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Diversity Provisions Added To Marijuana Banking Bill Up For Congressional Vote This Week

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The sponsor of a marijuana banking bill scheduled for a key committee vote in Congress this week is moving to amend the legislation to add provisions requiring the federal government to track and issue recommendations on how to expand financial services to minority-owned and women-owned cannabis businesses, among other changes.

The bill, the the Secure And Fair Enforcement (SAFE) Banking Act, is slated to be voted on by the House Financial Services Committee on Tuesday afternoon.

In general the proposal seeks to protect banks from bring punished by federal regulators for working with marijuana businesses that are legal under state laws—a key goal for the cannabis industry, the lack of which is seen as a major roadblock to certainty, security and growth.

Current policy makes many financial institutions reluctant to work with marijuana growers, processors or sellers out of fear of violating money laundering or drug laws. And that has forced many cannabis businesses to operate on a cash-only basis, which can make them targets for robberies.

The new House Democratic majority has identified moving on the banking issue as the first step in what could be a broad marijuana reform agenda, although top Republicans are seeking to delay the vote from happening at all this week.

Meanwhile, Rep. Ed Perlmutter (D-CO), the bill’s chief sponsor, wants to strike the current bill’s provisions and replace them with a new version—an “amendment in the nature of a substitute,” in Capitol Hill parlance.

Many of its core provisions, and the main thrust of the legislation, which currently has 143 cosponsors—nearly a third of the entire House—remain the same, however.

Chief among the changes are the diversity and inclusion provisions that would require federal financial regulators to issue reports on an annual basis compiling “information and data on the availability of access to financial services for minority-owned and women-owned cannabis-related legitimate businesses” and make “regulatory or legislative recommendations for expanding access to financial services” for those businesses

Separately, the Government Accountability Office would be directed to “carry out a study on the barriers to marketplace entry, including in the licensing process, and the access to financial services for potential and existing minority-owned and women-owned cannabis-related legitimate businesses.”

Another change would spell out more clearly which activities are covered under the legislation’s protections. The original version referred to the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act to define “financial service.”

The amended language, however,  specifies that the protections provided in the bill cover armored car services and money transmitting businesses, as well as the “authorizing, processing, clearing, settling, billing, transferring for deposit, transmitting, delivering, instructing to be delivered, reconciling, collecting, or otherwise effectuating or facilitating of payments or funds, where such payments or funds are made or transferred by any means, including by the use of credit cards, debit cards, other payment cards, or other access devices, accounts, original or substitute checks, or electronic funds transfers.”

The substitute additionally makes sure to clarify that protections under the legislation are extended to federal reserve banks and employees of marijuana businesses.

The amendment also deletes a requirement for federal banking regulators to issue guidance and procedures to banks but maintains a related provision directing the Financial Institutions Examination Council to develop the guidance.

“With access to banking services, cannabis businesses would longer need to operate as a cash only business, which could promote public safety and improve the efficiency of collecting taxes and fees from these businesses,” reads a new committee memo on the bill released ahead of Tuesday’s markup.

The legislation was the subject of a lengthy hearing last month.

Here’s a closer look at the changes Marijuana Moment spotted in a side-by-side comparison of the original bill and the substitute amendment, with technical and non-substantive changes listed last:

OLD:
[no comparable provision]
NEW:
SEC. 8. ANNUAL DIVERSITY AND INCLUSION REPORT.
The Federal banking regulators shall issue an annual report to Congress containing—
(1) information and data on the availability of access to financial services for minority-owned and women-owned cannabis-related legitimate businesses; and
(2) any regulatory or legislative recommendations for expanding access to financial services for minority-owned and women-owned cannabis-related legitimate businesses.

 

OLD:
[no comparable provision]
NEW:
SEC. 9. GAO STUDY ON DIVERSITY AND INCLUSION.
(a) STUDY.—The Comptroller General of the United States shall carry out a study on the barriers to marketplace entry, including in the licensing process, and the access to financial services for potential and existing minority-owned and women-owned cannabis-related legitimate businesses.
(b) REPORT.—The Comptroller General shall issue a report to the Congress—
(1) containing all findings and determinations made in carrying out the study required under subsection (a); and
(2) containing any regulatory or legislative recommendations for removing barriers to marketplace entry, including in the licensing process, and expanding access to financial services for potential and existing minority-owned and women-owned cannabis-related legitimate businesses.

 

OLD:
(6) FINANCIAL SERVICE.—The term ‘‘financial service’’ means a financial product or service as defined in section 1002 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5481).
NEW:
(6) FINANCIAL SERVICE.—The term ‘‘financial service’’—
(A) means a financial product or service, as defined in section 1002 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5481);
(B) includes, whether performed directly or indirectly, the authorizing, processing, clearing, settling, billing, transferring for deposit, transmitting, delivering, instructing to be delivered, reconciling, collecting, or otherwise effectuating or facilitating of payments or funds, where such payments or funds are made or transferred by any means, including by the use of credit cards, debit cards, other payment cards, or other access devices, accounts, original or substitute checks, or electronic funds transfers;
(C) includes acting as a money transmitting business which directly or indirectly makes use of a depository institution in connection with effectuating or facilitating a payment for a cannabis-related legitimate business or service provider in compliance with section 5330 of title 31, United States Code, and any applicable State law; and
(D) includes acting as an armored car service for deposit with a depository institution or the Board of Governors of the Federal Reserve System with respect to any monetary instruments (as defined under section 1956(c)(5) of title 18, United States Code.

 

OLD:
[no comparable provision]
NEW:
(b) PROTECTIONS FOR FEDERAL RESERVE BANKS.—With respect to providing a service to a depository institution that provides a financial service to a cannabis-related legitimate business or service provider (where such financial service is provided within a State, political subdivision of a State, or Indian country that allows the cultivation, production, manufacture, sale, transportation, display, dispensing, distribution, or purchase of cannabis pursuant to a law or regulation of such State, political subdivision, or Indian Tribe that has jurisdiction over the Indian country, as applicable), a Federal reserve bank, and the officers, directors, and employees of the Federal reserve bank, may not be held liable pursuant to any Federal law or regulation—
(1) solely for providing such a service; or
(2) for further investing any income derived from such a service.

 

OLD:
(b)FORFEITURE.—A depository institution that has a legal interest in the collateral for a loan or another financial service provided to an owner or operator of a cannabis-related legitimate business or service provider, or to an owner or operator of real estate or equipment that is leased or sold to a cannabis-related legitimate business or service provider, shall not be subject to criminal, civil, or administrative forfeiture of that legal interest pursuant to any Federal law for providing such loan or other financial service.
NEW:
(c) FORFEITURE.—
(1) DEPOSITORY INSTITUTIONS.—A depository institution that has a legal interest in the collateral for a loan or another financial service provided to an owner, employee, or operator of a cannabis-related legitimate business or service provider, or to an owner or operator of real estate or equipment that is leased or sold to a cannabis-related legitimate business or service provider, shall not be subject to criminal, civil, or administrative forfeiture of that legal interest pursuant to any Federal law for providing such loan or other financial service.
(2) FEDERAL RESERVE BANKS.—A Federal reserve bank that has a legal interest in the collateral for a loan or another financial service provided to an owner, employee, or operator of a depository institution that provides a financial services to a cannabis-related legitimate business or service provider, or to
an owner or operator of real estate or equipment that is leased or sold to such a depository institution, shall not be subject to criminal, civil, or administrative forfeiture of that legal interest pursuant to any Federal law for providing such loan or other financial service.

 

OLD:
ISSUANCE BY FEDERAL BANKING REGULATORS.—The Federal banking regulators shall each issue guidance and examination procedures for depository institutions that provide financial services to cannabis-related legitimate businesses and service providers that are consistent with the uniform guidance and examination procedures developed under subsection (a).
NEW:
[no comparable provision]

 

OLD:
(5) FEDERAL BANKING REGULATOR.—The term ‘‘Federal banking regulator’’ means each of the Board of Governors of the Federal Reserve System, the Bureau of Consumer Financial Protection, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the National Credit Union Administration, or any Federal agency or department that regulates banking or financial services, as determined by the Secretary of the Treasury.
NEW:
(5) FEDERAL BANKING REGULATOR.—The term ‘‘Federal banking regulator’’ means each of the Board of Governors of the Federal Reserve System, the Bureau of Consumer Financial Protection, the Federal Deposit Insurance Corporation, the Financial Crimes Enforcement Network, the Office of Foreign Asset Control, the Office of the Comptroller of the Currency, the National Credit Union Administration, the Department of the Treasury, or any Federal agency or department that regulates banking or financial services, as determined by the Secretary of the Treasury.

 

OLD:
(5) prohibit or penalize a depository institution, or entity performing services for the depository institution, for, or otherwise discourage a depository institution, or entity performing services for the depository institution, from, authorizing, processing, clearing, settling, billing, transferring, reconciling, or collecting payments for a cannabis-related legitimate business, where such payment is made by any means, including a credit, debit, or other payment card, an account, check, or electronic funds transfer
NEW:
(5) prohibit or penalize a depository institution (or entity performing a financial service for or in association with a depository institution) for, or otherwise discourage a depository institution (or entity performing a financial service for or in association with a depository institution) from, engaging in a financial service for a cannabis-related legitimate business or service provider.

 

OLD:
(a) IN GENERAL.—With respect to providing financial services within a State, political subdivision of a State, or Indian country that allows the cultivation, production, manufacture, sale, transportation, display, dispensing, distribution, or purchase of cannabis pursuant to a law or regulation of such State, political subdivision, or Indian Tribe that has jurisdiction over the Indian country, as applicable, a depository institution that provides financial services to a cannabis-related legitimate business or service provider, and the officers, directors, and employees of that depository institution may not be held liable pursuant to any Federal law or regulation—
(1) solely for providing such financial services;
(2) for further investing any income derived from such financial services.
NEW:
(a) IN GENERAL.—With respect to providing a financial service to a cannabis-related legitimate business or service provider within a State, political subdivision of a State, or Indian country that allows the cultivation, production, manufacture, sale, transportation, display, dispensing, distribution, or purchase of cannabis pursuant to a law or regulation of such State, political subdivision, or Indian Tribe that has jurisdiction over the Indian country, as applicable, a depository institution, entity performing a financial service for or in association with a depository institution, or Federal reserve bank that provides a financial service to a cannabis-related legitimate business or service provider, and the officers, directors, and employees of that depository institution, entity, or Federal reserve bank may not be held liable pursuant to any Federal law or regulation—
(1) solely for providing such a financial service;
(2) for further investing any income derived from such a financial service.

 

OLD:
Nothing in this Act shall require a depository institution to provide financial services to a cannabis-related legitimate business or service provider.
NEW:
Nothing in this Act shall require a depository institution or entity performing a financial service for or in association with a depository institution to provide financial services to a cannabis-related legitimate business or service provider.

 

OLD:
The purpose of this Act is to increase public safety by expanding financial services to cannabis-related legitimate businesses and service providers and reducing the amount of cash at such businesses.
NEW:
The purpose of this Act is to increase public safety by ensuring access to financial services to cannabis-related legitimate businesses and service providers and reducing the amount of cash at such businesses.

 

OLD:
FINANCIAL SERVICE.—The term ‘financial service’ means a financial product or service as defined in section 1002 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5481).
NEW:
FINANCIAL SERVICE.—The term ‘financial service’ has the meaning given that term in section 10 of the SAFE Banking Act of 2019.

 

OLD:
CANNABIS-RELATED LEGITIMATE BUSINESS.—The term ‘cannabis-related legitimate business’ has the meaning given that term in section 8 of the SAFE Banking Act of 2019.
NEW:
CANNABIS-RELATED LEGITIMATE BUSINESS.—The term ‘cannabis-related legitimate business’ has the meaning given that term in section 10 of the SAFE Banking Act of 2019.

 

OLD:
SERVICE PROVIDER.—The term ‘service provider’ has the meaning given that term in section 8 of the SAFE Banking Act of 2019.
NEW:
SERVICE PROVIDER.—The term ‘service provider’ has the meaning given that term in section 10 of the SAFE Banking Act of 2019.

 

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.

Tom Angell is the editor of Marijuana Moment. A 15-year veteran in the cannabis law reform movement, he covers the policy and politics of marijuana. Separately, he founded the nonprofit Marijuana Majority. Previously he reported for Marijuana.com and MassRoots, and handled media relations and campaigns for Law Enforcement Against Prohibition and Students for Sensible Drug Policy. (Organization citations are for identification only and do not constitute an endorsement or partnership.)

Politics

Kentucky GOP Congressman Touts ‘High Hemp IQ’ Of His Constituents

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Rep. James Comer (R-KY) says that he proved his political advisors wrong when he decided to champion hemp legalization.

When he served as Kentucky’s Agriculture Commissioner before joining Congress and first contemplated “making hemp a reality,” he was told that people would conflate the crop with marijuana and he’d face a backlash, Comer said during an interview that aired this week.

“They said the people of Kentucky will never know the difference. They’ll think you’re talking about marijuana and you’re done,” he said during the Kentucky Educational Television appearance. “You can’t be a Republican and do this.”

“But people in Kentucky are smarter than some people give us credit for, and the people in Kentucky knew the history of hemp,” he said, noting that his own grandparents cultivated the crop.

“We have a high hemp IQ in Kentucky, and people across America are now learning the difference between hemp and marijuana.”

One of the areas that Comer said he hopes to see expanded is the use of hemp fibers to create products such as furniture and car parts. He mentioned one example of a Kentucky company that’s creating hardwood flooring out of hemp, and House Agriculture Committee Chair Collin Peterson (D-MN) is going to tour that facility with him soon.

Shortly before becoming the panel’s chair, Peterson said he was considering growing hemp on his own farm.

Most of the existing hemp facilities in Kentucky are producing CBD oil, which Comer said he also takes to treat minor pain.

While hemp and its derivatives were federally legalized under the 2018 Farm Bill, businesses are still awaiting guidelines from the U.S. Department of Agriculture (USDA) and the Food and Drug Administration (FDA). And that regulatory uncertainty has led some financial institutions to deny credit lines to hemp companies.

To that end, Comer said he and Senate Majority Leader Mitch McConnell (R-KY) are working closely to resolve the problem. That includes pushing for the Secure And Fair Enforcement (SAFE) Banking Act, which would protect banks that service state-legal cannabis businesses from being penalized by federal financial regulators.

“We teamed up with the marijuana people in the states,” Comer said.

Watch Comer’s hemp comments, starting around 5:30 into the video below:

“They’ve legalized marijuana. They’re selling marijuana. They’re not allowed to deposit the cash. They’re not allowed to take credit card transactions at those marijuana stores,” he said. “We have worked with them to try to create a system where you can have financial transparency, and that bill is making its way through Congress now.”

The SAFE Banking Act was approved by the House Financial Services Committee in March. And on Tuesday, the Senate Banking Committee took advocates by surprise after it announced that it would hold a hearing on marijuana banking issues next week, with just days left before the August recess.

Separately, the Senate Agriculture Committee will meet to discuss hemp production two days later.

McConnell has been an especially vocal advocate for hemp and CBD. For example, he led the head of USDA on a tour of a Kentucky hemp facility that produces CBD oil earlier this month.

Comer also claimed in the new interview that large pharmaceutical companies feel threatened by hemp-derived CBD as more consumers gravitate toward it as a “natural supplement” that could be a substitute for prescription painkillers.

“Now what you are having up here in Washington as we speak, the big drug companies are like, ‘Wow, people are buying this CBD oil and not buying our drug,'” the congressman said. “So they’re demanding that the FDA regulate it.”

He and McConnell are working to “keep the FDA off the backs of people,” Comer said.

While former FDA Commissioner Scott Gottlieb stressed that creating a regulatory pathway that allows for the lawful marketing of CBD as a food item or dietary supplement would take years without congressional action, the agency recently said that it is speeding up the rulemaking process and will issue a progress report by early fall.

USDA similarly recognized the intense interest from lawmakers and stakeholders in developing regulations for the crop, and it plans to issue an interim final rule for the crop in August.

Senate Schedules Second Cannabis Hearing For Next Week

Photo courtesy of KET.

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Psychedelics Decriminalization Moves Forward In Cities Around The U.S.

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Activists in Berkeley, California and Port Townsend, Washington took steps this week to get psilocybin mushrooms and other psychedelics decriminalized, following in the footsteps of successful similar efforts in Denver and Oakland.

In Berkeley, a decriminalization resolution advanced in a City Council committee on Wednesday, and organizers in Port Townsend spoke about their proposal at a county public health board meeting on Thursday, with plans to formally present it to the City and County Council.

The Berkeley measure would prohibit city departments and law enforcement from using any funds to enforce laws against possession, propagation and consumption of psychedelics by individuals 21 or older. Members of the City Council Public Safety committee unanimously voted to send the resolution to the body’s Public Health Committee for further consideration.

If that panel approves the measure, the full Council will schedule a hearing and vote on final passage. Decriminalize Nature, the group behind this resolution as well as the successful passage of neighboring Oakland’s psychedelics decriminalization effort last month, said they hope the Council will act on the measure by early November.

Separately, activists in Port Townsend announced that they delivered a speech about their psychedelics decriminalization proposal during a meeting of the Jefferson County Board of Health.

Beyond prohibiting the use of government funds to criminalize adults for using and possessing the substances, the local Washington resolution also calls on the city administrator to “instruct the City’s state and federal lobbyists to work in support of decriminalizing all Entheogenic Plants and plant-based compounds that are listed on the Federal Controlled Substances Schedule 1.”

“We are overwhelmed by the support of our community. Our group of supporters filled up half the audience,” the Port Townsend Psychedelic Society said in an Instagram post. “We are currently making plans to speak with the county health officer to talk about next steps in presenting in front of city and county council.”

Alex Williams, who is leading the decriminalization effort in Berkeley, told Marijuana Moment that Wednesday’s Council committee meeting there “went better than I had anticipated” and that he feels “there is an excellent chance of the resolution passing.”

Watch the Berkeley Public Safety Committee discuss psychedelics, starting at about 42:00:

While Williams said two members of the committee seemed to be under the impression that the resolution is singularly geared toward recreational use and meant to “capitalize on a new market,” Decriminalize Nature plans to address those misconceptions, emphasizing that the measure would not provide for commercial manufacturing or sales and that “this process is very important to allowing safe, equitable access to marginalized communities.”

“It is essential that entheogenic substances be treats as sacred spiritual practices and healers,” he added.

The resolution defines entheogenic substances as “plants and natural sources such as mushrooms, cacti, iboga containing plants and/or extracted combinations of plants similar to ayahuasca; and limited to those containing the following types of compounds: indoleamines, tryptamines, phenethylamines.”

Two Councilmembers, Rigel Robinson and Cheryl Davila, are sponsoring the measure.

“You can imagine a day where, years from now, doctors working with patients with serious depression or veterans dealing with PTSD could actually offer them a more realistic and comprehensive suite of potential treatments, which may include some of these plants as the research over the last several decades has indicated,” Robinson said at the meeting.

While Berkeley might seem like an obvious target for psychedelics reform given the city’s decades-long close association with counterculture, the movement to remove criminal penalties is gaining steam nationally. Decriminalize Nature is maintaining a map of jurisdictions throughout the country where activists have expressed interest in pursuing a similar model.

Also this week, a resident spoke at a Columbia, Missouri City Council meeting, asking the body to consider a resolution to decriminalize psychedelics. At least one councilmember expressed interest in following through, and he called the therapeutic potential of the natural substances “very promising.”

Individuals from nearly 100 cities have reached out to the organization for assistance advancing their own decriminalization efforts.

Voters in Denver kicked things off by approving the nation’s first-ever ballot measure to decriminalize psilocybin mushrooms in May.

Activists are currently pursuing efforts to place psilocybin-focused measures on statewide ballots in California and Oregon for next year.

More Than 100 Marijuana Businesses Urge Congress To Include Social Equity In Legalization

Photo courtesy of Wikimedia/Mushroom Observer.

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Top Democratic Party Leader Flops With Attempted Joke About Trump Smoking Hemp

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The chairman of the Democratic National Committee (DNC) apparently thinks that hemp gets you high—and that getting high makes you dumb.

In an attempted dig at President Donald Trump, who said last week that farmers struggling amid a trade war were “over the hump,” DNC Chair Tom Perez said he thought the president “was smoking some hemp when he said they were over the hump.”

“If you smoke some hemp, I guess that would stimulate certain farm economies here,” he added during his remarks at a press conference in Wisconsin.

Watch Perez’s hemp comment at about 6:45 into the video below:

Because hemp contains only trace amounts of THC, the main psychoactive ingredient in marijuana, it wouldn’t get you high, as Perez implied. But legalization advocates say it’s especially problematic that a party leader is treating marijuana as a laughing matter in the first place.

“I would need to be smoking something a hell of a lot stronger than hemp to find Tom Perez’s weak attempt at a marijuana joke funny,” Erik Altieri, executive director of NORML, told Marijuana Moment.

“At a time when over 600,000 overwhelmingly black and brown Americans are still being arrested every year for simple possession, our failed and racist prohibition is no laughing matter,” he said. “While we have made great progress in winning elected officials nationwide to our cause, Perez illustrated that we have a lot of work left to do when it comes educating them about the issue and still a bit of a road to go down before we can stop dealing with dad jokes and bad weed puns.”

Don Murphy, director of federal policies for the Marijuana Policy Project, echoed that point.

“We need more leadership and action at the federal level, not more stupid jokes, puns and inaccurate comments about hemp’s ability to get you high,” he told Marijuana Moment. “Luckily that is something that many of his party’s presidential candidates understand,” he said. “Sadly, Mr. Perez does not.”

Perez’s position on cannabis policy isn’t quite clear, as he’s remained largely silent on the issue. In contrast, many 2020 Democratic presidential candidates are campaigning on broad marijuana reform proposals.

The DNC chair made his attempted hemp quip during a press availability in Milwaukee, where he is meeting donors and coordinating preparation for next year’s Democratic National Convention.

Senate Schedules Second Cannabis Hearing For Next Week

Photo courtesy of Flickr/Gage Skidmore.

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.
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