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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

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

Politics

Anniversary Of Alcohol Prohibition’s End Is A Good Time To Legalize Marijuana, Presidential Candidate Castro Says

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Former Housing and Urban Development (HUD) Secretary Julián Castro marked the 86th anniversary of the repeal of alcohol prohibition in the U.S. on Thursday by calling for the legalization of marijuana.

The 2020 Democratic presidential candidate tweeted about Repeal Day, a commemoration of the ratification of the 21st Amendment, which ended federal prohibition of booze.

“86 years later, it’s time we end the federal prohibition of Cannabis once and for all,” he said. “Legalize it. Regulate it. Expunge the records of the victims of the war on drugs.”

Castro, who included proposals to legalize marijuana and expunge prior cannabis convictions in a criminal justice reform plan he released in October, isn’t the only one calling attention to the ongoing prohibition of the plant on Repeal Day. Several other Twitter users, including a congressional candidate, have made similar points.

While Castro hasn’t been quite as vocal about marijuana reform in his campaign as some of the other candidates, he has recently expressed openness to even broader drug policy initiatives such as decriminalizing possession of all drugs.

During a forum hosted by the Iowa Harm Reduction Coalition last month, Castro said “I do think though that it’s worth taking a look at that and understanding where are those opportunities, either to decriminalize or at least deemphasize enforcement so that we’re not penalizing individuals who should instead be getting the treatment that they need.”

He also said he supports communities establishing safe injection sites where individuals can consume illicit drugs under medical supervision to reduce the risk of overdose deaths and help people get into treatment.

South Bend, Indiana Mayor Pete Buttigieg and Rep. Tulsi Gabbard (D-HI), rival presidential candidates, are in favor of drug decriminalization, and Sens. Elizabeth Warren (D-MA) and Bernie Sanders (I-VT) back safe consumption facilities. Entrepreneur Andrew Yang says he would decriminalize opioids and invest federal resources into opening safe injection sites across the country.

Cory Booker’s Marijuana Agenda Highlighted In Three Super PAC Ads

Photo courtesy of YouTube/IHRC.

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Hemp Businesses Need Clarity On Credit Card Processing, GOP Congressman Tells Federal Regulators

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One day after federal financial regulators issued guidance relaxing requirements for banks doing business with hemp companies, Rep. Andy Barr (R-KY) called for further input on how financial institutions can work with the industry—particularly when it comes to credit card processing.

“I have heard from Kentucky bankers about this. They welcome this guidance, and it will go a long way to help the hemp industry thrive,” Barr said on Wednesday at a House Financial Services Committee hearing.

But after thanking witnesses—including Federal Deposit Insurance Commission (FDIC) Chairwoman Jelena McWilliams and National Credit Union Association (NCUA) Chairman Rodney Hood—he reminded them that there is still much work to be done to give hemp businesses fair access to financial services.

Specifically, Barr called credit card processing services for Kentucky hemp companies “unreliable” and “unavailable” while pointing out that Tuesday’s hemp banking memo failed to clearly address the problem.

“I’ve read the guidance closely, as you can tell, and I didn’t see that in there,” Barr said. “That’s the financial service that has really been unreliable and spotty, so if you need to update that guidance to give more clarity to card processing businesses, that might be in order.”

McWilliams replied that her agency would “certainly take a look” at the issue and offered that “to the extent that we need to do additional explaining, we are more than happy to engage in that process.”

In response, Barr reminded her of the broader goals of congressional action to legalize hemp products under the 2018 Farm Bill.

“Congressional intent is not only that the regulators confirm the legality of industrial hemp and hemp related retailers under the Farm bill, but that those retailers and merchants can use card processing services to sell the product itself,” he said.

Watch Barr press federal regulators on hemp business credit card processing below:

This isn’t the first time Barr has raised the issued of hemp businesses’ ability to accept payments with cards.

“I’ve had constituent businesses tell me that their access to financial products, specifically card services, have actually deteriorated since we descheduled industrial hemp in the Farm Bill,” he said at an earlier hearing in May. “This obviously conflicts with congressional intent.”

The congressman’s questions and comments at the most recent hearing are emblematic of a larger bipartisan push to provide updated regulations to the hemp industry and banks that work with it.

Most notably, the House overwhelmingly approved the Secure and Fair Enforcement (SAFE) Banking Act in September. The legislation would protect banks and credit unions from being penalized by federal regulators for working with marijuana businesses, and Barr added an amendment clarifying that the protections also apply to hemp companies.

However, the vote came later than some observers expected, which may help explain why the growth in the number of financial institutions working with cannabis companies seems to have slowed down in the prior quarter of the fiscal year.

NCUA’s Hood, whose agency’s earlier hemp guidance released in August was among the first federal clarifications on the issue after the Farm Bill became law, testified on Wednesday about the steps NCUA is taking to open up access to financial services for companies in the industry.

“We are continuing to work with the industry to provide training to our examiners,” Hood said. “We will now be working with the [U.S. Department of Agriculture] and other related parties to ensure that we get it right. We will be hosting a series of roundtables to gain insights from entities around best practices.”

In submitted testimony, he wrote that NCUA expects “to continue updating the credit union community now that the USDA has published its interim final rule [for hemp]” and said the agency has “received interest from credit unions eager to know the rules of the road for serving hemp-related businesses in their communities, and we want to make sure those credit unions have what they need to make informed decisions in this area.”

Jospeh Otting, comptroller of the currency, also discussed the latest guidance from federal regulators in testimony he submitted to the panel, writing that the joint statement from federal regulators “provides clarity regarding the legal status of commercial growth and production of hemp and relevant requirements for banks.”

Also discussed at the hearing was NCUA’s recent regulatory action on employment at credit unions by people with criminal records. Initially proposed by the agency in July, the move to allow participation by people convicted of minor offenses like simple drug possession was officially enacted by this week.

Asked by Rep. Brad Sherman (D-CA) “what are you doing, and what can Congress do” to assist in the advancement of the so-called “second chance” decision, Hood responded that NCUA “recognized that individuals who have committed nonviolent criminal offenses who have paid their debts to society should have opportunities to work in federal credit unions.”

McWilliams called the second chance decision an “important social justice issue” and said FDIC is currently seeking input on how best to move forward. “I personally believe we can go a long way to enabling those individuals to re-enter the workforce,” she said.

Watch lawmakers and regulators discuss financial services employment by people with prior convictions below:

Outside of the House Financial Services panel, several lawmakers on Capitol Hill have recently pushed to make business easier for hemp companies.

Last week, for example, Senate Minority Leader Chuck Schumer (D-NY) called on USDA to extend its public comment period for proposed hemp regulations. And in October, Sens. Ron Wyden (D-OR) and Jeff Merkley (D-OR) sent a letter to USDA asking for five specific changes in the rules.

Federal Regulators Ease Hemp Banking Protocols Following Crop’s Legalization

Photo courtesy of Pixabay.

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Cory Booker’s Marijuana Agenda Highlighted In Three Super PAC Ads

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A super PAC working to get Sen. Cory Booker (D-NJ) elected president is putting a lot of emphasis on the candidate’s marijuana reform agenda, releasing multiple new advertisements highlighting his position on the issue.

United We Win, an organization that’s not formally associated with Booker’s presidential campaign but supports his candidacy, included cannabis reform in three separate spots over the past month. Two of those ads contrasted the senator’s stance with that of former Vice President Joe Biden, a rival contender for the Democratic nomination who opposes adult-use legalization.

“Joe Biden is wrong about weed,” one ad, released on Tuesday, states. “He called marijuana a ‘gateway drug,’ but science says he’s wrong. Cory Booker knows that legalizing marijuana is the sensible, humane thing to do.”

Another, posted last week, shows a clip of Booker at the most recent Democratic debate, where Booker called out Biden over the gateway drug comment that quickly became a source of controversy ahead of the event. Booker said at the time that he was shocked to hear Biden say he doesn’t support legalization because he thinks cannabis could lead to the use of more dangerous drugs.

About one week after the former vice president made the remarks, he reversed his stance and said evidence doesn’t support the gateway drug theory. This wasn’t the first time that the senator has blasted Biden over his cannabis record, as Booker said in July that his opponent’s drug reform plan was inadequate.

“Joe Biden had more than 40 years to get this right,” Booker said. “The proud architect of a failed system is not the right person to fix it.”

The other ad, released last weekend, pits Booker against South Bend, Indiana Mayor Pete Buttigieg, who is also competing for the Democratic nomination. United We Win included Booker’s plan to legalize marijuana in a list of policy proposals that they said make him a more fit candidate and also noted his role in advancing criminal justice reform legislation in a Republican-controlled Senate.

Buttigieg does support legalization, so the point of bringing that position up didn’t appear to be an attempt to contrast each candidate’s platform on that issue in particular.

The super PAC’s website also prominently spotlights Booker’s marijuana record, including the issue as one of six main menu links across its top banner—alongside “criminal justice,” “gun safety” and “defeating Trump.”

There’s also an article recapping the senator’s debate attack on Biden’s anti-legalization comments.

Booker has certainly taken pains to emphasize his advocacy for cannabis reform during the campaign, and he’s the sponsor of comprehensive legislation that would not only federally deschedule marijuana but also penalize states that continue to dole out cannabis enforcement in a discriminatory manner.

While United We Win isn’t affiliated with Booker’s team, and federal law prohibits the PAC and the campaign from coordinating with one another, the strong focus on his marijuana platform reflects a growing recognition that, especially among Democratic voters, legalization is an important issue that candidates and political operatives are seeking to leverage during this election.

Cory Booker’s Mom Scolds Him For Marijuana Joke At Joe Biden’s Expense

Photo courtesy of YouTube/United We Win.

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