A powerful House committee on Thursday approved spending bills and related reports that touch on a wide range of marijuana and drug policy issues—including calls to remove roadblocks to research into cannabis, noting the lifesaving potential of safe consumption sites for illegal substances, recognizing the painkilling promise of the kratom plant and urging the development of technology to detect impairment from THC.
Importantly, the legislation that cleared the House Appropriations Committee would also maintain an existing provision that shields state medical marijuana laws from intervention by the Justice Department.
Rep. Barbara Lee (D-CA), co-chair of the Congressional Cannabis Caucus, thanked committee leadership on Thursday for “including important language that would prohibit the Department of Justice from interfering in access to medical marijuana in states, the District of Columbia and territories where it is legal.”
“This language is critical to ensuring that the federal government doesn’t preempt what states are doing,” she said.
Advocates are holding out hope that a broader provision is added later in the process to keep federal law enforcement agencies from using funds to interfere in the implementation of any state-level legalization law—including those that allow recreational use.
Meanwhile, the advancing legislation also includes language to prevent the penalization of universities that conduct cannabis research.
Reports attached to the two pieces of Fiscal Year 2022 legislation approved by the panel—the Commerce, Justice, Science, and Related Agencies Appropriations (CJS) bill and the Labor, Health and Human Services, Education, and Related Agencies (LaborH) bill—contain a number of cannabis-related provisions.
Research, medical benefits and driving
The CJS report notes that the Drug Enforcement Administration (DEA) has moved to approve additional marijuana manufacturers for research purposes and says the committee supports ongoing research efforts on cannabis, particularly in the wake of an outbreak of lung injuries associated with unregulated vaping products:
“Marijuana Research and E-cigarette or Vaping use-Associated Lung Injury (EVALI).—The Committee is aware that DEA recently published a rule (effective January 19, 2021) in 2020 DEA that amended regulations to facilitate the cultivation of marijuana for research purposes and other licit purposes to enhance compliance with the Controlled Substances Act, including registering cultivators consistent with treaty obligations. The Committee also understand that since the issuance of this new rule, DEA has registered additional growers, and supports DEA continuing efforts in support of such scientific research, and allowing Federal researchers to test marijuana products to characterize toxicological risks and health effects associated with EVALI products and the administration of those products in research subjects.”
The LaborH report, meanwhile, includes a number of passages about cannabis research. The committee urged the National Institute On Drug Abuse (NIDA) to support expanded marijuana studies, for example:
“Cannabis Research.—The Committee encourages NIDA to support coordinated, multidisciplinary cannabis research, including basic, clinical, and translational cannabis research and research on the health effects of cannabis use, potential therapeutic effects of cannabis use, and effects of cannabis legalization. NIDA is encouraged to support peer-reviewed scientific research, graduate and postdoctoral fellowships, and any required infrastructure, with priority given to research programs in States where State co-funding is available.”
It goes on to mandate that the National Institutes of Health (NIH), work with the Food and Drug Administration (FDA), DEA, White House Office of National Drug Control Policy (ONDCP) and other relevant agencies to broaden access for researchers to obtain marijuana and other Schedule I drugs, which can be difficult to access due to their restricted status under federal law:
“Schedule I Drug Research.—The Committee recognizes that, despite marijuana being legalized in some form in 35 States and nearly 45,000,000 American adults reporting having used marijuana in the past year, research on marijuana and other Schedule I substances is extremely limited. The Committee directs NIH, in collaboration with FDA, DEA, ONDCP, and any other relevant agencies, to develop an approach to facilitate access to Schedule I drugs for research.”
Another passage concerns individual marijuana components, including CBD, minor cannabinoids and terpenes, noting that the panel “strongly believes” they “may provide beneficial medicinal effects” but that more studies are needed:
“Cannabidiol Research.—The Committee strongly believes that cannabidiol (CBD), cannabigerol (CBG), cannabichromene (CBC), minor cannabinoids, and terpenes—compounds found in cannabis— may provide beneficial medicinal effects. However, there is insufficient scientific information about the short- and long-term effects of these compounds. The Committee is also concerned that marijuana policies on the Federal level and in the States are being changed without the benefit of scientific research to help guide those decisions. Additional, coordinated research on a national scale is necessary to determine the toxicology and medicinal effects of these compounds. The Committee believes that NIH should consider significantly expanding funds to study the medicinal effects and toxicology of CBD, CBG, CBC, minor cannabinoids, and terpenes. This expanded effort should include funding of clinical trials with academic health centers to study the long-term medicinal benefits and toxicology of CBD, CBG, CBC, minor cannabinoids, and terpenes. The Committee encourages NIH to continue supporting a full range of research on the health effects of marijuana and its components, including research to understand how marijuana policies affect public health.”
Lee, the Cannabis Caucus co-chair, told colleagues at the committee markup that “gaining scientific data on cannabis will be valuable in further understanding its potential benefits.”
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Also in the report, the committee conveyed its support for language in the bill itself that prevents universities from being penalized for conducting research into the risks and benefits of marijuana:
“Protecting Scientific Research on Marihuana.—Through scientific research, institutions of higher education advance our understanding and knowledge of various aspects of our world. Moreover, when in the public interest, such institutions should be able to conduct such research without fear of reprisal or loss of Federal funding. This includes research on cannabis, a Schedule I controlled substance under the Controlled Substances Act. As more States and localities move to legalize cannabis, many institutions of higher education are expanding the knowledge-base on this controlled substance. As a result, the Committee notes that such research is in the public interest, and the recommendation includes new bill language prohibiting the Department from penalizing institutions of higher education that conduct scientific research on marihuana.”
That said, the report is something of a mixed bag of marijuana policy positions.
A lengthy section expresses concerns about cannabis use by young people and the impact of marijuana consumption by pregnant and breastfeeding women. It notes that the spending legislation appropriates $2 million to NIDA to commission a study on the issue, a mandate that’s consistent with a warning issued by U.S. surgeon general under the Trump administration, who publicly cautioned against cannabis use by pregnant women and adolescents:
“Underage and Perinatal Marijuana Use.—The Committee includes $2,000,000 for NIDA to enter into a contract with NASEM to commission a study to determine the scope of the problem of underage and perinatal marijuana use and effective ways of reducing it. Topics explored should include but not be limited to the demographics of underage and perinatal marijuana use; its economic and social costs; adolescent and perinatal decision making and risk and protective factors; and the effectiveness of various prevention programs and approaches, including media campaigns, school-based education, pricing, and access. The NAS will develop a strategy for reducing and preventing underage and perinatal consumption of today’s marijuana and THC products, specifically focused on the impacts of THC on the developing brain.
“To help develop an effective strategy, the NAS shall review existing Federal, State, and non-governmental programs, including media-based programs, that have been shown to be effective with other substances that can be harmful to youth, including any done on marijuana, that are designed to change the attitudes and health behaviors of youth (those under the age of 21).
“In addition, the NAS shall review existing Federal, State, and non-governmental programs including media-based programs, that have been shown to be effective with other substances that can be harmful to babies of pregnant and breast-feeding women, including any completed on marijuana, that are designed to change the attitudes and health behaviors of pregnant and breast-feeding women.
“Based on its reviews, the NAS shall produce a strategy designed to prevent and reduce underage consumption of today’s marijuana and THC products in addition to a strategy designed to prevent and reduce consumption of today’s marijuana and THC products by pregnant and breast-feeding women. This shall include but not be limited to: an outline and implementation strategy, message points that will be effective in changing the attitudes and health behaviors of youth concerning underage marijuana consumption and an outline and implementation strategy, message points that will be effective in changing the attitudes and health behaviors of pregnant and breast-feeding women, target audience identification, goals and objectives of both campaigns, and the estimated costs of development and implementation.”
The report also simultaneously expresses concern in one section that there’s not a uniform method of detecting impairment from cannabis while recognizing that DEA restrictions have minimized the capacity of researchers to investigate marijuana:
“Drug Impairment Standards for Marijuana.—The Committee is concerned that development of a drug impairment standard for marijuana remains unlikely in the near term and encourages NIH to continue supporting a full range of research on the health effects of marijuana and its components, including research to understand how marijuana policies affect behaviors that impact public health, such as drug-impaired driving. The Committee is aware that due to Drug Enforcement Administration restrictions on registered growers, the majority of Federal research using marijuana has been limited to marijuana produced by a single grower and encourages NIH, when possible, to undertake research that encompasses the diversity, quality, and potency of commonly available cannabis products.”
Meanwhile, the Appropriations Committee is set to take it another funding bill—for the Departments of Transportation, and Housing and Urban Development—on Friday, and its attached report also has a passage on drug-impaired driving from substances such as marijuana. It urges the National Highway Traffic Safety Administration (NHTSA) to take steps to address the issue:
“Drug-impaired driving.—The Committee remains concerned with the growing problem of people driving under the influence of one or multiple substances, including marijuana and opioids. The Committee encourages NHTSA to continue funding training efforts to ensure stakeholders can identify drug-impaired driving and enforce the law. Funding under this heading is provided to continue research with the goal of developing a standardized field sobriety test (SFST) to detect marijuana impairment.
“The Committee directs NHTSA to work with the Department of Justice, the Department of Health and Human Service, and the Department of Commerce to ensure that state highway safety offices and state law enforcement have the most up-to-date information from the Federal government on detecting impaired driving. In order to increase the safety of the transportation network by reducing drug-impaired driving, the Committee directs NHTSA to work with states to determine their toxicology testing and funding needs and to make states aware that assistance for state toxicology labs are eligible expenses under section 402 and 405 formula grant funds.”
Broader drug policy provisions
Meanwhile, the CJS and LaborH reports approved on Thursday also include language on broader drug policy reforms.
Members acknowledged that safe consumption sites where people can use illegal drugs under medical supervision have the potential to save lives, and they’re directing the Centers for Disease Control and Prevention (CDC) to work with NIH on a report about the issue:
“Overdose Prevention Centers.—The Committee recognizes that overdose prevention centers, or supervised consumption sites, are part of a larger effort of harm reduction interventions intended to reduce the risk of drug overdose death and reduce the spread of infectious disease. The Committee directs NIH, in consultation with CDC, to provide a report to the Committee no later than 180 days after the enactment of this Act that provides an updated literature review and evaluation on the potential public health impact of overdose prevention centers in the U.S.”
That’s a significant recognition at the congressional level. At the state level, meanwhile, the governor of Rhode Island recently signed a bill to establish a safe consumption site pilot program where people could test and use currently illicit drugs in a medically supervised environment. It’s the first state in the country to legalize the harm reduction centers.
In other harm reduction wins, a press release from the committee notes that a previous longstanding rider has been removed from this year’s LaborH legislation that in the past has blocked funds from being used to purchase syringes for exchange programs:
“Helping Reduce Injection-Related Infections to Save Lives
“Syringe Exchange—The bill removes a longstanding general provision that prohibited federal funds from being used to purchase syringes as part of a public health campaign to provide services to individuals involved in injection drug use.”
Further, the LaborH report specifically includes funding for syringe access programs, the first time that such efforts have ever been explicitly funded in an annual federal appropriations bill:
“Infectious Diseases and the Opioid Epidemic.—The Committee includes an increase of $56,500,000 to expand activities to target the infectious disease consequences of the public health crisis involving injection drug use, including expanding the implementation of and access to high quality syringe services programs nationwide.”
Meanwhile, a provision in the CJS report reminds the Department of Justice that Byrne Memorial Justice Assistance Grants it doles out to local law enforcement agencies can be used to fund efforts to expunge criminal records:
“The Committee would like to reiterate the following allowable uses of Byrne JAG formula grant funding:…supporting expungement and record clearing initiatives.”
On kratom, a plant that’s been touted by advocates as a potentially safer alternative to opioids, the committee noted that is aware of its “potential promising results”:
“Kratom.—The Committee recognizes that NIDA-funded research has contributed to the continued understanding of the health impacts of kratom, including its constituent compounds, mitragynine and 7-hydroxymitragynine. The Committee is aware of the potential promising results of kratom for acute and chronic pain patients who seek safer alternatives to sometimes dangerously addictive and potentially deadly prescription opioids and of research investigating the use of kratom’s constituent compounds for opioid use disorder. The Committee directs NIDA to continue to invest in this important research, especially considering the increase in overdose deaths during the COVID–19 pandemic.”
It also directed the Health and Human Services secretary to continue to refrain from recommending that kratom be controlled in Schedule I:
“Kratom.—The Committee directs the Secretary to maintain current Agency policy to not recommend that the substances mitragynine and 7-hydroxymitragynine, known as kratom, be permanently controlled in Schedule I of the Controlled Substances Act, either temporarily or permanently, until scientific research can sufficiently support such an action. The Committee encourages AHRQ to continue to fund research on natural products that are used by many to treat pain in place of opioids, including kratom. Given the wide availability and increased use of these substances, it is imperative to know more about potential risks or benefits, and whether they can have a role in finding new and effective non-opioid methods to treat pain. The Committee recommends an additional $3,000,000 for this research and directs AHRQ to make center-based grants to address research which will lead to clinical trials in geographic regions which are among the hardest hit by the opioid crisis.”
The CJS and LaborH measures and their reports were approved by the Appropriations Committee on Thursday and the legislation now heads to the floor along with several other individual spending bills that previously cleared the panel.
As far as advocates are concerned, the most consequential portion of the latest appropriations legislation is the protections for medical states:
“SEC. 531. None of the funds made available under this Act to the Department of Justice may be used, with respect to any of the States of Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming, or with respect to the District of Columbia, the Commonwealth of the Northern Mariana Islands, the United States Virgin Islands, Guam, or Puerto Rico, to prevent any of them from implementing their own laws that authorize the use, distribution, possession, or cultivation of medical marijuana.”
It remains to be seen whether lawmakers will push for an additional amendment in the full committee or on the floor to protect adult-use marijuana programs as well, as the House approved in 2019 and 2020. The provision was not attached to final bills sent to then-President Donald Trump’s desk, however, after they were not included in Senate versions that advanced when the chamber under Republican control.
Another longstanding provision again included in the latest CJS spending legislation would bar DOJ or DEA from interfering in state-legal hemp programs.
“SEC. 530. None of the funds made available by this Act may be used in contravention of section 7606 (“Legitimacy of Industrial Hemp Research”) of the Agricultural Act of 2014 (Public Law 113–79) by the Department of Justice or the Drug Enforcement Administration.”
A new provision was also attached to the bill that would make states and localities ineligible for certain federal law enforcement grants if they maintain a policy allowing for no-knock warrants for drug-related cases. That policy garnered national attention following the police killing of Breonna Taylor, who was fatally shot by law enforcement during a botched drug raid.
“SEC. 219. None of the funds made available by this Act under paragraph (1) under the heading “State and Local Justice Assistance”, or under the heading “Community Oriented Policing Services”, may be awarded to a State or unit of local government unless the Attorney General of the United States certifies that the State or unit of local government—
(6) has in effect a law that prohibits the issuance of a “no-knock warrant” in a drug case, consistent with the requirements as described in section 362 of H.R. 1280 of the 117th Congress as passed by the House of Representatives on March 3, 2021.”
In LaborH, members included language that prohibits the Department of Education from denying funds to colleges that carry out—or plan to carry out—research into cannabis.
“SEC. 316. None of the funds appropriated by this title for the Department of Education shall be withheld from an institution of higher education solely because that institution is conducting or preparing to conduct research on marihuana as defined in 21 U.S.C. 802(16).”
But advocates are disappointed to see that another rider dating back to the 1990s was included again that broadly prevents agencies from promoting the legalization of Schedule I substances like marijuana. Rep. Alexandria Ocasio-Cortez (D-NY) attempted to get that language deleted in 2019 by arguing that it impedes research on psychedelics, but Democrats joined Republicans in rejecting her floor amendment.
“SEC. 507. (a) None of the funds made available in this Act may be used for any activity that promotes the legalization of any drug or other substance included in schedule I of the schedules of controlled substances established under section 202 of the Controlled Substances Act except for normal and recognized executive-congressional communications.
(b) The limitation in subsection (a) shall not apply when there is significant medical evidence of a therapeutic advantage to the use of such drug or other substance or that federally sponsored clinical trials are being conducted to determine therapeutic advantage.”
A failed amendment on cracking down
At Thursday’s markup, Rep. Mike Garcia (R-CA) sought to pass an amendment that would have added new CJS report language directing the Justice Department to aid local police in cracking down on illegal marijuana operations:
“Illegal Marijuana Grow Operations – The Committee is concerned with the rampant growth of illegal marijuana grow operations in states with legal marijuana production and sale frameworks, because these illegal enterprises contribute to increases in thefts, extortion, assaults, human trafficking, and homicides in communities where they proliferate. The Committee is aware of the assistance provided through the DEA Domestic Cannabis Eradication Suppression Program, but illegal grow operations are still increasing in number and complexity. To address this problem the Committee directs the Department to increase its support to local police forces combating legal grow operations and encourages the Department to pursue prosecution of these criminals to the full extent allowable under federal law.”
“Let me be clear: this is not a problem with the legal cannabis market or distributors,” Garcia told colleagues. “This is a problem with large-scale and transnational criminal organizations that are being primarily staffed and operated by illegal immigrants.”
But Lee and fellow Cannabis Caucus co-chair Rep. Dave Joyce (R-OH) spoke in opposition to the measure, even though they said they understood concerns about illegal cultivation.
“The report language appears to favor prosecution under federal laws as opposed to the state’s right to prosecute illegal growers according to their own laws in states where cannabis is legal,” Lee said. “We should be cautious about subjecting individuals to heavier penalties given the clear example of mass incarceration due to the war on drugs.”
She added that she’s “concerned with the language of this amendment, which correlates the illegal growth of marijuana with increase in ‘theft, extortion, assaults, human trafficking, and homicides,’ which are horrible crimes.”
“This is simply fear-mongering rhetoric which aims to amplify negative stigma around cannabis,” Lee said. “It’s inappropriate for the federal government to spend more taxpayer money to combat illicit operations when it continues to place the heavy burden of federal prohibition on states that have made the wise choice to legalize.”
At Joyce’s request, Garcia withdrew the amendment and asked colleague to work together with him to handle the illegal growing issue “holistically” in the future.
I want to thank @KenCalvert and @Robert_Aderholt for speaking in support of this important amendment and @RepCartwright who agreed to collaborate with me on finding needed solutions for the many Californians suffering from the impact of the illegal marijuana grows.
— Rep. Mike Garcia (@RepMikeGarcia) July 16, 2021
Other spending bills have cannabis provisions
Meanwhile, the Appropriations Committee approved separate spending legislation recently that would protect banks from being punished for working with marijuana businesses and allow Washington, D.C. to legalize cannabis sales.
The move by congressional Democrats to let the District of Columbia set its own marijuana policies is in contrast with a budget released by President Joe Biden, which proposed continuing the longstanding Republican-led rider that has prevented the city from spending its own money to regulate adult-use cannabis commerce.
The banking-related provision is less far-reaching than more robust standalone bills the House has passed on four occasions, but would still provide some protections to banks that work with state-legal marijuana operators.
Both measures are attached to the Financial Services and General Government bill for Fiscal Year 2022. The corresponding committee report also urges federal agencies to reconsider policies that result in the firing of employees who use marijuana legally in accordance with state law.
In a separate spending bill that allocates annual funding for the Department of Homeland Security (DHS), there’s also a provision that would protect immigrants from have their status penalized simply because they’ve admitted to using cannabis or were convicted of a low-level marijuana offense. That cleared the full committee earlier this week.
Standalone legislation has been introduced this session to resolve cannabis problems for immigrants, but it has yet to be acted on.
The Appropriations Committee also approved a bill that includes a report acknowledging that the U.S. Department of Veterans Affairs (VA) has clarified that military veterans are eligible for home loan benefits even if they work in a state-legal marijuana industry. However, it expresses disappointment that VA hasn’t taken further action to communicate this policy to lenders and borrowers.
That report directs VA to improve that communication and report back to Congress on its progress within 180 days of the enactment of the legislation. A separate provision urges VA to expand research on the medical benefits of cannabis for veterans.
Separately, there are a host of provisions on hemp and its derivatives like CBD in another spending bill and attached report that covers funding for the U.S. Department of Agriculture (USDA) and Food and Drug Administration (FDA).
In the report, lawmakers took issue with the 2018 Farm Bill’s 0.3 percent THC cap for lawful hemp products and directed USDA to work with the U.S. Department of Health and Human Services (HHS) and DEA on a study of whether that threshold is scientifically backed.
The Appropriations Committee also approved a report last month voicing support for federal law enforcement efforts to deploy drones in California to find illicit marijuana grow sites on public lands. However, it said that support is contingent on resolving issues related to cybersecurity and domestic production.
The Biden administration, for its part, is being closely watched by advocates when it comes to any marijuana policy development—especially since the president has maintained an opposition to adult-use legalization even as multiple bills to end federal prohibition are being drafted and introduced.
Perhaps unsurprisingly, Biden’s budget did not propose gutting the Office of National Drug Control Policy (ONDCP) as Trump did. The former president called for a roughly 90 percent cut in the agency’s budget in his proposals, but Congress did not follow suit. Biden helped to establish the drug czar’s office during his time in the Senate.
Biden’s budget also includes $17 million in funding to support industrial hemp production.
The Senate is also set to soon take up its parallel consideration of the annual appropriations measures, and it remains to be seen which cannabis and drug policy provisions will advance in that chamber.
Photo courtesy of Mike Latimer.
Top IRS Official Says Marijuana Banking Reform Would Help Feds ‘Get Paid’
The Internal Revenue Service (IRS) would like to get paid—and it’d help if the marijuana industry had access to banks like companies in other legal markets, an official with the federal department said. She also talked about unique issues related to federal tax deductions for cannabis businesses.
At an event hosted by UCLA’s Annual Tax Controversy Institute on Thursday, IRS’s Cassidy Collins talked about the “special type of collection challenge” that the agency faces when it comes to working with cannabis businesses while the product remains federally illegal.
While IRS isn’t taking a stand on federal marijuana policy, Collins said that the status quo leaves many cannabis businesses operating on a cash-only basis, creating complications for the agency, in part by making it harder for banks to “pay us.”
“The reason why [the marijuana industry is] cash intensive is twofold,” she said. “Number one, a lot of customers don’t want a paper trail showing that they’re buying marijuana, and number two, the hesitancy of banks to allow marijuana businesses to even bank with them.”
Of course, the reason why many financial institutions remain hesitant to take on cannabis companies as clients is because the plant is a strictly controlled substance under federal law.
“There’s been a number of legislative bills that have been introduced—and I am definitely not expressing any opinion personally or on behalf of the IRS about any pending or proposed legislation,” Collins, who is a senior counsel in the IRS Office of Chief Counsel, said. “But it is interesting to note that, if the law changed so that the marijuana businesses could have banks, that would make the IRS’s job to collect [taxes] a lot easier. As part of collection, we want the money. That’s our end goal there.”
A major part of what makes cannabis businesses unique is that they don’t qualify for traditional tax credits under an IRS code known as 280E. That policy “prohibits them from claiming deductions for business expenses because they’re technically being involved in drug trafficking,” Collins explained at the event, from which small excerpts of her comments were reported by Bloomberg.
There are some options available to lessen the burden on marijuana firms, however. At the end of the day, “IRS will work with marijuana companies because, again, we want to get paid,” Collins said.
One of the ways the agency works with marijuana business operators is to have them visit designated IRS “tax assistance centers” that accept cash payments in excess of $50,000. But the official warned businesses to “be prepared to be there for a little while” as the center checks—and double checks—the amount of cash being submitted.
“Revenue officers will assist the marijuana companies in paying us,” she said.
IRS officials could also help cannabis firms by having officials accompany them “to the bank in order to try to help the taxpayer secure a cashier’s payment to pay the IRS, as well as using money orders,” she said, adding that “our revenue officers are are wanting to work with the marijuana companies to help assist them to pay us.”
“When the revenue officers are there in person with the taxpayer, that could potentially help increase the likelihood that the bank will cooperate and help the taxpayer transition into a cashier’s check,” she continued. “And that has been a trend since this first became legal [at the state level], that more and more banks are allowing cannabis companies to bank with them.”
In a report published earlier this year, congressional researchers examined tax policies and restrictions for the marijuana industry—and how those could change if any number of federal reform bills are enacted.
IRS, for its part, said last month that it expects the cannabis market to continue to grow, and it offered some tips to businesses on staying compliant with taxes while the plant remains federally prohibited.
As it stands, banks and credit unions are operating under 2014 guidance from the Financial Crimes Enforcement Network (FinCEN) that lays out reporting requirements for those that choose to service the marijuana industry.
Leaders in both chambers of Congress are working on legalization bills to end federal marijuana prohibition. But stakeholders are hopeful that, in the interim, legislators will enact modest marijuana banking reform. Legislation to protect financial institutions from being penalized for working with cannabis businesses passed the House for the fifth time last month.
Rodney Hood, a board member of the National Credit Union Administration, wrote in a Marijuana Moment op-ed this month that legalization is an inevitability—and it makes the most sense for government agencies to get ahead of the policy change to resolve banking complications.
IRS separately hosted a forum in August dedicated to tax policy for marijuana businesses and cryptocurrency.
Earlier this year, IRS Commissioner Charles Rettig told Congress that the agency would “prefer” for state-legal marijuana businesses to be able to pay taxes electronically, as the current largely cash-based system under federal cannabis prohibition is onerous and presents risks to workers.
Former Treasury Secretary Steven Mnuchin said in 2019 that he’d like to see Congress approve legislation resolving the cannabis banking issue and he pointed to the fact that IRS has had to build “cash rooms” to deposit taxes from those businesses as an example of the problem.
IRS released updated guidance on tax policy for the marijuana industry last year, including instructions on how cannabis businesses that don’t have access to bank accounts can pay their tax bills using large amounts of cash.
The update appears to be responsive to a Treasury Department internal watchdog report that was released earlier in the year. The department’s inspector general for tax administration had criticized IRS for failing to adequately advise taxpayers in the marijuana industry about compliance with federal tax laws. And it directed the agency to “develop and publicize guidance specific to the marijuana industry.”
Luxembourg Set To Become First European Country To Legalize Marijuana Following Government Recommendation
Luxembourg is poised to become the first European country to legalize marijuana, with key government agencies putting forward a plan to allow the possession and cultivation of cannabis for personal use.
The ministers of justice and homeland security on Friday unveiled the proposal, which will still require a vote in the Parliament but is expected to pass. It’s part of a broader package of reform measures the agencies are recommending.
Under the marijuana measure, adults 18 and older could grow up to four plants. However, under the non-commercial model that is being proposed, possessing more than three grams in public would still be a civil offense, carrying a fine of €25-500 ($29-581). Currently, the maximum fine for possession is €2,500 ($2,908).
In terms of access, adults would be able to buy and trade cannabis seeds for their home garden.
Justice Minister Sam Tamson said the government felt it “had to act” and characterized the home cultivation policy change as a first step, The Guardian reported.
👉🏻élaboration du projet de loi usage privé du #cannabis : jusqu’à 4 plantes à domicile & décorrectionnalisation <3g
👉🏻renforcement de la prévention & de l’accompagnement
👉🏻⬆️des moyens de la police
👉🏻élaboration d’un projet de production/vente #Luxembourg pic.twitter.com/8yre0Udt8J
— Sam Tanson (@SamTanson) October 22, 2021
“The idea is that a consumer is not in an illegal situation if he consumes cannabis and that we don’t support the whole illegal chain from production to transportation to selling where there is a lot of misery attached,” he said. “We want to do everything we can to get more and more away from the illegal black market.”
While limited in scope, the reform would make Luxembourg the first country in Europe to legalize the production and possession of marijuana for recreational use. Cannabis has been widely decriminalized in certain countries in the continent, but it has remained criminalized by statute.
Government sources in Luxembourg told The Guardian that plans are in the works to develop a program where the state regulates the production and distribution of marijuana. Tamson said they are working to resolve “international constraints” before taking that step, however, referring to United Nations treaty obligations that multiple U.S. states and other countries like Canada and Uruguay have openly flouted.
The measures include:
🟢 Regulation of cannabis use and cultivation: adults will be able to legally cultivate up to four cannabis plants for their own use, provided the cultivation is happening at their place of residence.
— European Greens (@europeangreens) October 22, 2021
For now, the country is focusing on legalization within a home setting. Parliament is expected to vote on the proposal in early 2022, and the ruling parties are friendly to the reform.
This has been a long time coming, as a coalition of major parties of Luxembourg agreed in 2018 to enact legislation allowing “the exemption from punishment or even legalization” of cannabis.
Meanwhile in the U.S., congressional lawmakers are working to advance legalization legislation. A key House committee recently approved a bill to end marijuana prohibition, and Senate leadership is finalizing a separate reform proposal.
In Mexico, a top Senator said this week that lawmakers could advance legislation to regulate marijuana in the coming weeks. The Supreme Court has already ruled that adults cannot be criminalized over possession or cultivation, but there’s currently no program in place to provide access.
Photo courtesy of Mike Latimer.
New Bipartisan Marijuana Research Bill In Congress Would Let Scientists Study Dispensary Products
A bipartisan group of federal lawmakers introduced a bill on Thursday to remove barriers to conducting research on marijuana, including by allowing scientists to access cannabis from state-legal dispensaries.
The Medical Marijuana Research Act, filed by the unlikely duo of pro-legalization Rep. Earl Blumenauer (D-OR) and prohibitionist Rep. Andy Harris (R-MD), would streamline the process for researchers to apply and get approved to study cannabis and set clear deadlines on federal agencies to act on their applications.
“Congress is hopelessly behind the American people on cannabis, and the quality of our research shows why that is an urgent problem,” Blumenauer told Marijuana Moment. “Despite the fact that 99 percent of Americans live in a state that has legalized some form of cannabis, federal law is still hamstringing researchers’ ability to study the full range of health benefits offered by cannabis, and to learn more about the products readily available to consumers.”
“It’s outrageous that we are outsourcing leadership in that research to Israel, the United Kingdom, Canada, and others. It’s time to change the system,” he said.
Late last year, the House approved an identical version of the cannabis science legislation. Days later, the Senate passed a similar bill but nothing ended up getting to the president’s desk by the end of the last Congress. Earlier this year, a bipartisan group of senators refiled their marijuana research measure for the current 117th Congress.
Meanwhile, lawmakers are also advancing a separate strategy to open up dispensary cannabis to researchers. Large-scale infrastructure legislation that has passed both chambers in differing forms and which is pending final action contains provisions aimed at allowing researchers to study the actual marijuana that consumers are purchasing from state-legal businesses instead of having to use only government-grown cannabis.
The new bill filed this week by Blumenauer and Harris, along with six other original cosponsors, would also make it easier for scientists to modify their research protocols without having to seek federal approval.
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It would additionally mandate that the Drug Enforcement Administration (DEA) license more growers and make it so there would be no limit on the number of additional entities that can be registered to cultivate marijuana for research purposes. It would also require the U.S. Department of Health and Human Services (HHS) to submit a report to Congress within five years after enactment to overview the results of federal cannabis studies and recommend whether they warrant marijuana’s rescheduling under federal law.
“The cannabis laws in this country are broken, including our laws that govern cannabis research,” Blumenauer said in remarks in the Congressional Record. “Because cannabis is a Schedule I substance, researchers must jump through hoops and comply with onerous requirements just to do basic research on the medical potential of the plant.”
The new legislation will “both streamline the often-duplicative licensure process for researchers seeking to conduct cannabis research and facilitate access to an increased supply of higher quality medical grade cannabis for research purposes,” he said, adding that expanded studies will help make sure “Americans have adequate access to potentially transformative medicines and treatments.”
For half a century, researchers have only been able to study marijuana grown at a single federally approved facility at the University of Mississippi, but they have complained that it is difficult to obtain the product and that it is of low quality. Indeed, one study showed that the government cannabis is more similar to hemp than to the marijuana that consumers actually use in the real world.
There’s been bipartisan agreement that DEA has inhibited cannabis research by being slow to follow through on approving additional marijuana manufacturers beyond the Mississippi operation, despite earlier pledges to do so.
In May, the agency finally said it was ready to begin licensing new cannabis cultivators. Last week, DEA proposed a large increase in the amount of marijuana—and psychedelics such as psilocybin, LSD, MDMA and mescaline—that it wants produced in the U.S. for research purposes next year.
Under the new House bill, the agency would be forced to start approving additional cultivation applications for study purposes within one year of the legislation’s enactment.
HHS and the attorney general would be required under the bill to create a process for marijuana manufacturers and distributors to supply researchers with cannabis from dispensaries. They would have one year after enactment to develop that procedure, and would have to start meeting to work on it within 60 days of the bill’s passage.
In general, the legislation would also establish a simplified registration process for researchers interested in studying cannabis, in part by reducing approval wait times, minimizing costly security requirements and eliminating additional layers of protocol review.
Read the full text of the new marijuana research bill below: