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Feds Reviewing Marijuana Banking Protections

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A top official with the U.S. Treasury Department says the Trump administration is currently reviewing whether to keep or rescind Obama-era guidance that provides a process for banks to serve the marijuana industry without running afoul of federal regulators.

“We are reviewing the guidance in light of the attorney general’s recent decision to revoke a Justice Department memorandum on this issue,” Sigal Mandelker, the department’s deputy secretary, said at a Senate hearing on Wednesday.

However, she added that the Treasury guidance “remains in place,” at least for now. “We’re taking a look at it in light of the Justice Department’s announcement.”

Earlier this month, U.S. Attorney General Sessions rescinded a 2013 memo that has generally allowed states to implement their own cannabis laws without federal interference.

Mandelker was responding to questions from Sen. Bob Menendez (D-NJ) about a separate guidance memo issued by the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) in 2014 that laid out a process for how banks can open accounts for marijuana businesses and avoid triggering federal enforcement actions.

The policy, which requires financial institutions to regularly file reports on their cannabis customers, was intended to provide clarity and assurances to banks, but many have remained reluctant to work with marijuana businesses because of overarching federal prohibition laws.

Nonetheless, documents released by FinCEN last month showed that the number of banks willing to work with the marijuana industry has steadily grown over time, though those figures were collected prior to Sessions’s move to revoke the previous Justice Department guidance.

Reuters reported last week that FinCEN was not consulted in advance about Sessions’s decision.

On Wednesday, a bipartisan group of 31 House members sent a letter asking the agency not to rescind the cannabis banking guidance.

“FinCEN’s stated priorities have allowed such businesses to conduct commerce more safely through financial institutions which reduces the use of all cash, improves public safety, and reduces fraud,” the lawmakers wrote. “Leaving your guidance unchanged will continue to encourage small companies to make investments by freeing up access to capital. It will also further provide for well regulation and oversight through suspicious activity reports. Rescinding this guidance would inject uncertainty in the financial markets.”

A bipartisan group of 15 senators followed up with their own letter on Thursday.

“Attempts to disrupt this market are dangerous and imprudent,” they wrote. “We see the removal of protections on financial institutions, which are operating in accordance with state laws, as a poor alternative to creating meaningful policy through the political process.”

In a separate letter, Menendez and Sen. Cory Booker, a fellow New Jersey Democrat, wrote that “without access to the banking sector, [marijuana] businesses will face serious challenges paying their employees, conducting transactions with vendors, and meeting state tax obligations.”

Mandelker’s comments at the Senate hearing were first reported by Law360.

A growing bipartisan group of members of Congress has sought a legislative solution to the cannabis businesses’ banking access problems. House and Senate bills to provide permanent clarity to the banking industry about working with marijuana businesses have earned increasing cosponsor numbers, but haven’t been scheduled for hearings or votes.

In 2014, the House voted 231 to 192 in favor of an amendment to prevent federal authorities from punishing banks for servicing the legal marijuana industry. But the language was not included in the final version of annual appropriations legislation that year and was not enacted into law. Congressional Republican leaders have since prevented similar measures from even being considered for attachment to subsequent spending bills.

In November, the chair of the House Financial Services Committee used a procedural ruling to block a vote on a cannabis banking amendment offered to a bill on stress testing for financial institutions.

Marijuana Moment is made possible with support from readers. If you rely on our cannabis advocacy journalism to stay informed, please consider a monthly Patreon pledge.

Tom Angell is the editor of Marijuana Moment. A 15-year veteran in the cannabis law reform movement, he covers the policy and politics of marijuana. Separately, he founded the nonprofit Marijuana Majority. Previously he reported for Marijuana.com and MassRoots, and handled media relations and campaigns for Law Enforcement Against Prohibition and Students for Sensible Drug Policy. (Organization citations are for identification only and do not constitute an endorsement or partnership.)

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Four Governors Talk Marijuana Reform During Major Speeches In A Single Day

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Governors in at least four states talked about their goals for marijuana reform during separate speeches on Tuesday.

The day kicked off with New York Gov. Andrew Cuomo (D) offering details on planned cannabis legalization legislation in a State of the State speech outlining his annual budget proposal.

“Legalize adult-use cannabis,” Cuomo, who previously called marijuana a “gateway drug,” said. “Stop the disproportionate impact on communities of color and let’s create an industry that empowers the poor communities that paid the price and not the rich corporations who come in to make a profit.”

His plan involves imposing a 20 percent state tax and 2 percent county tax on cannabis transfers from wholesalers to retailers. The plan would also tax cultivators $1 per gram on dry flower and a $0.25 per gram on trim.

Across the border, New Jersey Gov. Phil Murphy (D) dedicated a significant portion of his State of the State address to marijuana policy.

The governor started by touting medical cannabis expansion in the state, which has “given more of our veterans have access to medical marijuana to treat their [post-traumatic stress disorder] so they can get their lives back, and go to work or school.” He then pivoted to the broader benefits of full legalization.

“By legalizing adult-use marijuana—first and foremost—we can reverse the inequality and unfairness left from years of failed drug policies and shift public safety resources to where they can do the most good,” Murphy said. “We must ensure that those with a past mark on their records because of a low-level offense can have that stain removed, so they can move forward to get a stable job or an education.”

Legal marijuana “will also allow us to broadly benefit from creating an entirely new and legal industry, much as we did last year with sports betting,” he said. “We are learning from the states that went before us on what not to do, but we are also seeing the positive economic impacts.”

“Massachusetts’ new industry is creating an estimated 19,000 new jobs. And, in Colorado, legalization fostered an industry that has an annual statewide economic impact measured at $2.4 billion, with 18,000 new jobs created in research, agriculture, processing, and retail. We can do that here, and in a smart way that ensures fairness and equity for minority-owned businesses and minority communities.”

In New Mexico, newly sworn-in Gov. Michelle Lujan Grisham (D) reiterated her pledge to make opioid addiction a qualifying condition for medical cannabis in the state.

She said she will “direct my Health Department to adopt the longstanding recommendation from the Medical Cannabis Advisory Board” to add the condition as a means to reduce opioid abuse.

And in Washington state, Gov. Jay Inslee (D) talked about his recently launched Marijuana Justice Initiative, which allows individuals with a simple possession marijuana conviction going back to 1998 to apply for an expedited pardon. An estimated 3,500 Washington residents qualify for a pardon under the program.

“We are going to write an even brighter chapter of our Washington story,” Inslee said during his State of the State address. “We’re the state offering to pardon thousands of people with misdemeanor marijuana convictions.”

If there were any questions about whether marijuana was going to be a hot political topic in 2019, these and a flurry of other recent speeches from governors across the country should put those doubts to rest.

Besides the four who spoke about marijuana in major addresses on Tuesday, Illinois Gov. J.B. Pritzker (D) again committed to fully legalizing cannabis during his inaugural address on Monday. And last week, West Virginia Gov. Jim Justice (R) said in his State of the State speech that the lack of action on medical cannabis was “hurting” patients, Virginia Gov. Ralph Northam (D) advocated for decriminalization in his State of the Commonwealth address and Colorado Gov. Jared Polis (D) touted hemp and legal marijuana during his State of the State address.

Illinois Governor Pledges To Legalize Marijuana In Inaugural Address

Photo courtesy of Max Pixel.

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Trump Attorney General Nominee Won’t Go After Legal Marijuana Businesses And Urges Congress To Act

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At his confirmation hearing on Tuesday, attorney general nominee William Barr said he would not go after marijuana companies that have operated in compliance with earlier Justice Department guidance that was rescinded last year by his predecessor, Jeff Sessions.

He also encouraged Congress to address the conflict between federal and state cannabis policies.

“My approach to this would be not to upset settled expectations and the reliant interests that have arisen as a result of the Cole memorandum,” Barr said, referring to a memo on federal marijuana enforcement priorities that Sessions revoked in early 2018. “However, I think the current situation is untenable and really has to be addressed. It’s almost like a backdoor nullification of federal law.”

Sen. Cory Booker (D-NJ) asked Barr what he would do to address the issue and whether he felt it was “appropriate to use federal resources to target marijuana businesses that are in compliance with state law.”

“I’m not going to go after companies that have relied on Cole memorandum,” Barr replied. “However, we either should have a federal law that prohibits marijuana everywhere, which I would support myself because I think it’s a mistake to back off marijuana. However, if we want a federal approach—if we want states to have their own laws—then let’s get there and get there in the right way.

Booker, who has sponsored a bill to remove cannabis from the Controlled Substances Act and penalize states where marijuana enforcement is disproportionate, said he was glad to hear Barr’s comment on not taking action against state-legal marijuana businesses.

Sen. Kamala Harris (D-CA) also pressed Barr about his stance on federal marijuana enforcement. She asked whether the nominee intended to use the limited federal funds at his disposal to go after cannabis businesses in compliance with state law.

“No, I thought I answered that by saying that to the extent that people are complying with the state laws—distribution and production and so forth—we’re not going to go after that,” Barr said. That said, “I think it’s incumbent on the Congress to make a decision as to whether we’re going to have a federal system or whether it’s going to be essential federal law. This is breeding disrespect for the federal law.”

Sen. Cory Gardner (R-CO), who has sponsored broad marijuana reform legislation that last year earned an endorsement from President Trump, said he is “encouraged” by Barr’s statements.

Michael Collins, director of national affairs for the Drug Policy Alliance, told Marijuana Moment that “Barr’s comments on not going after state-legal marijuana are a welcome development, and a break with his predecessor.”

“He should now commit his department to working with Congress on a solution to the state vs. federal conflict, so that we can reform our outdated marijuana laws in a way that is consistent with racial justice values,” Collins said.

Other advocates saw the comments as positive, though one noted that Barr seems to personally opposed marijuana law reform even while he indicated he wouldn’t interfere with the implementation of state laws.

“While it is encouraging that William Barr committed to not enforce federal prohibition, his insistence that he believes in the policy of prohibition is a clear signal that the Department of Justice will continue to be led by an individual who refuses to acknowledge the successful implementation of reforms in states throughout the nation,” Justin Strekal, political director of NORML, told Marijuana Moment.

Strekal said Barr’s pledge not to interfere in state-legal marijuana activities gives Congress “a clear mandate to take action and end the underlying policy of federal criminalization.”

Don Murphy, director of federal policies for the Marijuana Policy Project, told Marijuana Moment that Barr’s newly stated stance effectively “green lights the marijuana industry” in spite of concerns reform advocates expressed about the Trump administration after the 2016 presidential election. He said the exchange represented a “big win for marijuana policy reformers.”

“Senator Booker delivered for advocates and AG nominee Barr delivered for the industry.”

Also at the hearing, Booker questioned the nominee’s broader views on mass incarceration and racial disparities in the criminal justice system. Barr defended his earlier call for increased incarceration in the 1990s, saying it was made in the context of historically high crime rates and was directed at chronic, violent offenders.

But he also agreed to commission a Justice Department study about racial disparities in the criminal justice system and recognized that harsh penalties for non-violent drug crimes have specifically “harmed the black community—the incarceration rate on the black community.”

Harris also challenged Barr to “take a look at the more recent perspective on the drug crisis that is afflicting our country.”

She said there’s “now an understanding that the war on drugs was an abject failure, that America frankly has a crisis of addiction and that putting the limited resources of our federal government into up locking people who suffer from a public health crisis is probably not the smartest use of taxpayer dollars.”

One of the last senators to question Barr during the first round, Sen. Thom Tillis (R-NC), also brought up cannabis. He asked whether it was fair to characterize the nominee’s statements as essentially imploring Congress to settle the issue, regardless of where he personally stands on marijuana policy.

“That’s generally fair, yes,” Barr said.

This story has been updated to include additional comments from Barr, Booker, Gardner, Harris and Tillis, as well as marijuana policy reform advocates.

Where Trump’s Pick For Attorney General Stands On Drug Policy

Photo courtesy of The Washington Post/YouTube.

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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New York Gov. Cuomo Releases Marijuana Legalization Details

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New York Gov. Andrew Cuomo (D), who only recently flipped from calling marijuana a “gateway drug” to endorsing its legalization, released details on Tuesday that shed light on exactly how he wants to end cannabis prohibition in 2019.

“Legalize adult-use cannabis,” Cuomo said in his State of the State speech. “Stop the disproportionate impact on communities of color and let’s create an industry that empowers the poor communities that paid the price and not the rich corporations who come in to make a profit.”

Under the plan, which the governor is including in his annual budget request to lawmakers, marijuana would be legal for adults over the age of 21.

Cuomo is proposing a 20 percent state tax and 2 percent county tax on marijuana transfers from wholesalers to retailers, in addition to a $1 per gram tax on dry flower for cultivators, along with a $0.25 per gram tax on trim.

The governor said that legalization “will create the good union jobs that we need.”

His administration estimates that the move will eventually generate roughly $300 million in annual tax revenue, though counties and large cities would be allowed to opt out of legal sales—something that could potentially impact revenue.

Speaking of revenue, funds would be earmarked for a state traffic safety committee, small business development, substance abuse services and other programs.

The proposal would create a new Office of Cannabis Management to regulate the marijuana industry and would prohibit cultivation license holders from also operating retail outlets.

The plan would also create a process to review and seal prior marijuana conviction records.

The governor is proposing to ban home cultivation of marijuana by recreational consumers, though the plan would allow medical cannabis patients and their caregivers to grow their own medicine.

Cuomo formally endorsed legalizing cannabis for the first time in a December speech in which he laid out his priorities for New York’s 2019 legislative session. It was the culmination of his evolution on cannabis issues over the course of the past year or so.

Earlier, in August, during the course of a contentious primary race with the pro-legalization actress Cynthia Nixon, the governor formed a working group to draft a legalization bill after a state Department of Health report, which he commissioned, found that the benefits of legal cannabis outweigh its potential consequences.

Earlier this month, Cuomo reiterated the promise to enact legalization during his inaugural address at the start of his third term as governor.

The prospects for legalization are believed to have gotten a significant boost from the fact that Democrats took control of the state Senate in November’s midterm elections after years of being in the minority.

Senate Republicans, for their part, seem poised to accept the fact that legalization is on the way and are taking steps to focus their efforts on arguing how cannabis tax revenue is earmarked rather than trying to oppose the end of prohibition.

“If New York State legalizes marijuana, we will propose that all tax revenues from marijuana sales go to tax relief – not to fuel more spending,” the caucus wrote in a budget document of their own on Tuesday.

The Cuomo administration, for its part, released several lengthy documents outlining the governor’s marijuana proposal.

See below for excerpts of explanatory documents from the governor’s office:

“Enact the Cannabis Regulation and Taxation Act. The Executive Budget proposes to regulate and control the manufacture, wholesale, and retail production, distribution, transportation, and sale of cannabis, cannabis related products, medical cannabis, and hemp cannabis within the State of New York, for the purposes of fostering and promoting temperance in their consumption, to properly protect the public health, safety, and welfare, and to promote social equality.

“This bill would impose three taxes on the adult-use of marijuana. The first tax is imposed on the cultivation of cannabis at the rate of $1 per dry weight gram of cannabis flower and $0.25 per dry weight gram of cannabis trim. The second tax is imposed on the sale by a wholesaler to a retail dispensary at the rate of 20 percent of the invoice price. The third tax is imposed on the same sale by a wholesaler to a retail dispensary at the rate of 2 percent of the invoice price, but collected in trust for and on account of the county in which the retail dispensary is located.

“Revenues from the State cannabis taxes will be expended for the following purposes: administration of the regulated cannabis program, data gathering, monitoring and reporting, the governor’s traffic safety committee, small business development and loans, substance abuse, harm reduction and mental health treatment and prevention, public health education and intervention, research on cannabis uses and applications, program evaluation and improvements, and any other identified purpose recommended by the director of the Office of Cannabis Management and approved by the Director of the Budget.”

New York Marijuana Plan by on Scribd

More New York Marijuana Plan by on Scribd

The full legislative language is available here.

Illinois Governor Pledges To Legalize Marijuana In Inaugural Address

Photo elements courtesy of Metropolitan Transportation Authority and Carlos Gracia.

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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