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Federal Reserve Bank Presidents Call For Marijuana Banking Clarity

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Three Federal Reserve Bank presidents united in a call on Wednesday for clarity on rules for providing financial services to the marijuana industry.

During a panel at the American Bankers Association summit, the federal executives were asked about how financial institutions are expected to manage conflicting state and federal cannabis laws. All three stressed the need for a resolution to how the growing gap between state and federal marijuana laws has created difficulties for bankers and cannabis businesses alike.

“For better or for worse, we’re responsible to follow federal law, and so we would very much like to have clarification on this,” Tom Barkin, CEO of the Federal Reserve Bank of Richmond, said. “Whatever legislative answer gets us to clarity would be our preferred outcome.”

Esther George, who runs the Federal Reserve Bank of Kansas City, added that “the reality on the ground is there are businesses that are considered state-legal around this substance, and the money that is generated from that again, is a challenge for the banks.”

Choosing to service a marijuana business is “not an easy judgement for the banks to make,” she said. “They deem what’s the level of risk—how do I apprise for that, how do I manage that? I think that it is particularly challenging for them, so I look forward to that resolution that provides more clarity to the bankers.”

What advice would George offer financial institutions interested in accepting cannabis business accounts?

“Do your homework,” she said. “This is a case where you have to know your customer and you have to weigh the risk of what you’re worried about could happen around this.”

“We have to get reconciliation across federal and state law ultimately to make this work. In the meantime, you’re going to have some of these challenging situations.”

Raphael Bostic, CEO of the Federal Reserve Bank of Atlanta, put the situation into starker terms. Existing federal cannabis laws put banks “in an impossible situation because we don’t actually have a vote at either level but are asked to sort of navigate in this middle space,” he said.

“There’s not really a clear thing for us to say—we can’t give anyone 100 percent certainty in terms of how this is going to turn out,” he said. “I do hope that we get some legislative clarity sooner rather than later. I would love some resolution, one way or the other, as soon as we possibly can because this is only become more prominent.”

Watch video of the Federal Reserve Bank officials discussing marijuana, around 49:00 into the video below:

The branch presidents echoed what other top federal financial officials have said in recent months. Treasury Secretary Steven Mnuchin told senators that “this issue needs to be resolved one way or another because there are conflicts in so many regulations and rules and everything else” during a hearing last month.

Another Treasury official similarly told lawmakers that “this is really something I think that Congress needs to look at because nothing that we do can or does change what is prohibited under federal law.”

A resolution might be on the horizon after the House Financial Services Committee approved legislation that would shield banks that service cannabis businesses from being penalized by financial regulators. That bill is now awaiting scheduling for a full House floor vote.

U.S. Senators Push Federal Bank Regulators To Clarify Rules For Hemp Businesses

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.

Kyle Jaeger is Marijuana Moment's Los Angeles-based associate editor. His work has also appeared in High Times, VICE and attn.

Politics

New York And Connecticut Governors Talk Marijuana Legalization On Fishing Trip

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The governors of New York and Connecticut went fishing and talked about marijuana legalization on Tuesday.

The conversation comes after lawmakers in both states were unable to pass legalization legislation before their respective sessions’ ends this year, despite having the support of New York Gov. Andrew Cuomo (D) and Connecticut Gov. Ned Lamont (D).

“We talked about policy issues like the marijuana issue, which is obviously also relevant to contiguous states,” Cuomo said at a press conference following the fishing trip. “What Connecticut does on marijuana is relevant to New York, what New York does is relevant to Connecticut so we talked about that and a lot of issues. So we had fun.”

Watch Cuomo’s marijuana comments at about 5:00 into the video below:

Cuomo had described legalization as a top legislative priority for 2019 and included it in his state budget proposal. But after months of negotiations with lawmakers, the plan fell through, due in part to disagreements about how to allocate tax revenue and whether to allow individual jurisdictions to opt out of allowing cannabis businesses.

The governor did sign legislation in July that expands the state’s marijuana decriminalization policy and provides a pathway for expungements of past marijuana convictions.

Over in Connecticut, Lamont campaigned on legalization during his election bid last year and described it as one of his administration’s “priorities” after he took office. But as with neighboring New York, the legislature failed to advance a legalization bill beside multiple successful committee votes and hearings throughout the year.

The specifics of what the governors talked about during their fishing expedition on Lake Ontario aren’t clear, but both are presumably gearing up for another round of legislative efforts marijuana over the coming year and could take lessons from each other as reform talks continue.

Another East Coast state, New Jersey, has also struggled to move legalization legislation forward, with lawmakers saying that the issue should be taken up by voters in 2020 rather than pushed through the legislature, though there has been discussion lately about another try at moving a bill before year’s end. Gov. Phil Murphy (D) did sign a decriminalization and expungements bill in May, however.

Federal Data Shows Youth Marijuana Use Isn’t Increasing Under Legalization

Photo courtesy of CBS 6.

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GOP Congressman Will Meet Attorney General To Discuss Expanding Marijuana Research

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Rep. Matt Gaetz (R-FL) said on Monday that he will soon be speaking with the U.S. attorney general about expanding marijuana research.

The congressman, a close ally of President Trump, is a vocal proponent of medical cannabis and has argued that the federal drug scheduling system is hampering research into the plant’s therapeutic potential.

“I will be meeting with Attorney General Bill Barr in the coming weeks to discuss the Department of Justice’s approach to unlocking more research grants so that we can have American innovation applied to our health care in a way that can get people off of some of these devastating opioids and painkillers, and on to a more natural product,” he said following a radio town hall event.

Even under the framework of prohibition, the Justice Department is able to promote research by, for example, approving additional marijuana manufacturers—something the Drug Enforcement Administration (DEA) said it would do three years ago.

Barr has voiced support for expanding the number of federally authorized cannabis manufacturers.

“I think we’re going to move forward on it,” the attorney general said in April. “I think it’s very important to get those additional suppliers.”

Earlier this year, Gaetz joined congressional colleagues in leading a letter addressed to Barr and the head of DEA expressing frustration that the Justice Department has declined to take action despite its pledges. The lawmakers implored DEA to “do whatever you can to speed up and improve the research application process.

Gaetz also introduced legislation that would force DEA to approve additional facilities to produce research-grade cannabis. A version filed last year cleared the Judiciary Committee in a voice vote, and he reintroduced the bill in January but it has not yet been acted upon.

Listen to Gaetz’s new cannabis comments, about 1:20 into the audio below:

DEA is facing two lawsuits regarding its approach to marijuana, including one that concerns the lack of diversity of research-grade cannabis since only one manufacture is currently authorized. The agency was ordered to respond to the suit by August 28.

Separately, a group of patients and advocates sued DEA over marijuana’s Schedule I status under the Controlled Substances Act, with a federal court directing the agency to “promptly” consider reclassifying cannabis.

Gaetz also spoke about the need to more broadly reform cannabis laws during the Monday remarks.

“The federal government listing marijuana as a Schedule I drug impairs financial transactions, it impairs research and it stops us from being able to unlock cures for some of America’s most vulnerable people,” the congressman said, adding that he’s a cosponsor of legislation that would deschedule marijuana that was introduced by Judiciary Chairman Jerry Nadler (D-NY).

Gaetz, who is also a member of the Judiciary Committee, said he is requesting that the panel hold a hearing on cannabis legislation. That’d mark the second such meeting after a Judiciary subcommittee convened last month to discuss paths to ending federal prohibition.

The congressman’s staff wasn’t able to provide Marijuana Moment with additional details regarding the meeting with Barr.

Congressman Says Marijuana Could Be Legal Sooner If Trump Stops Tweeting

Photo courtesy of Meredith Geddings.

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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Elizabeth Warren’s Criminal Justice Plan Involves Legalizing Marijuana And Safe Injection Sites

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Legalizing marijuana, granting clemency to people convicted of drug offenses and investing in harm reduction programs such as safe injection sites are part of a criminal justice reform plan that Sen. Elizabeth Warren (D-MA) released on Tuesday.

The 2020 Democratic presidential candidate stressed that the war on drugs has been carried out in a racially discriminatory manner, writing that it’s unfair that “a kid with an ounce of pot can get thrown in jail, while a bank executive who launders money for a drug cartel can get a bonus. It’s long past time for us to reform our system.”

“This failure [of the drug war] has been particularly harmful for communities of color, and we need a new approach,” she said. “It starts with legalizing marijuana and erasing past convictions, and then eliminating the remaining disparity between crack and powder cocaine sentencing.”

What’s more, the drug war “has criminalized addiction, ripped apart families—and largely failed to curb drug use” when a more effective system would treat addiction as a public health issue.

That includes diverting people who’ve been convicted of non-violent drug offenses to treatment programs and providing evidence-based resources for people suffering from addiction. For example, Warren’s plan calls for safe injection sites where people can use illicit drugs under the supervision of medical professionals who can help prevent fatal overdoses and get people into treatment. She also said needle exchange programs and expanding access to buprenorphine would reduce the opioid crisis.

“Instead of locking up people for nonviolent marijuana crimes, I’ve proposed putting pharmaceutical executives on the hook to report suspicious orders for controlled substances that damage the lives of millions.”

She also called for the abolition of certain mandatory minimum sentences and said that “people who struggle with addiction should not be incarcerated because of their disease.”

“Mass incarceration has not reduced addiction rates or overdose deaths, because substance abuse disorder is a public health problem — and it’s long past time to treat it that way,” the plan says. “We know that diversion programs are both more humane and a better investment than incarceration — for every dollar we invest in treatment programs, we can save $12 in future crime and health care costs.”

“And rather than incarcerating individuals with substance abuse disorders, we should expand options that divert them into programs that provide real treatment.”

Like Sens. Bernie Sanders (I-VT), Cory Booker (D-NJ) and South Bend, Indiana Mayor Pete Buttigieg, Warren’s criminal justice reform proposal also mentions executive actions she could unilaterally take.

Specifically, she wrote that the Justice Department should not hold authority to make clemency recommendations and it should instead be left up to an independent clemency board so that those eligible for a pardons and commutations are more quickly identified.

“I’ll direct the board to identify broad classes of potentially-deserving individuals for review, including those who would have benefited from retroactivity under the First Step Act, individuals who are jailed under outdated or discriminatory drug laws, or those serving mandatory minimums that should be abolished,” she said.

The plan’s unveiling comes two days after Sanders released his criminal justice reform proposal, which also called for marijuana legalization and the implementation of harm reduction policies such as safe consumption facilities.

Buttigieg’s plan stands out from his fellow Democratic candidates in at least one regard: the mayor said drug possession should broadly be decriminalized.

Warren also released a separate plan for Indian tribes last week that involves protecting tribal cannabis programs from federal intervention.

Bernie Sanders Calls For Legalization Of Marijuana And Safe Injection Sites

Photo courtesy of Edward Kimmel.

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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