Federal financial regulatory agencies are clarifying that banks no longer have to take extra steps to track accounts for hemp-related businesses.
Before hemp and its derivatives were federally legalized under the 2018 Farm Bill, financial institutions were required to file suspicious activity reports (SARs) for accounts associated with the crop because it was a Schedule I controlled substance treated the same as marijuana.
But the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Financial Crimes Enforcement Network (FinCEN) and the Office of the Comptroller of the Currency, as well as the Conference of State Bank Supervisors, issued a statement on Tuesday updating banks on the legal status of hemp.
— Federal Reserve (@federalreserve) December 3, 2019
“Because hemp is no longer a Schedule I controlled substance under the Controlled Substances Act, banks are not required to file a Suspicious Activity Report (SAR) on customers solely because they are engaged in the growth or cultivation of hemp in accordance with applicable laws and regulations,” the memo states. “For hemp-related customers, banks are expected to follow standard SAR procedures, and file a SAR if indicia of suspicious activity warrants.”
In essence, the financial agencies said that while banks don’t have to accept hemp accounts, if they do, those clients shouldn’t be treated any differently than customers from any other legal industry.
FDIC, @FederalReserve, @USOCC, and the Financial Crimes Enforcement Network, along with @CSBSNews, have clarified reporting requirements for banks with customers involved in hemp-related businesses. https://t.co/C6OuTvByAG
— FDIC Gov (@FDICgov) December 3, 2019
“When deciding to serve hemp-related businesses, banks must comply with applicable regulatory requirements for customer identification, suspicious activity reporting, currency transaction reporting, and risk-based customer due diligence, including the collection of beneficial ownership information for legal entity customers,” they wrote.
Federal guidance on dealing with marijuana businesses, which was outlined in a 2014 Treasury Department memo, remains in place, the letter added. Banks must still file SARs for those firms, regardless of the legal status of cannabis under state law.
Senate Majority Leader Mitch McConnell (R-KY), a chief proponent of hemp legalization, took credit for the release of updated guidance. In April, he and Sen. Ron Wyden (D-OR) sent a series of letters to federal financial regulators requesting clarification on the legality of servicing hemp businesses.
At @senatemajldr Mitch McConnell’s request, federal banking regulatory agencies issue joint guidance to assist legal #hemp industry: https://t.co/KB43C4cq2X @FDICgov @USOCC @federalreserve @CSBSNews + Financial Crimes Enforcement Network (FinCEN)
— Senator McConnell Press (@McConnellPress) December 3, 2019
“Today’s multi-agency announcement represents continued progress as we work to ensure hemp is treated just like any other legal agricultural commodity,” McConnell said in a press release on Tuesday. “Even after President Trump signed my initiative in last year’s farm bill to fully legalize hemp and remove it from the list of federally controlled substances, I heard from hemp producers around Kentucky about their ongoing challenges, including the lack of access to the financial system.”
“I’m proud federal banking regulators agreed to my request to issue new guidance that affirms hemp’s legality,” he said. “I look forward to more Kentucky producers having the ability to grow their hemp businesses with the help of the Commonwealth’s financial institutions.”
Wyden also cheered the development.
“Hemp was legalized almost a year ago, yet Oregon farmers and producers have been forced to ride the roller coaster of uncertainty,” he said in a press release. “Slowly but surely federal regulators are starting to catch up, and these new banking guidelines are an important step toward giving hemp businesses the certainty they need. The work doesn’t stop here, however, and more must be done to make sure hemp businesses are treated fairly and allowed to fully realize this legal crop’s economic potential in our state and nationwide.”
The recent legalization of hemp presents big opportunities for small businesses. Ensuring they have access to banking is an important step in building a business. https://t.co/OJuACz8fIe
— House Committee on Small Business (@HouseSmallBiz) December 3, 2019
The American Bankers Association (ABA) said that the regulators’ hemp move has been “long sought” by the financial services industry.
“We are pleased that the guidance also notes that bank customers are responsible for complying with regulatory requirements surrounding hemp, not the banks who serve those customers,” ABA President Rob Nichols said. “We appreciate the steps regulators have taken today to clarify regulatory expectations for banks, and we look forward to working with them as they develop additional guidance.”
New ABA statement from @BankersPrez applauds regulatory guidance issued today on hemp banking, which “provides greater clarity on banks’ obligations related to hemp producers.” Read it here: https://t.co/oLpv9RQRCv pic.twitter.com/tyHg36xsi3
— American Bankers Association (@ABABankers) December 3, 2019
Though financial institutions are still required to file SARs for marijuana businesses, the rate of those reports being submitted seemed to level off in the last quarter.
It’s possible that’s connected to industry expectations about the potential passage of a bipartisan bill that would shield banks servicing marijuana firms from being penalized by federal regulators.
While the House overwhelmingly approved the legislation in September, that was months later than some had anticipated, and it’s possible banks had been holding off on accepting new cannabis clients and were discouraged that lawmakers hadn’t acted prior to the summer recess, as was expected.
It’s not clear whether the bill has enough support to clear the Senate, but the chair of that chamber’s Banking Committee has said he’s interested in holding a vote on it in his panel before the year’s end—and that he’d also like to see certain changes made.
Should the cannabis banking bill ultimately be enacted, it’s likely that financial services providers would eventually see a similar update on SAR reporting guidance for marijuana companies.
Read the federal hemp banking memo below:
This story was updated to include comment from Wyden and ABA.
Photo courtesy of Brendan Cleak.
Wisconsin Governor Blasts Lawmakers For Not Legalizing Medical Marijuana Despite Public Support
The governor of Wisconsin called out state lawmakers on Wednesday for declining to pass legislation legalizing medical marijuana despite widespread public support for the policy.
“When more than 80 percent of our state supports medical marijuana…and elected officials can ignore those numbers without consequence, folks, something’s wrong,” Gov. Tony Evers (D) said during his annual State of the State address.
Watch Evers’s comments about public support for medical cannabis below:
He also cited contrasting public support support and lack of legislative action on issues such as expanding Medicaid and universal background checks for gun purchases.
While Evers had included both marijuana decriminalization and medical cannabis legalization in his budget proposal last year, Republican leaders stripped those policies from the plan. It’s not clear if he’ll attempt to pursue the policies through the budget again this year, or if lawmakers would be more inclined to support reform than the last round.
Senate Minority Leader Jennifer Shilling (D) recently said she hopes that the legislature came come together around certain bipartisan issues such as medical marijuana. But Senate Majority Leader Scott Fitzgerald (R) said last month that there’s no such legislation he’s be willing to get behind.
Assembly Speaker Robin Vos (R) didn’t seem to close the door on the possibility of approving legalization legislation, however, but tempered expectations about when or how it would be achieved.
“It’s going to take a while,” he said last month. “It’s not like it’s a panacea that everybody thinks, ‘Oh, jeez this is an easy slam dunk.’ It’s a complicated issue that we want to get right.”
He also previously suggested that he’d only support a significantly limited program that would allow patients to access cannabis in pill form, raising doubts about whether Democratic lawmakers would be willing to advance such a reform.
While decriminalization didn’t come up in the governor’s speech, lawmakers did file a bill last year to remove criminal penalties for possession of up 28 grams of marijuana.
Not only is there broad public support for medical cannabis legalization based on polling, but local elections have also demonstrated that the people are ready for change. Three jurisdictions in the state voted in favor of non-binding resolutions expressing support for the legalization of marijuana for medical or recreational purposes last year. That followed the approval of other cannabis ballot measures in 16 counties in 2018.
Evers reflected on the progress the state has made in the past year in a tweet sent during his speech, citing improvements to its hemp program as an example of the “many bipartisan successes” that have been achieved.
In my first State of the State Address, I called on the Legislature to set politics aside so we could get to work on the issues facing our state. One year later, I am proud that from improving our hemp program to expanding telehealth services, we had many bipartisan successes. pic.twitter.com/qCjGPWpzDW
— Governor Tony Evers (@GovEvers) January 23, 2020
Rep. Dianne Hesselbein (D) weighed in on the State of the State speech as well, echoing Evers’s point about 80 percent support for medical cannabis.
Let’s review what WI wants:
✅ 80% support medical marijuana.
✅ 80% support universal background checks.
✅ 70% support accepting our Medicaid money.
Why does the majority ignore these issues? Partisan gerrymandering. #sots2020
— Dianne Hesselbein (@RepHesselbein) January 23, 2020
“Why does the majority ignore these issues?” she asked. “Partisan gerrymandering.”
Evers joined a growing list of governors who’ve discussed cannabis reform priorities for 2020.
New York Gov. Andrew Cuomo (D) included legalization in his budget plan this week. Rhode Island Gov. Gina Raimondo (D) called for a state-run cannabis model in her budget plan. New Mexico Gov. Michelle Lujan Grisham (D) said it’s “high time” to legalize in her State of the State address and put ending prohibition on the agenda for the short 2020 session. Virginia Gov. Ralph Northam (D) said he wants to decriminalize cannabis possession and create a pathway for expungements in his annual address. And U.S. Virgin Islands Gov. Albert Bryan Jr. (D) pushed lawmakers to legalize cannabis to raise revenue to support a government employees retirement fund in his State of the Territory address.
Photo courtesy of Philip Steffan.
Congressman Visits Marijuana Dispensary On Behalf Of Bernie Sanders’s Presidential Campaign
A congressman and staffers for Sen. Bernie Sanders’s (I-VT) presidential campaign toured a marijuana dispensary in Las Vegas on Monday and discussed the need for federal cannabis reform.
Rep. Mark Pocan (D-WI), who endorsed Sanders’s bid for the White House last week, shared photos on Twitter from the visit to NuWu Cannabis, a tribal-owned shop that features a consumption lounge and a drive-thru where consumers can buy marijuana products.
After years of an unjust War on Drugs, it’s time we work to ensure all communities can benefit from legalization—@BernieSanders marijuana legalization plan will do just that. pic.twitter.com/XFWmIZKuus
— Mark Pocan (@MarkPocan) January 21, 2020
“After years of an unjust War on Drugs, it’s time we work to ensure all communities can benefit from legalization—[Sanders’s] marijuana legalization plan will do just that,” the congressman tweeted.
While the 2020 Democratic presidential candidate wasn’t scheduled to attend the shop and has since had to drop campaign stops in order to participate in the Senate’s impeachment trial of President Donald Trump, Pocan and Nevada campaign staff were there on his behalf, Tick Segerblom, a Clark County commissioner and former state senator who helped coordinate the event, told Marijuana Moment.
“We showed him around, explained on how it works, explained how it’s organized under state law,” Segerblom said of Pocan. “He said he’d never seen anything like it.”
The congressman also talked with business owners about the importance of social equity within the marijuana industry. He didn’t purchase or sample any cannabis products, however.
Segerblom said that while Sanders wasn’t able to attend this tour, he believes it’s important for the candidate to participate in such events and talk about his reform agenda to distinguish himself in the race.
“There’s a lot of people who will vote on this issue, and since [former Vice President Joe Biden] has come out against legalizing cannabis, I think it’s a very important issue for him to emphasize,” he said.
It’s fitting that Pocan would tour a tribal-owned cannabis business, as he was the chief sponsor of a 2016 bill that would have protected tribes from losing federal funds if they enact a legal marijuana program. Although the congressman represents Wisconsin, which doesn’t even have a comprehensive medical cannabis program let alone full adult-use legalization, he has cosponsored several cannabis reform bills this Congress, including two that would end federal prohibition.
State-legal dispensaries are getting a lot of high-profile attention from politicians lately. For example, former South Bend, Indiana Mayor Pete Buttigieg visited a Las Vegas marijuana shop last year, Rep. Julia Brownley (D-CA) paid a visit to a California dispensary and Sen. Ron Wyden (D-OR) toured a business that makes CBD-infused chocolates.
Photo courtesy of Rep. Mark Pocan.
New Vermont Bill Would Decriminalize Psychedelics And Kratom
Vermont lawmakers filed a bill on Wednesday that would decriminalize three psychedelic substances as well as kratom.
Rep. Brian Cina (P/D) introduced the legislation, which would amend state law to carve out exemptions to the list of controlled substances. Psilocybin, ayahuasca, peyote and kratom would no longer be regulated under the proposal.
Cina told Marijuana Moment in a phone interview that he decided to pursue the policy change based on a “belief that I share with many people around the world that plants are a gift from nature and they’re a part of the web of life that humans are connected to.”
“Plants, especially plant medicines, should be accessible to people,” he said. “Use of plant medicine should be considered a health care issue, not a criminal issue.”
Whether plant medicines are used for treating pain or whether they’re used for seeking pleasure, that is a health care choice, and it’s a waste of society’s resources to criminalize healing practices that go back to the very roots of our humanity. https://t.co/hRDWWqa7yb
— Brian Cina (@briancinavt) January 22, 2020
While it remains to be seen whether the legislature will have the appetite to pursue the policy change, the bill’s introduction represents another sign that the psychedelics reform movement has momentum. Activists in about 100 cities across the U.S. are working to decriminalize a wide range of entheogenic substances, but the Vermont proposal is unique in that it’s being handled legislatively at the state level.
Text of the bill states that the four substances are “commonly used for medicinal, spiritual, religious, or entheogenic purposes.”
Larry Norris, cofounder of the national psychedelics reform group Decriminalize Nature, told Marijuana Moment that he’s especially encouraged by the use of the word “entheogenic,” a term that advocates are hoping to bring into the mainstream to more accurately describe the type of substances they want to decriminalize.
“It is exciting to see emerging interest at the state legislative level to support decriminalizing natural plants and fungi that are ‘commonly used for medicinal, spiritual, religious, or entheogenic purposes,'” he said. “The fact that the word entheogenic is making its way into the legislative lexicon speaks volumes for the shift in perspective that is happening nationwide.”
“While we were not involved in the drafting of this legislation, we look forward to offering any support and guidance to Representative Brian Cina in Vermont or any future state legislators aiming to decriminalize entheogenic plants and fungi,” Norris said.
Denver became the first city in the nation to decriminalize psilocybin mushrooms last year, followed by a unanimous City Council vote in Oakland to make a wide range of psychedelics among the city’s lowest law enforcement priorities. And while lawmakers have been comparatively slow to raise the issue in legislatures, activists in Oregon are working to put a therapeutic psilocybin initiative on the state’s 2020 ballot and, separately, a measure to decriminalize possession of all drugs with a focus on funding substance misuse treatment. In California, meanwhile, advocates are aiming to put psilocybin legalization before voters in November.
Part of the motivation behind the legislation was “recognizing that the decriminalization of mushrooms seems to be a next step in other places, and thinking that it might have greater success if we can make the point that in the path of decriminalization, the next step after cannabis is psilocybin mushrooms,” Cina said. “It was important for me to make a point about the significance of plants.”
“What it goes back to for me ultimately is that any kind of use of substances should be treated as a health care matter, not a criminal issue,” he said. “Whether those substances are used for treating pain or whether they’re used for seeking pleasure, that is a health care choice, and it’s a waste of society’s resources to criminalize a behavior that goes back to the very roots of our humanity.”
The bill currently has three cosponsors and has been referred to the Judiciary Committee. One of the cosponsors, Rep. Zachariah Ralph (P/D) told Marijuana Moment that he supports “the legalization of psychedelics because prohibition, generally, does not to work, and has continued to be enforced disproportionally against low income and minority communities.”
“Research at Johns Hopkins University and other facilities around the country on the medicinal use of psilocybin mushrooms are showing some promising results as a long term treatment of depression, addiction and anxiety,” he said. “This is especially important today as we deal with increased rates of suicides and drug overdoses across the nation and especially in Vermont.”
The bill’s introduction also comes as Vermont lawmakers express optimism about the prospects of expanding the state’s cannabis law to allow commercial sales.
While Gov. Phil Scott (R) has previously voiced opposition to allowing retail marijuana products to be sold, citing concerns about impaired driving, he recently indicated that he may be open to taxing and regulating the market. And according to top lawmakers in the state, the legislature is positioned to advance a cannabis commerce bill this session, with most members in favor of the reform move.
Vermont made history in 2018 by becoming the first state to pass marijuana legalization through the legislature, albeit with a noncommercial grow-and-give model. Now the question is whether lawmakers there will again make history by taking up psychedelics reform and decriminalizing these substances at the state level for the first time.
“We’ve decriminalized and then legalized and now might be regulating and taxing marijuana, which is a plant medicine,” Cina said. “But there are these other plant medicines that have been left behind.”
A Republican lawmaker in Iowa filed a bill to legalize certain psychedelics for medical purposes last year, but it did not advance.
Photo courtesy of Wikimedia/Mushroom Observer.