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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

Biden Says Marijuana Might Be A Gateway Drug

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Former Vice President Joe Biden (D) said on Saturday that he’s not sure if marijuana is a gateway drug that leads to the use of other, more dangerous substances.

“The truth of the matter is, there’s not nearly been enough evidence that has been acquired as to whether or not it is a gateway drug,” the 2020 presidential candidate claimed at a town hall meeting in Las Vegas. “It’s a debate, and I want a lot more before I legalize it nationally. I want to make sure we know a lot more about the science behind it.”

Please visit Forbes to read the rest of this piece.

(Marijuana Moment’s editor provides some content to Forbes via a temporary exclusive publishing license arrangement.)

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Vote To Federally Legalize Marijuana Planned In Congress

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A key congressional committee plans to hold a historic vote on a bill to end the federal prohibition of marijuana next week, two sources with knowledge of the soon-to-be-announced action said.

The legislation, sponsored by House Judiciary Committee Chairman Jerrold Nadler (D-NY), would remove cannabis from the Controlled Substances Act and set aside funding to begin repairing the damage of the war on drugs, which has been disproportionately waged against communities of color.

Please visit Forbes to read the rest of this piece.

(Marijuana Moment’s editor provides some content to Forbes via a temporary exclusive publishing license arrangement.)

Image element courtesy of Tim Evanson.

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Where Presidential Candidate Deval Patrick Stands On Marijuana

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Former Massachusetts Gov. Deval Patrick (D) announced on November 14, 2019, that he is seeking the 2020 Democratic presidential nomination.

The latecomer to the race does not have an especially reform-friendly record on drug policy issues compared to many of his rival contenders, and questions remain about where he stands on legalization for adult-use—or even medical use for that matter.

During his time as governor, he voiced opposition to a marijuana decriminalization proposal and raised concerns about a medical cannabis legalization measure. After voters approved that latter initiative, he said he wished the state didn’t have the program, and his administration faced criticism over its implementation.

That said, Patrick, who also served as the U.S. assistant attorney general for the civil rights division, does not appear to have expressed hostility to marijuana reform in recent years and during his time in office did take action in support of modest proposals such as resentencing for people with non-violent drug convictions. Here’s where the former governor stands on cannabis:

Legislation And Policy Actions

Patrick’s administration said that despite a marijuana decriminalization policy going into effect following the passage of a 2008 ballot initiative, law enforcement should be able to continue to search people suspected of possession. However, his office declined to approve a request from prosecutors to delay the implementation of the voter-approved policy change.

After the decriminalization proposal passed, Patrick directed the Executive Office of Public Safety and Security (EOPSS) to develop an implementation plan.

“Our office will continue to work collaboratively with EOPSS and the district attorneys and law enforcement agencies on implementation,” a spokesperson said. “It’s an ongoing process.”

The then-governor said he would work to toughen up enforcement of fines levied against people possessing marijuana.

“The bottom line is the governor believes that if people are fined they should pay the fines,” a spokesperson for his administration said.

Following the passage of a 2012 medical cannabis initiative in Massachusetts, Patrick said simply that the “voters have voted,” and pledged that he wouldn’t seek to repeal the law.

But there were some complications that arose during his administration’s medical marijuana licensing approval process.

In February 2014, Patrick contradicted the state health department, which had recently announced that 20 business licenses had been accepted.

“No licenses have been given. No provisional licenses have been given. What we have is a multi-step process of screening out applicants,” he said. “Don’t get ahead of where we are. There was a balance struck here about trying to let the public in through transparency to the process even though the process was unfinished.”

When reports emerged that certain medical cannabis applicants had apparently provided false or misleading information in their application forms, Patrick said “[n]o good dead goes unpunished.”

“Rather than wait till the end when all that vetting and screening had been done, we’re going to do that first cut from 100 [applicants] down to 20, and we’re going to tell everybody,”

The next month, he dismissed requests for a review of the licensing process by applicants who the health department had rejected.

“I don’t think we gain anything by starting over,” he said. “We are in the middle of a process. Nobody has a license, no one is going to get a license until we meet the standards of the application process.”

Patrick was also criticized for failing to follow up with patient advocates who urged him to effectively implement the program.

“It appears the governor wants to skip out of office without addressing medical marijuana because he doesn’t want to talk about it and he doesn’t want to deal with it,” Massachusetts Patient Advocacy Alliance Executive Director Matthew Allen said in 2014.

Patrick’s successor, Gov. Charlie Baker (R), overhauled the his predecessor’s medical cannabis licensing process to create “a more streamlined, efficient, and transparent process that allows the Commonwealth to maintain the highest standards of both public safety and accessibility.”

Despite opposing marijuana decriminalization and expressing concerns about medical cannabis legalization, the governor did sign several drug policy reform bills during his time in office.

Patrick signed legislation in 2012 that reduced mandatory minimum sentences for people with non-violent drug convictions. He’d introduced a package of bills that included a call for the repeal of such mandatory minimums the previous year, earning praise from reform advocates.

“We need an effective and accountable re-entry program for those leaving the criminal justice system,” Patrick said in a statement. “Combining probation and parole, and requiring supervision after release, takes the best practices from other states to assure both public safety and cost savings.”

Another piece of legislation the then-governor proposed was to reduce the scope of “drug-free school zones,” where people charged with drug crimes would face mandatory minimum sentences. He recommended reducing the size of these zones from within 1,000 feet of a school to 100 feet.

Patrick signed off on a bill in 2014 to expand access to drug treatment.

“This bill creates some new rules and new tools for us to use together to turn to our brothers and sisters who are dealing with these illnesses and addiction and help them help themselves,” he said.

But in 2012, Patrick signed a bill prohibiting certain synthetic drugs called “bath salts.”

On The Campaign Trail

So far, Patrick has not made drug policy a center-stage issue in his campaign. However, his website says his agenda involves “making meaningful fixes to the big systems that consistently fail to meet modern needs.”

“This means a justice system that focuses less on warehousing people than on preparing them to re-enter responsible life,” the site says.

Previous Quotes And Social Media Posts

In 2007, a spokesperson for Patrick’s office said the governor would veto a proposed marijuana possession decriminalization bill. Patrick told the Associated Press that he had other priorities when asked whether he would sign the legislation.

He was listed as a supporter for a campaign that opposed the 2008 decriminalization ballot measure that voters later approved.

Several news reports from the time also noted that Patrick stood opposed to the modest proposal to remove criminal penalties for low-level cannabis possession.

Oddly, two years earlier, Patrick was asked about a decriminalization proposal during a debate and said that while he’s “very comfortable with the idea of legalizing marijuana,” he doesn’t “think it ought to be our priority.” He went on to say that he would veto a proposed decriminalization measure in the legislature.

Massachusetts voters also approved a 2012 medical cannabis initiative while Patrick was in office—in spite of the fact that he declined to endorse the measure.

Asked about the proposal during a radio interview with WBZ, the then-governor first cited an argument in support of legalization made by conservative author William F. Buckley Jr., who said regulating drug sales would remove a profit motive for illicit dealers. Yet he went on to say that “I’m not endorsing” the initiative.

“I’m not expressing a point of view and I’m not dodging, it’s just I’ve got so much else I’m working on,” he said.

The host asked if Patrick would implement the law if voters approved it and he said “that’s, I think, what we’re supposed to do.”

In September 2012, he said that he doesn’t “have a lot of enthusiasm for the medical marijuana” measure, which was set to go before voters two months later.

“I mean I have heard the views on both sides and I’m respectful of the views of both sides, and I don’t have a lot of energy around that,” he said. “I think California’s experience has been mixed, and I’m sympathetic to the folks who are in chronic pain and looking for some form of relief.”

“I really have to defer to the medical views about this and individuals will get a chance to vote on this,” Patrick said in April 2012. “I haven’t been paying much attention to it.”

While his administration struggled to implement the program after voters had approved it, Patrick said in August 2014 that “I wish frankly we didn’t have medical marijuana.”

Patrick doesn’t appear to have publicly weighed in during the Massachusetts campaign about legalizing marijuana for adult-use, which voters approved in 2016 after he had left office.

In 2012, Patrick said during a State of the State Address that Massachusetts should reevaluate how it treats people convicted of non-violent drug offenses.

“In these cases, we have to deal with the fact that simply warehousing non-violent offenders is a costly policy failure,” he said. “Our spending on prisons has grown 30 percent in the past decade, much of that because of longer sentences for first-time and nonviolent drug offenders. We have moved, at massive public expense, from treatment for drug offenders to indiscriminate prison sentences, and gained nothing in public safety.”

“We need more education and job training, and certainly more drug treatment, in prisons and we need mandatory supervision after release,” he said. “And we must make non-violent drug offenders eligible for parole sooner.”

He also said that the “biggest problem is that our approach to public safety has been to warehouse people,” and that the “answer is new policies, not bigger warehouses.”

“We’ve been warehousing people for whom what they really need is treatment and not just time,” he said during a town hall event in 2009.

Patrick voiced support in 2006 for a bill that would legalize the over-the-counter sale of needles in order to prevent the spread of disease.

“Deval Patrick supports this legislation because he believes it will reduce dangerous diseases in our state,” a campaign spokesperson said. “Studies in other states have shown that programs such as these decrease the rates of disease infection without increasing drug use.”

Patrick later criticized then-Gov. Mitt Romney (R) for vetoing the legislation, stating that the official “put misguided ideology before leadership in public health.”

Personal Experience With Marijuana

Patrick said in 2012 that he has never “experienced marijuana myself” but that during his school years there “was probably enough around me that there was a second-hand, a contact-high.”

Marijuana Under A Patrick Presidency

It is difficult to assess how Patrick would approach federal marijuana policy if elected president, but his vocal opposition to decriminalization in Massachusetts and his administration’s troubled implementation of medical cannabis legalization is likely to give advocates pause. While his current position on legalizing marijuana for adult-use is unclear, given that drug policy reform has become a mainstream issue that candidates are routinely pressed on, it is likely the former governor will be asked to weigh in on the campaign trail.

But for the time being, it appears that Patrick would not make marijuana reform a priority and, in fact, might prove more resistant to policy changes such as descheduling that the majority of candidates now embrace.

Where Presidential Candidate Mark Sanford Stands On Marijuana

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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