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Earlier this month, U.S. Attorney General Sessions rescinded a 2013 memo that has generally allowed states to implement their own cannabis laws without federal interference.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.
Medical marijuana dispensaries help many chronically ill NJans, including veterans, and provide a non-opioid alternative for those who badly need it. That's why I pressed Trump Admin. officials to keep in place guidance for banks who want to serve marijuana-related businesses. pic.twitter.com/notbqpFvSD
— Senator Bob Menendez (@SenatorMenendez) January 18, 2018
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.
.@SenJeffMerkley & I led a bipartisan effort, urging Financial Crimes Enforcement Network to keep guidelines in place enabling financial institutions to provide banking services for legitimate cannabis businesses in states that have legalized marijuana. https://t.co/N49vKZZ8f3
— Sen. Lisa Murkowski (@lisamurkowski) January 18, 2018
“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.”
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 Isn’t Addictive, Former A.G. Eric Holder Says
The nation’s former top law enforcement officer is not worried that the legalization of marijuana will lead to addiction.
“I’ve never seen any scientific evidence that points you to concerns about addiction through the use of marijuana,” former U.S. Attorney General Eric Holder said in an interview published on Friday by NY1.
The comments by the former A.G. call into question cannabis’s current status as a Schedule I drug. That category is supposed to be reserved only for substances with no medical value and a high potential for abuse. In fact, it would mean that marijuana should be moved to at least Schedule III, where drugs with “moderate to low potential for physical and psychological dependence” are categorized.
Although Holder did not move to reclassify cannabis when he had the power to do so as attorney general, he did specifically endorse such a change just months after leaving office.
“I certainly think it ought to be rescheduled,” he said in a 2015 interview with PBS.
And he still feels the same way.
“We need to move marijuana from Schedule I, so research can be done,” Holder said in the new NY1 interview. “It is classified now on the same level as heroin is, and clearly that is inappropriate.”
While he did nothing to officially recategorize marijuana as attorney general — and continually passed the buck to Congress when asked about the issue — Holder’s Justice Department did issue guidance, known as the Cole Memo, which generally allowed states to implement their own cannabis laws without federal interference.
Current Attorney General Jeff Sessions rescinded that memo earlier this year.
In the new interview, Holder said he thinks the federal government should continue letting states implement their own legalization laws.
“Let those be laboratories to see where we want to be,” he said. “I think if you allow the states to experiment we’ll ultimately come to a national consensus about what it is we ought to do with regard to marijuana.”
He also spoke about unfair enforcement of cannabis criminalization.
“One of the things that I am concerned about, though, is the racial disparity you see in the enforcement of marijuana laws,” he said. “You see African Americans, Latinos using marijuana at just about the same rates as whites, and yet seeing rates of arrest four, five times as great as it is for whites. That is something that I think is extremely troubling.”
Photo courtesy of US Embassy New Zealand.
Congressional Committee Protects Medical Marijuana From Jeff Sessions
A powerful congressional panel voted on Thursday to continue shielding medical marijuana patients and providers who comply with state laws from prosecution by the federal government.
While the provision has been federal law since 2014, when it was first attached to legislation that funds the U.S. Department of Justice, its continuance has been in question because of recent efforts by Republican leadership to prevent votes on cannabis amendments. But in a stunning bipartisan move, the House Appropriations Committee voted to add the provision as a rider to legislation funding U.S. Attorney General Jeff Session’s department for Fiscal Year 2019.
(Marijuana Moment’s editor provides some content to Forbes via a temporary exclusive publishing license arrangement.)
Congressional Republicans Block Votes On Hemp Amendments
In the latest development in a series of anti-cannabis moves, congressional Republican leadership has blocked consideration of several industrial hemp amendments.
Supporters were seeking to attach the measures to the large-scale Farm Bill, which sets food and agriculture policy for the country, but the House Rules Committee on Wednesday decided that the proposals cannot be considered on the floor.
The anti-cannabis chairman of the panel did, however, reveal that a broader deal for industrial hemp might be in the works.
One of the measures the committee killed, submitted by Reps. James Comer (R-KY) and Earl Blumenauer (D-OR), along with a bipartisan list of cosponsors, would have legalized hemp and made it eligible for crop insurance.
“Hemp is a crop with a long and rich history in our country,” Comer said in introducing his amendment before the committee. “It was grown by many of our founding fathers.”
Comer, who is a former Kentucky agriculture commissioner, said his state’s existing industrial hemp research program, which is authorized under a previous Farm Bill enacted in 2014, “has been a great success.”
He also spoke about the economic potential of the plant. “Times are tough in rural america,” he said. “For rural Kentuckians, industrial hemp has provided a new crop and business opportunity.”
But in a party-line move, the committee voted 8 to 3 to reject a motion to add Comer’s amendment to the list of proposals approved for floor consideration.
Another hemp amendment, filed by Reps. Thomas Massie (R-KY) and Jared Polis (D-CO), would have removed hemp from the list of federally banned substances.
A third proposal, submitted by Rep. Andy Barr (R-KY), sought to create “a safe harbor for financial institutions that provide services to hemp legitimate businesses” that operate under state-authorized research programs.
“There is a proud history in American and in Kentucky [for hemp] as an agriculture product,” Barr said when testifying for his amendment, noting that it can be used in over 25,000 products.
Under current law, banks that work with legitimate hemp companies “fear reprisal from federal regulators,” Barr said, arguing that his proposed measure would protect financial institutions “from unnecessary interference from bank examiners and regulators” and give producers rights that “every other American crop enjoys.”
The committee did not hold specific votes on those two measures.
Rules Committee Chairman Pete Sessions (R-TX) has made a consistent practice of blocking cannabis measures from advancing over the past several years.
Sessions, seemingly mistakenly, told Comer during the Wednesday hearing that the U.S. Drug Enforcement Administration (DEA) has “a clause…that industrial hemp should be declassified under their Schedule I drugs, which they concur, which is the position you hold, too.”
A hemp lobbyist told Marijuana Moment in an email that he had not heard of the DEA taking a pro-hemp position.
Polis, who as a Rules Committee member made the unsuccessful motion to let the full House vote on Comer’s amendment, argued that hemp is a “common sense area” that enjoys bipartisan support. The measure, he said, would simply “treat industrial hemp as the agricultural commodity that it is.”
While Sessions and other GOP panel members were not swayed, the chairman did hint just before the vote that there may still be hope for hemp reform, saying that the issue would be “determined by an agreement that would be reached” with Senate Majority Leader Mitch McConnell (R-KY).
McConnell last month filed a hemp legalization bill, which Comer’s amendment closely modeled. Fully a fifth of the Senate is now signed on as cosponsoring that legislation, and the majority leader has already announced plans to attach his hemp language to the version of the Farm Bill being considered by the Senate this month.
While it is unclear what exactly Sessions was suggesting when he referred to an “agreement” with McConnell, it may have been a reference to the conference committee process that will merge the House and Senate’s respective versions of the Farm Bill into a single proposal after each chamber passes its legislation. If McConnell succeeds in attaching hemp legalization to the Senate bill, it would then be up for consideration as part of the final legislation sent to President Trump for signing into law.
In 2014, McConnell successfully inserted a provision to prevent federal interference in hemp research programs in that year’s version of the Farm Bill.
Photo courtesy of Chris Wallis // Side Pocket Images.