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GOP Senator Wants Tax Cut For Marijuana Businesses

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A Republican senator from a state where marijuana is legal is pushing this week to give cannabis businesses a measure of tax fairness.

Sen. Cory Gardner of Colorado wants to attach an amendment to a wide-ranging Republican-led tax reform bill that would allow state-legal marijuana growers, processors and sellers to deduct normal businesses expenses from their taxes, just like operators in other industries can.

Under current federal law, a 1980s provision — known as 280E — effectively forces cannabis businesses to pay a much higher tax rate than other companies.

The statute was originally intended to to stop drug cartel leaders from writing off yachts and expensive cars, but today its language means that that growers, processors and sellers of marijuana — which is still a Schedule I substance under federal law — can’t take business expense deductions that are available to operators in other sectors.

As a result, cannabis businesses often pay an effective tax rate upwards of 65-75 percent, compared with a normal rate of around 15-30 percent.

Gardner’s press secretary said in an email that “he plans to file an amendment” to the broader tax legislation this week to include a 280E fix so that the provision no longer applies to marijuana businesses that operate in accordance with state or local laws.

The senator also cosponsored a standalone bill to reform the provision this month.

“Our current tax code puts thousands of legal marijuana businesses throughout Colorado at a disadvantage by treating them differently than other businesses across the state,” he said in a press release about the bill. “Coloradans made their voices heard in 2012 when they legalized marijuana and it’s time for the federal government to allow Colorado businesses to compete. This commonsense, bipartisan bill will allow small businesses in Colorado and other states that have legal marijuana businesses to grow their operations, create jobs, and boost the economy.”

Marijuana businesses and their supporters failed to attach 280E reform language to the House version of the tax legislation this month. In that chamber, the Rules Committee blocked floor consideration of an amendment on the issue two weeks ago.

“When Congress passed 280E, they never envisioned an industry like ours meant to take ill-gotten gains from drug dealers,” Neal Levine, chairman of the New Federalism Fund, said in an interview. “The provision is misapplied to our industry. It’s actually helping the drug cartels it was meant to hurt,” he said, referring to the fact that extra taxes force legal providers to keep prices artificially high such that they sometimes can’t compete with the illegal market.

Levine’s group and others have been working to convince members of Congress to reform the provision, emphasizing that it’s not a pro-marijuana idea.

“Our industry is actually the only folks who have been able to take market share from the drug cartels,” he said.

Gardner mentioned the plan to attach the amendment to the tax bill to a Bloomberg reporter earlier this week.

The tax bill is currently on the Senate floor, and leaders are aiming to pass it before they go home for the weekend.

Even if 280E language is adopted on the Senate floor, in order to be enacted into law it will have to a survive a bicameral conference committee that merges the chamber’s bill with the House version that does not contain the provision.

In other financial legislative news of interest to the cannabis industry, House leaders also prevented consideration of an amendment to allow marijuana businesses to access banks this month.

This piece was originally published by Forbes.

(Marijuana Moment’s editor provides some content to Forbes via a temporary exclusive publishing license arrangement.)

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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American Bankers Association Demands Answers About Hemp And CBD

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The American Bankers Association (ABA) recently sent a letter imploring top federal financial regulators to provide explicit guidance on how the banking sector can lawfully service hemp businesses.

The letter—sent to the heads of the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), the Treasury’s Comptroller of the Currency and Financial Crimes Enforcement Network (FinCEN) last week—describes ongoing uncertainty among financial institutions since hemp and its derivatives were federally legalized under the 2018 Farm Bill.

ABA Executive Vice President Virginia O’Neill wrote that “banks remain uncertain about the degree to which they can serve hemp-related companies, and the compliance and reporting requirements that such relationships require.”

“Although other federal regulators have issued helpful clarifications regarding hemp production, banks are subject to a complex set of legal requirements and regulatory expectations and require specific guidance to ensure they are acting appropriately,” she wrote. “Furthermore, the unique nature of hemp as a low-THC strain of marijuana, which remains a Schedule I substance under the [Controlled Substances Act], means banks must have a reliable mechanism to distinguish legal hemp from federally illegal marijuana with extreme confidence.”

There have been other attempts to elicit clarification from federal regulators in the months since hemp was legalized.

Rep. Andy Barr (R-KY) asked FDIC Chair Jelena McWilliams about the issue in May, telling her that he has constituents who’ve told him their access to financial services has “actually deteriorated since we descheduled industrial hemp” and requesting further guidance.

In a similar letter to federal regulators this month, Sen. Michael Bennet (D-CO) also complained about the continued lack of access to banking services for hemp producers. The 2020 Democratic presidential candidate said he hopes the agencies “can work expeditiously and in a coordinated manner to issue guidance describing how financial institutions can offer financial products and services to hemp formers and processors.”

But so far, the closest the regulators have come to assuaging the concerns of banks is a statement from a top Federal Reserve official who said during a Senate hearing earlier this month that “hemp is not an illegal crop.”

ABA said it appreciated the comment but that “a formalized statement from the agencies is necessary to enable banking services for the hemp industry on a meaningful scale.” O’Neill requested confirmation of five specific areas of interest.

“Specifically, we ask that the agencies confirm that:

“—hemp is no longer a controlled substance, effective as of the enactment of the 2018 Farm Bill, and therefore proceeds derived from hemp businesses are not unlawful, and handling those proceeds does not constitute money laundering;

“—banks do not need to file suspicious activity reports solely because a transaction relates to hemp or hemp-derived products;

“—banks can rely on a license issued by a state department of agriculture or the U.S. Department of Agriculture to confirm that a hemp producer is operating in compliance with state and federal law, and that their product qualifies as ‘hemp’ as defined in the 2018 Farm Bill;

“—in accordance with United States Department of Agriculture (USDA) guidance, banks can serve hemp cultivators and processors operating subject to state pilot programs under the 2014 Farm Bill, effective immediately; and

“—as soon as USDA finalizes its regulations related to industrial hemp, banks will be able to serve hemp cultivators and processors operating under state approved plans or direct federal licenses.”

Further, ABA asked for specific guidance as it relates to hemp-derived CBD and information about “the appropriate procedures for sourcing those products back to legal cultivators and processors.”

While the association recognized that “this is an evolving area of law and regulation” and that questions remained among federal regulators about the implementation of hemp legalization, it said that “there are steps that can be taken now to help clarify legal and regulatory expectations for banks in the current environment.”

The letter focused exclusively on hemp and its derivatives, but there’s a simultaneous conversation going on nationally about how financial institutions can work with state-legal marijuana businesses. Bipartisan legislation that would protect banks that service such businesses has the support of all 50 individual state bankers associations.

Read the full ABA letter on hemp banking below:

Regulators Hemp 062119 by on Scribd

Senator Urges FDA To Speed Up CBD Regulations

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Congressional Committee Asks JUUL For Documents On Marijuana Partnerships

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Is the e-cigarette company JUUL planning on expanding its stake in the marijuana industry?

That’s one question the chair of a congressional subcommittee asked the company in a letter concerning JUUL’s role in the “youth e-cigarette epidemic” earlier this month.

Lawmakers have frequently criticized JUUL for making products—specifically flavored e-cigarette cartridges—that allegedly appeal to young people at a time when rates of cigarette use are steadily declining. But while JUUL was developed by the cannabis vaporizer company PAX, it hasn’t announced plans to further partner with marijuana companies.

Rep. Raja Krishnamoorthi (D-IL), who chairs the House Subcommittee on Economic and Consumer Policy, apparently sees the possibility on the horizon, though.

In a letter sent to JUUL on June 7, the congressman said his panel was investigating youth e-cigarette usage and, specifically, how the company’s marketing tactics might be exacerbating the issue. He requested documents on everything from clinical trials on how JUUL devices divert people away from traditional cigarettes to communications on the company’s rationale for the nicotine concentration of JUUL pods.

Tucked within the extensive request is a question about potential marijuana partnerships. Krishnamoorthi asked for:

“All documents, including memoranda and communications, referring or relating to proposals, plans, and/or intended partnerships or collaborations between JUUL and any cannabis-related companies, including but not limited to Cronos Group.”

It’s not clear where the Cronos-specific mention comes from, but the company has perviously caught the interest of the tobacco industry. The maker of Marlboro cigarettes, Altria Group, invested almost $2 billion in the Canada-based cannabis company in December. Two weeks later, Altria invested $13 billion in JUUL.

Marijuana Moment reached out to JUUL, Cronos and Krishnamoorthi’s office for comment, but representatives did not respond by the time of publication.

If a partnership does emerge, it would likely be met with some controversy, as opponents and proponents of marijuana reform alike have long expressed concern that the tobacco industry would take over the cannabis market and commercialize it in a way that mirrors how it peddled cigarettes.

Of course, given that tobacco use is declining and tobacco companies generally have the infrastructure that would make a pivot to cannabis relatively simple, such a partnership would not be especially surprising.

Senate Majority Leader Mitch McConnell (R-KY) has made the case several times that tobacco farmers in his state could leverage the federal legalization of industrial hemp and its derivatives by growing the crop to offset profit losses from declining tobacco sales.

Read Rep. Krishnamoorthi’s full letter to JUUL below:

2019-06-07.Krishnamoorthi t… by on Scribd

Americans Want CBD Available Over-The-Counter, Poll Finds

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Google Announces Ban On Marijuana Apps In Android Play Store

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Apps that help connect people with marijuana products are not welcome anymore in the Google Play store, the company announced in a policy update on Wednesday. That includes apps that facilitate cannabis transactions in states where it’s legal.

The updated policy section states that Google Play doesn’t “allow apps that facilitate the sale of marijuana or marijuana products, regardless of legality.” Previously the page didn’t include any specific mention of cannabis.

Via Google.

The revised guidelines go on to list descriptions of “common violations.” Apps can’t allow users “to order marijuana through an in-app shopping cart feature,” help users “in arranging delivery or pick up of marijuana” or facilitate the “sale of products containing THC.”

A google spokesperson explained the change in an email to Marijuana Moment, adding that affected companies can take advantage of a simple workaround.

“These apps simply need to move the shopping cart flow outside of the app itself to be compliant with this new policy,” the spokesperson said. “We’ve been in contact with many of the developers and are working with them to answer any technical questions and help them implement the changes without customer disruption.”

The spokesperson also said that the company recognizes the popularity of cannabis-related apps and hopes they will remain in the Play Store under the amended rules. Google is working directly with developers of affected apps, the spokesperson said.

Another new section of the policies stipulates that apps “that facilitate the sale of tobacco (including e-cigarettes)” are prohibited. Apps that help consumers purchase alcohol are apparently allowed, but not those that “encourage the irresponsible use of alcohol or tobacco.”

The update was first reported by Android Police, which also noted that Apple has previously banned marijuana-related apps such as the social networking platform MassRoots. But Apple lifted that ban in 2015 and has since taken a relatively hands-off approach to the issue.

Some of the best-known cannabis apps—Weedmaps and Eaze—are still available for download on Google Play as of the time of publication. But insiders believe that their essential functions (i.e. the ordering services) will have to be deactivated. Weedmaps alone has been installed more than one million times to date, and more than 50,000 users have downloaded Eaze.

Android Police reported that Google will be working with affected app developers to resolve any compliance issues over the next month.

In a blog post on Wednesday, Google said that it was generally making a series of policy changes to ensure that its app store serves as “a positive, safe environment for children and families.” As TechCrunch pointed out, this comes about five months after Google Play was the subject of an FTC complaint, which alleged that the company wasn’t doing enough to vet apps that appear in the kids section.

The tech industry has had a strained relationship with marijuana businesses, even as a growing number of states have decided to legalize and regulate the sale of cannabis.

Facebook, which recently showed off its artificial intelligence technology that’s capable of identifying images of marijuana, continues to prohibit the commercial advertising of cannabis products, regardless of the legality of the business under state law.

Noncommercial cannabis news sites such as Marijuana Moment and state regulatory bodies like the Massachusetts Cannabis Control Commission have also been caught up in the anti-marijuana policy despite the fact that they do not promote or sell cannabis products. In some cases, it appears these organizations have been hidden from appearing in search results—a practice known as “shadowbanning.”

The online shopping site eBay also gave cannabis consumers some bad news this week, clarifying that CBD products will continue to be banned globally regardless of individual country laws on the compound.

“Eaze connects adults only to licensed, regulated cannabis retailers,” Elizabeth Ashford, senior director of corporate communications for Eaze, said in an email. “Google’s decision is a disappointing development that only helps the illegal market thrive, but we are confident that Google, Apple and Facebook will eventually do the right thing and allow legal cannabis companies to do business on their platforms. We regret any inconvenience this may cause for customers and patients.”

“Prohibition is over,” she added. “Voters across the country have legalized cannabis.”

Marijuana Moment also reached out to Weedmaps for comment but the company has not yet provided a statement reacting to the Google policy change.

On the flip side, at least one major tech company is testing the regulatory waters after hemp and its derivatives were legalized under the 2018 Farm Bill. The payment processing service Square announced last week that has launched a pilot program designed to give businesses that sell hemp-derived CBD products access to credit card processing services as an alternative to traditional financial institutions that remain wary of working with the industry.

Marijuana might be banned from Google’s app market, but just last year it seemed the company’s executives were pretty bullish about loosening cannabis laws. Google co-founder Sergey Brin joked about supplying employees with joints at a post-election meeting in September.

“I was asking if we could serve joints outside on the patio, but apparently these things take a little while to take effect,” Brin said, referring to the implementation of California’s cannabis legalization measure. “It was a huge, huge disappointment. I’ve been bemoaning that all week, I’ll be honest with you.”

Disclosure: Weedmaps and Eaze are Marijuana Moment advertisers/sponsors.

This story was updated to include comment from Google and Eaze.

Google Execs Told Marijuana Jokes To Lighten The Mood After Trump’s Election, Leaked Video Shows

Photo courtesy of Rick Proctor.

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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