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Five Federal Agencies Respond To Presidential Candidate’s Hemp Banking Letter

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The heads of five federal financial regulatory agencies have replied to a letter from Sen. Michael Bennet (D-CO) that requested clarification on banking services hemp businesses.

The responses, which Bennet’s office provided exclusively to Marijuana Moment, each recognize that hemp was legalized through the 2018 Farm Bill—meaning the rules governing how financial institutions interact with these businesses have changed.

The chair of one body clarified that federal reporting guidelines in place for institutions that work with marijuana businesses no longer apply to hemp companies and said she has “personally discussed the changes during banker outreach meetings both in Washington, D.C. and across the country.”

But the five letters—from the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), Farm Credit Administration (FCA) and National Credit Union Administration (NCUA)—varied with regard to what the agencies said they were actively doing, or plan to do, to clear up remaining confusion within the financial sector.

Bennet, a 2020 Democratic presidential candidate, has made much of the hemp industry’s potential, especially as it concerns his home state of Colorado. His initial June inquiry emphasized the role hemp is playing for his constituents and raised concerns about instances in which hemp businesses are still unable to access credit and other banking services despite the crop’s legalization.

“Hemp farmers and processors have made clear that the lack of access to the banking system is a significant hurdle to growing their business,” Bennet told Marijuana Moment. “While I appreciate the response from the banking regulators, it’s clear that more needs to be done to provide banks and credit unions with the assurance and clarity needed to remove this major barrier facing the hemp industry.”

Here’s what the agencies said in response to the senator’s request that they issue guidance clarifying hemp businesses’ ability to access financial services:

Federal Reserve

Chairman Jerome Powell said that the agency expects banks it supervises to apply “adequate policies, procedures, and processes to address appropriately the risks associated with the particular relationship as required under the Bank Secrecy Act,” and that includes hemp businesses.

“The decision to open, to close, or to decline a particular account is generally made by the financial institution without involvement of the federal regulator,” he wrote.

“The Board does not currently plan to issue guidance specific to this area, because it is our expectation institutions will apply their established policies, procedures and practices to their hemp industry customers, but we will continue to monitor this issue,” Powell said.

FDIC

FDIC has “received a number of questions regarding the changes made by the 2018 Farm Bill, some of which we are able to answer, but many of which are outside our jurisdiction,” Chair Jelena McWilliams said.

“Nevertheless, we have taken a number of steps to inform financial institutions and our examiners about the changes,” which includes discussing the issue at a meeting of community bankers in March as well as personal conversations McWilliams has had during banker outreach events.

Additionally, FDIC is “in the process of providing training to our examiners on changes to the legal status of hemp and instructing them that the suspicious activity filing requirements prescribed by the Financial Crimes Enforcement Network for cannabis do not apply to hemp.”

McWilliams wrote that financial providers should assess risk on a “case-by-case basis, rather than declining to provide banking services to entire categories of customers.”

“You have my assurance that we will continue to maintain a dialogue with the institutions we supervise to reinforce this policy regarding the provision of services to legal hemp businesses,” she concluded.

OCC

Comptroller of the Currency Joseph Otting said that his agency “supports the institutions it supervises in providing banking services to any category of customers operating in compliance with applicable law” and that “[d]ecisions on the provision of financial services are bank business decisions and matters of banker judgement,” which also applies to hemp businesses.

“We expect these general requirements to apply to relationships established and maintained with legal hemp farms and producers,” he wrote.

“The OCC does not currently plan to issue guidance specific to this area,” Otting said, “because we expect OCC-supervised banks to apply their established policies, procedures, and practices to legal hemp farmers and producers. Nevertheless, we will continue to monitor this issue.”

FCA

Jeffery Hall, acting CEO of FCA, directed Bennet to a memorandum the agency previously issued in April that “outlines our exception for System institutions to develop underwriting standards for hemp production and processing to take into account applicable federal and state laws, growing conditions, and marketing opportunities.”

The memo stated that “now that there is more clarity and direction regarding the legality of hemp production, each individual System institution should determine when and under what conditions to finance producers or processors of hemp.”

Hall told Bennet that his agency “will continue to closely monitor USDA’s development of hemp program authorized by the 2018 Farm Bill and will provide additional guidance as necessary.”

NCUA

“I share your concern that hemp farmers and processors may lack access to the financial services system,” NCUA Chairman Rodney Hood wrote. “Full access to the system will better enable these farmers and processors across the country to make investments in their businesses and create jobs.”

“Unfortunately, until the Department of Agriculture completes their regulations and guidelines for this program, the uncertainty for financial institutions will likely remain,” he said, referring to the ongoing rulemaking process at USDA that Secretary Sonny Purdue said would be in place in time for the 2020 planting season.

“The NCUA is working on possible future guidance to financial institutions in this area, and we are consulting with FinCEN and other federal banking agencies,” he said. “Opening, closing, or declining a particular account is a business decision for the credit union.”

“Once we are able to provide more clarity, credit unions will be able to make more informed decisions,” Hood added. “As with any such business decision, credit unions should consider their objective, evaluate the risks, and determine their capacity to manage those risks.”

Bennet isn’t the only lawmaker pushing for clarification post-hemp legalization. Another champion of the crop, Senate Minority Leader Chuck Schumer (D-NY) sent a similar letter seeking guidance on the issue from federal financial regulators on Monday.

Senate Majority Leader Mitch McConnell (R-KY), a chief proponent of hemp legalization, has also put pressure on financial institutions to ensure that hemp businesses have the same access to banking services such as federal crop insurance since the crop was legalized. The senator wrote to federal regulators about the issue in April and this week penned an op-ed detailing his work to ensure that the hemp industry is properly supported.

A top Federal Reserve official was also pressed on what the agency is doing to resolve confusion around hemp during a Senate hearing in June. The official told Sen. Jon Tester (D-MT) that her agency “will try to clarify” that servicing hemp businesses is not illegal.

Outside of the hemp realm, there’s also a growing, bipartisan call to protect banks that service state-legal marijuana businesses. The House Financial Services Committee approved legislation to allow banks to service these businesses in March, and the Senate Banking Committee held a hearing on the issue last month.

Chairman Mike Crapo (R-ID), who earlier this year indicated that his panel wouldn’t hold a hearing on marijuana banking while the substance was federally illegal, has since backed developing a legislative resolution to the issue.

Read Bennet’s initial letter on hemp banking and the agencies’ replies below: 

Hemp Banking Letters by Marijuana Moment on Scribd

Top Senate Democrat Calls On Federal Regulators To Clarify Hemp Banking Rules

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DC Activists Have A New Plan To Get Psychedelics Decriminalization On The Ballot Despite Coronavirus

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Activists in Washington, D.C. are considering a new strategy to get a measure to decriminalize psychedelics on the November ballot, with the coronavirus outbreak having forced them to suspend in-person signature gathering.

While Decriminalize Nature D.C. hoped that officials would pass emergency legislation allowing the digital collection of signatures, they aren’t actively considering that option. And the District Council’s chairman said he would not simply place the initiative on the ballot for voters to decide regardless of the signature count.

That’s left the group in a challenging position. But they’re not out of ideas yet.

Now the campaign is exploring the possibility of conducting “micro-scale petition signature collection” to make the ballot. The plan would involve having petitions mailed to supporters, who would circulate it and collect signatures from “registered DC voters in their immediate vicinity, such as family, roommates, friends and close-by neighbors” and then return the signed petitions to the campaign headquarters.

They’ve launched an online survey to determine the feasibility of the option. It asks prospective volunteers to estimate how many signatures they could theoretically collect under that limited scope and provide their mailing information should the campaign decide to move forward with the plan.

This is one of the last remaining options for the 2020 effort, which is working to make a wide range of psychedelics among the district’s lowest law enforcement priorities.

Council Chairman Phil Mendelson (D) said during a press conference on Friday that he “would not say that we’re looking for legislative action to put [the initiative] on the ballot” outside of the conventional process.

Board of Elections Chairman Michael Bennett also took a question about the prospect of allow electronic signature collection. He said his panel is not considering the possibility “at this point.”

Watch the comments below, starting around 22:15:

Decriminalize Nature D.C. is one of numerous groups working to change local and state drug policy laws. And it’s not alone in its struggle amid the current pandemic.

A California campaign to legalize psilocybin mushrooms is struggling and asking for electronic signature gathering to qualify for the ballot.

In Oregon, advocates for a measure to decriminalize drug possession and a separate initiative to legalize psilocybin for therapeutic purposes have suspended in-person campaign events amid the pandemic.

Activists in California recently released a video asking California officials to allow digital signatures for a petition to revise the state’s adult-use marijuana program. An effort to legalize medical cannabis in Nebraska is facing similar signature gathering challenges. A campaign to legalize cannabis in Missouri is also in jeopardy.

Arizona activists shared some more positive news last week, however, announcing that they have collected more than enough signatures to qualify for the state’s November ballot—though they have not yet been submitted to or verified by the state.

Marijuana Legalization Left Out Of New York Budget, According To Draft Summary Document

Photo elements courtesy of carlosemmaskype and Apollo.

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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Marijuana Legalization Left Out Of New York Budget, According To Draft Summary Document

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The New York legislature seems poised to eliminate a proposal to legalize marijuana through the budget this year, according to an unverified document outlining the policies included in the spending legislation currently under final negotiations ahead of a vote this week.

The draft budget report, which was shared with Marijuana Moment, includes a line stating that the “Adopted Budget omits the Executive proposal to legalize adult use cannabis.”

It also “eliminates $34.31 million in funding for the Office for Cannabis Management,” a government body that would have been responsible for regulating the marijuana market.

The apparent exclusion of Gov. Andrew Cuomo’s (D) legalization proposal, while disappointing to reform advocates, is not entirely surprising in the context of the coronavirus outbreak. While the governor repeatedly stressed that the policy change should be enacted through the budget, he and top lawmakers have tried to temper expectations in recent weeks as legislative priorities have shifted during the pandemic.

But to some, the draft adopted budget report isn’t necessarily a death knell for the reform move, and they hope lawmakers can still accomplish legalization this year through separate legislation.

“We are disappointed adult use is not in the budget since it would have been a huge economic benefit to New York farmers and small businesses,” Allan Gandelman, president of the NY Cannabis Growers & Processors Association, told Marijuana Moment. “We hope to continue working with the governor and the legislature to get this done as soon as possible.”

The legislature must still vote on the final budget, but there’s little time left to hash out a deal on comprehensive reform ahead of a Wednesday deadline. Sen. Liz Krueger (D) filed a revised standalone legalization bill earlier this month, language of which could have theoretically been inserted into the budget, but it’s not clear that option remains on the table.

Marijuana Moment reached out to Senate and Assembly leadership for comment about the draft budget summary, but representatives were not immediately available. The document, which according to its metadata was last modified on Sunday afternoon, contains highlighted sections for issues that are “still open” for negotiation, but that is not the case for the cannabis items.

This is the second year in a row that Cuomo has pitched legalization as part of his spending plan. Last year, months of negotiation between his office and lawmakers failed to produce a passable bill—with disagreements centering on issues such as how tax revenue would be allocated—and so the effort carried over to this year.

The governor seemed confident that 2020 would be the year for legal cannabis in New York, and he included the proposal in his State of the State address in January. As recently as last week, he indicated the effort was still alive, though he also recognized that it may prove too complicated an issue to ultimately deliver through the budget this round.

“We will pass a budget and address the policy items that we laid out and we discussed because it’s not just about passing a budget and the numbers,” he said. “There are many policy initiatives that I laid out back in January, and we’re going to pursue all of them.”

“The only caveat was if you have a really complex issue that normally would require weeks of nuanced, detailed negotiation to do it right, that we won’t do. Because I don’t want to pass any bills that are not really intelligent that I then have to come back and deal with again next year,” he continued. “If it’s a highly complex issue, I get it and then let’s put it off because we don’t want to do something sloppy.”

Another part of the governor’s legalization plan originally involved visiting legal cannabis states to learn from their experiences and take lessons back home. However, Cuomo said that trip was also impacted by the COVID-19 outbreak.

Meanwhile, drug policy reform efforts across the country are struggling amid the pandemic.

Activists in California recently released a video asking California officials to allow digital signatures for a petition to revise the state’s adult-use marijuana program. In Washington, D.C., advocates for a measure to decriminalize psychedelics similarly wrote to the mayor and local lawmakers, imploring them to accept online signatures for their ballot petition.

Another California campaign to legalize psilocybin mushrooms is struggling and asking for electronic signature gathering to qualify for the ballot. An effort to legalize medical cannabis in Nebraska is facing similar signature gathering challenges. A campaign to legalize cannabis in Missouri is also in jeopardy.

In Oregon, advocates for a measure to decriminalize drug possession and a separate initiative to legalize psilocybin for therapeutic purposes have suspended in-person campaign events amid the pandemic.

Arizona activists shared some more positive news last week, however, announcing that they have collected more than enough signatures to qualify for the state’s November ballot—though they have not yet been submitted to or verified by the state.

Senate Housing Bill Would Prevent Evictions For State-Legal Marijuana Extraction

Photo courtesy of Philip Steffan.

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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Senate Housing Bill Would Prevent Evictions For State-Legal Marijuana Extraction

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A new congressional bill designed to promote affordable housing in the U.S. includes a provision that would prevent landlords from evicting people over manufacturing marijuana extracts if they have a license to do so.

Under the legislation, filed earlier this month by Sen. Jeff Merkley (D-OR), there’s a list of “just causes for eviction” such as failure to pay rent or causing significant damage to a property.

The “manufacture of a cannabinoid extract” is another cause for eviction, “unless the tenant holds a license to manufacture the cannabinoid extract under Federal, State, or Tribal law.”

Curiously, however, the bill lacks any additional protections for other state-legal cannabis activities, including simple possession. It’s possible that a drafting error is to blame, but Merkley’s office did not respond to Marijuana Moment’s request for comment.

Just above the manufacturing provision is another that states that “the unlawful manufacture, delivery, or possession of a controlled substance” is ground for eviction, though it contains no caveat exempting state-legal activity as cause for eviction.

Despite the growing number of states moving to allow cannabis for medical or recreational use, it remains “unlawful” under the federal Controlled Substances Act.

While advocates would likely applaud the inclusion of state-legal protection language, it’s also the case that eviction proceedings are handled at the state level, and so some courts would presumably defer to state law when it comes to cannabis-related eviction cases.

Also, when it comes to the manufacturing provision, states generally do not provide licenses that would specifically allow individuals to produce marijuana extracts in their residences, so it’s unclear how impactful that policy would be in practice if enacted into law.

Of course, the cannabis provision is just one notable part of a comprehensive housing bill, which aims to “address the shortcomings of our current housing policies and funding levels by holistically addressing disparities and systematic obstacles and ensuring an equitable outcome for the most vulnerable Americans.”

Rep. Alexandria Ocasio-Cortez (D-NY) and Sen. Kamala Harris (D-CA) rolled out a different kind of housing reform bill last year that would protect people with low-level drug convictions from being denied access to or being evicted from public housing.

Letting VA Doctors Recommend Medical Marijuana To Veterans Won’t Cost Anything, Congressional Analysts Say

Photo courtesy of Mike Latimer.

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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