are moving to allow medical cannabis or recreational marijuana, its use, production and sales remain illegal under federal law. And that means that many banks refrain from serving related businesses out of fear of running afoul of federal money laundering and drug laws.
“These limitations create unique burdens for legal marijuana businesses,” the New York Department of Financial Services said in a new guidance document. “For example, companies pay employees with envelopes of cash, carry bags containing thousands of dollars to purchase money orders, and some pay taxes in cash. It also has been reported that some businesses have opened bank accounts through holding companies or use of personal bank accounts.”
“Forcing medical marijuana and industrial hemp businesses to operate solely with cash creates a public safety issue, as cash intensive businesses and their suppliers, employees and customers become targets for criminals. Large amounts of cash distributed outside the regulated banking system is unacceptable and creates risks to the companies, and their employees and business partners. Further, large scale cash operations impede tracking funds for tax and anti-money laundering purposes. None of this is necessary.”
“Positions taken by the federal government are only exacerbating these problems, rather than remedying them. New York must act.”
In the new document, state regulators say that the state “will not impose any regulatory action on any New York State chartered bank or credit union solely for establishing a banking relationship with a medical marijuana-related business that operates a compliant business in New York, as long as the New York State chartered bank or credit union complies with the requirements of” Obama-era Justice and Treasury Department memos intended to discourage federal interference in state cannabis laws.
Similar guidance is provided in the memo for banks working with hemp businesses that operate in accordance with relevant state and federal laws.
The move by New York officials is likely to be welcomed by the cannabis industry and financial services providers, but it is unclear whether it will actually encourage additional banks to work with marijuana businesses. That’s because Cuomo’s administration has no power to amend federal law, which remains unchanged, for now.
“The ability to establish a banking relationship is a challenge that legal industries face unlike no other,” Cuomo, a Democrat, said in a press release. “As the federal government continues to sow discord surrounding the medical marijuana and industrial hemp businesses, New York has made significant progress in creating a supportive economic development and regulatory landscape for these companies.”
U.S. House and Senate committees last month rejected amendments to allow banks to serve cannabis businesses without being punished by federal regulators.
Federal data shows that a growing number of financial institutions are working with marijuana growers, processors and retailers despite federal uncertainty.
The move comes as Cuomo’s health department prepares to release a report endorsing broader legalization of marijuana, something that governor once vigorously opposed but now seems more open to in light of a primary challenge from anti-prohibition advocate Cynthia Nixon.
The state Democratic Party called for marijuana legalization at its convention in May.
Photo courtesy of Zack Seward.
Washington Still Doesn’t Know What Good Marijuana Is (Or How To Test For It)
Retail sales of legal marijuana have been underway in Washington state for more than four years—and state regulators in charge of quality control still aren’t sure what good cannabis is, or how to test for it.
All product sold in stores is supposed to be tested for mold, pesticides and other contaminants by labs evaluated and accredited by a private company under contract.
That will change sometime soon. The Washington State Liquor and Cannabis Board, which regulates marijuana sales, has until January 15 to come up with recommendations for how the state should begin accrediting testing labs.
But in order to do that, regulators—or state lawmakers, or both—have to decide what, exactly, makes good weed. And nobody—not in Washington state, nor elsewhere in the U.S. where marijuana is legal—can seem to agree what that is, according to a draft government report posted online Thursday.
“Current quality standards… are insufficient to support a robust, science-based cannabis laboratory accreditation program,” the Washington Department of Ecology document says.
A “Cannabis Science Workgroup” comprised of experts in chemistry, biology, medicine and other fields to determine minimum standards for cannabis quality should be formed, wrote Sara Sekerak, a senior chemist and project manager at the department.
To reach this determination, researchers with the agency reviewed quality-control standards in four states. They found that “[w]idely accepted quality standards for testing cannabis and cannabis products do not yet exist.”
“Accreditation does not designate product standards or quality standards,” the report adds. “However, these are necessary to support meaningful accreditation.”
Eventually, testing labs in Washington will be accredited by a state agency. Until that happens, quality may remain erratic.
Because of weak or nonexistent state rules, labs “are allowed to design their own levels” of quality control and quality assurance. There are no readily available samples of agreed-upon “quality” cannabis to set a basic standard by, as there is for drinking water and other consumer goods.
Untrained workers collecting samples for testing may taint the samples. And current accreditation standards applied by the International Organization for Standardization (ISO) are not sufficient, the report found.
New York Liquor Stores Want To Sell Marijuana
Instead of creating a whole new system of specialized stores to distribute marijuana when it becomes legal, New York should just allow existing liquor and wine retail outlets to sell cannabis to adults. That’s the position of a new advocacy effort launched by owners of booze shops this month.
“With more than 2,000 wine and liquor stores from Buffalo to Montauk, we offer existing retail space with quick and cheap access to the market in every corner of the state,” reads the website for the group, which is called The Last Store on Main Street. “That means more tax revenue, and sooner, for the State to fulfill basic responsibilities and invest in the future of our neighborhoods.”
The group, which previously defeated an effort to allow wine sales in grocery stores, says that its members shops “operate under a highly regulated system that can easily and reasonably be expanded to cover marijuana retail without building new bureaucracy that only serves to eat into the tax revenues the industry creates.”
Jeff Saunders, the group’s founder, said alcohol retailers are worried that unless they are allowed to sell cannabis, their revenues could suffer.
“Recreational marijuana sales have resulted in significant declines in wine and liquor sales in other states, resulting in job loss and even stores closing,” he said, according to the news outlet New York Upstate.
On the group’s website, New Yorkers who agree with the goal of allowing weed sales in liquor stores can send prewritten letters to their state lawmakers that describe the move an “obvious win-win opportunity for a bedrock industry of New York’s Main Street economies and the future of our state.”
The effort to shape how legalization could roll out comes as the administration of Gov. Andrew Cuomo (D) is taking steps to bring about the end of marijuana prohibition.
Earlier this year, Cuomo directed the state Health Department to study legalizing marijuana, a move that led to a report that found that doing so would have more benefits than risks.
State officials are conducting a series of listening sessions around the state on the topic, and the governor created a task force to draft legalization legislation that lawmakers can consider in 2019.
Meanwhile, lawmakers are already holding hearings on ways to end cannabis prohibition.
Photo courtesy of Marilyn Acosta.
John Boehner Is Now Selling Marijuana Stock Tips
John Boehner, who just a few years ago was two heartbeats away from becoming president of the United States, is now “all in on the cannabis industry,” which he promises can “quite possibly” be worth as much as “$1 trillion” in the near future.
And the Republican former speaker of the House of Representatives wants you to join him on this gravy train. All you need to do is buy the very exclusive stock tips that Boehner is now selling.
Marijuana stocks have been in a free fall over the past few days, with formerly blue-chip Canadian companies—which saw their shares swell in value in the run up to nationwide legalization so quickly it caught the eye of Mad Money’s Jim Cramer—suffering double-digit losses as amateur investors lose their nerve.
If Boehner shares their concern, he did not show it on Tuesday, when the erstwhile anti-marijuana lawmaker provided the star power for the launch of the National Institute of Cannabis Investors.
“This is the time,” Boehner solemnly said, “to go all in on cannabis.”
Boehner made waves earlier this year when he joined the board of advisors of Acreage Holdings, a New York City-based firm that says it runs medical marijuana dispensary and cultivation operations in 13 states. The company is now preparing to go public via a reverse takeover, plus plenty of internet hype.
That will presumably be very good news for John Boehner. In the meantime, the former speaker says he has other extremely good marijuana stock-related news to share with you—provided you pony up an untold sum of money for membership in the cannabis investors’ network.
Exactly which companies Boehner suggests you invest in in order to build “the kind of wealth that lasts for generations,” he did not say during Tuesday’s nearly hourlong “American Cannabis Summit,” an extended infomercial for the investors’ network, though he and his co-presenters—veteran stock-tip salesman Mike Ward and Danny Brody, who helped take public a Canadian marijuana company that recorded $0 in sales in fiscal year 2018 and had zero kilograms of product in their inventory as of July, according to Seeking Alpha—did drop some clues.
One company manufactures the plastic containers in which retail marijuana is packaged. Another makes legal CBD oil—because, as Boehner said, he’d “think twice” before offering someone medical cannabis with more than 0.15 percent THC. Yet another could “help end our devastating opioid epidemic,” Tuesday’s presentation promised.
One of these companies could be “38 times bigger than GW Pharmaceuticals,” the UK drug manufacturer with an FDA-approved cannabis-derived epilepsy medication. That’s a bold claim, but such is Boehner’s confidence. (It’s also backed by “not one, but two 100 percent money-back guarantees,” Ward said. So there is that.)
Other highlights from Tuesday’s tease:
There is “nobody in cannabis more connected in Washington” than Boehner, whose post-retirement preparation for the cannabis industry involved playing lots of golf, smoking cigarettes and ripping in-power Republicans, including the president.
Boehner knows exactly how President Donald Trump feels about marijuana legalization but won’t say, because “if I tell you about our private conversations, I won’t have any more of them.”
He does feel that federal legalization could happen within the next five years. “It’s not a matter of if, but a matter of when,” he said.
Because when has John Boehner ever been wrong about anything?
Photo courtesy of Gage Skidmore.