New legislation being filed this week by a bipartisan coalition of Republicans and Democrats — including the chair of the powerful House Judiciary Committee — would remove several key federal roadblocks to research on marijuana.
“Not later than 1 year after the date of enactment of the Medical Cannabis Research Act of 2018…the Attorney General shall register…at least 2 applicants to manufacture cannabis for legitimate research purposes,” reads the text of a bill obtained by Marijuana Moment that is slated to be introduced on Thursday with the support of Judiciary Chairman Bob Goodlatte (R-VA).
In subsequent years, the attorney general would be required to license at least three additional cannabis manufacturers annually.
For decades, all cannabis used for studies in the U.S. has been grown at a single farm at the University of Mississippi. Researchers have long argued that it is difficult to access cannabis from the facility, and that the product is often of low quality.
In 2016, the Drug Enforcement Administration enacted a new policy intended to license more research cultivators, and he agency has reportedly since received at least 25 applications to participate in the new program. But it has not yet acted on any of them and, according to the Washington Post, that is because top Justice Department officials have stepped in to prevent DEA from approving any proposals.
The new legislation would force the attorney general’s hand.
A fact sheet circulated by the office of Congressman Matt Gaetz (R-FL), the lead sponsor of the bill, says that the existing cannabis research supply is “extremely subpar.”
“It is weak and often moldy, which can cause illness. In addition to being subpar, federally-grown cannabis is scarce; there is not enough product,” the document says.
The new bill would also create a “safe harbor” from federal law for universities and other research institutions that want to study marijuana. And it would clarify that doctors with the U.S. Department of Veterans Affairs are allowed to refer military veterans to studies on cannabis’s medical benefits.
Bloomberg first reported that Goodlatte was supporting the bill.
On Tuesday night, Gaetz and other lawmakers took to the House floor to voice support for marijuana law reform.
“Even though VA doctors/staff are not prohibited from sharing information about federally-approved cannabis clinical trials with patients, many VA offices believe mentioning these trials is illegal,” Gaetz’s fact sheet says. “This legislation codifies that healthcare providers at the VA are authorized to provide information about federally-approved cannabis clinical trials, and they are also allowed to fill out forms for veterans to participate in these trials.”
Besides Goodlatte, other initial cosponsors include Steve Cohen (D-TN), Alcee Hastings (D-FL), Darren Soto (D-FL), Dana Rohrabacher (R-FL), Karen Handel (R-GA), Earl Blumenauer (D-OR), Scott Taylor (R-VA), Carlos Curbelo (R-FL), Dina Titus(D-NV), Tom McClintock (R-CA), Ileana Ros-Lehtinen (R-FL), Darrell Issa (R-CA) and Barbara Lee (D-CA).
See below for the full section-by-section bill analysis circulated by Gaetz’s office:
Section 1: Title
Section 2: INCREASING THE NUMBER OF FEDERALLY-REGISTERED MANUFACTURERS OF CANNABIS FOR LEGITIMATE RESEARCH PURPOSES
PROBLEM: Currently, all federally-approved studies of medical cannabis get their product from one source, and it is extremely subpar. It is weak and often moldy, which can cause illness.
SOLUTION: this section requires there to be at least three federally-approved manufacturers of cannabis for legitimate research purposes.
The license to be a federally-approved manufacturer would be one year, with the (rare) exception of producers who wish to initiate a multi-year study or clinical trial.
Manufacturers would have to pass stringent background checks and meet a strict set of criteria, including growing at least ten different strains, and being able to test for at least 12 different cannabinoids. We must ensure that federally-approved growers are safe, will not run out of product, and are prepared to meet the needs of current and future researchers.
The strict standards set forth for medical cannabis manufacturers are not applied to other, non-research-based cannabis businesses. Keeping “research cannabis” separate means this legislation does not interfere with federal laws, state laws, or law enforcement. This bill makes no changes to the legal status of cannabis.
By ending the current monopoly on research-grade medical cannabis, and by improving choice among growers, research will be easier and better.
In addition to being subpar, federally-grown cannabis is scarce; there is not enough product. This section requires the Attorney General to annually assess whether there is an adequate and uninterrupted supply of research-grade cannabis.
Even though the DOJ is required to process new applicants for growing cannabis, they have dragged their feet, and a huge backlog of applications has built up. This section requires DOJ/DEA to act on any application to manufacture cannabis within one calendar year.
Some institutions (like universities) want to research cannabis, but cannot do so because cannabis research threatens their federal funding. This section includes “safe harbor” for researchers and institutions studying cannabis, and for patients in federally-approved medical cannabis clinical trials.
Section 3: PROVISION BY DEPARTMENT OF VETERANS AFFAIRS HEALTH CARE PROVIDERS OF INFORMATION REGARDING VETERAN PARTICIPATION IN FEDERALLY-APPROVED CANNABIS CLINICAL TRIALS
PROBLEM: even though VA doctors/staff are not prohibited from sharing information about federally-approved cannabis clinical trials with patients, many VA offices believe mentioning these trials is illegal.
SOLUTION: this section codifies that healthcare providers at the VA are authorized to provide information about federally-approved cannabis clinical trials, and they are also allowed to fill out forms for veterans to participate in these trials.
This section also clarifies that VA employees are allowed to receive information about cannabis clinical trials from researchers.
Finally, this section says that VA researchers (who are eligible to research Schedule 1 substances) may do research on cannabis.
This section provides clarity to VA employees, and allows VA researchers to study cannabis.
This bill is not a pathway to legalization, nor does it change the legal status of cannabis. It simply makes it easier to conduct federally-approved research. Many people say that we can’t change cannabis laws without doing more research. Fair enough. This legislation simply makes cannabis research safer, better, and more accessible.
Marijuana Banking Bill Would Save Federal Money, Congressional Budget Office Says
The federal government would save money if a bipartisan bill to give marijuana businesses access to banks is approved, according to a report released by the Congressional Budget Office (CBO) on Friday.
The legislation, which cleared the House Financial Services Committee in a bipartisan vote of 45 to 15 in March, would change federal law to protect financial institutions that service the cannabis industry from being penalized by regulators. That reform would set off a chain of events, beginning with a likely increase in the number of banks accepting deposits from those businesses, CBO reasoned.
Assuming the bill takes effect near the end of the 2019 fiscal year, the office estimates that starting in 2022, banks would see a $1.2 billion increase in deposits, and credit union deposits would grow by $200 million. By 2029, the amounts “would rise to $2.1 billion and $350 million, respectively.”
Because those deposits would have to be insured through the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA), the CBO took into account the possibility that individual financial institutions will fail, and the estimated cost of resolving those failures is $5 million.
That said, those direct spending costs would be “offset by assessments levied on insured financial institutions,” which would amount to about $9 million.
“As a result, CBO estimates, H.R. 1595 would decrease net direct spending by $4 million over the 2019-2029 period,” the office reported.
Rep. Ed Perlmutter (D-CO), the bill’s chief sponsor, told Marijuana Moment that its enactment would have benefits beyond fiscal savings.
“Getting cash off our streets and making our communities safer will come at no cost to the federal government and actually save money while providing a much-needed long-term banking solution for legitimate marijuana businesses across the country,” he said.
“This CBO score should only increase the significant momentum in Congress behind passing the SAFE Banking Act,” Neal Levine, CEO of the Cannabis Trade Federation, told Marijuana Moment. “It is now apparent that we can help diminish a serious threat to public safety at no net cost to the federal government. We look forward to the bill passing through the House and hope the Senate will follow suit.”
There are some implementation costs to take into account, CBO says. The administrative costs are estimated to be $3 million. But the FDIC and NCUA are able to charge premiums on the financial institutions they regulate to cover much of those costs. The total net administrative costs would, therefore, be about $1 million.
The Federal Reserve would also have to spend funds to implement the bill, and that would reduce remittances to the Treasury Department. Those remittances are considered revenue, which is expected to decrease by about $1 million if the legislation is implemented.
Then there are costs related to other provisions of the bill. Financial regulators would have to update and issue new guidance, which would “cost less than $500,000 over the 2019-2024 period.”
The legislation also requires the Government Accountability Office to study barriers to entry in the marijuana industry and to financial services for minority- and women-owned cannabis businesses. The costs are estimated to be less than $500,000 annually from 2020 to 2024.
The CBO also estimated that enacting the legislation “would not increase on-budget deficits by more than $5 billion in any of the four consecutive 10-year periods beginning in 2030.”
The CBO outlined “several noteworthy areas of uncertainty” that could change the calculus.
1. New guidance from federal financial regulators could be more or less stringent than existing guidance implemented under the Obama administration, which could impact the amount of deposits banks and credit unions will receive.
2. Data on cannabis-related deposits is currently “limited,” as federal restrictions have forced marijuana businesses to operate on a largely cash basis. That means CBO’s estimates on the amount of deposits financial institutions will see could end up being “greater or smaller.”
3. If those estimates do end up being different, costs associated with the bank and credit union insurance funds “could be higher or lower depending on the amount of premium collections and capital deposits and on changes in the resolution costs for financial institutions.”
Sahar Ayinehsazian, an associate attorney at Vicente Sederberg LLP who specializes in cannabis banking, told Marijuana Moment that most of the figures lined up with her expectations. However, given that many marijuana businesses have gravitated toward credit unions rather than banks, she said the estimate increase in deposits to those financial institutions may well end up being larger.
“Looking at the chances of this legislation passing from an economic standpoint, I think [the CBO score is] good news,” she said.
Other advocates agreed that the CBO estimate should help efforts to advance the bill.
“For years, cannabis advocates have been preaching the net benefits SAFE Banking would have on consumers, patients, financial institutions, regulators and taxpayers. This CBO cost estimate confirms that,” Michael Correia, director of government relations for the National Cannabis Industry Association, told Marijuana Moment. “The increase of insured deposits, coming from the added certainty this legislation brings, far outweighs the minor administrative costs to implement this bill.”
The House marijuana banking bill currently has 184 cosponsors, and a companion Senate version has 30 lawmakers signed on. The committee of jurisdiction in the upper chamber has not yet set a hearing or a vote, but pressure is increasing.
Banking associations from all 50 states urged the Senate to take up the legislation earlier this week. Other organizations that have called for a resolution to the cannabis banking dilemma include the National Association of Attorneys General, which has endorsed the bill, and the National Association of State Treasurers, representing state treasurers and finance officials, which adopted a resolution last week in favor of the legislation’s passage.
Want 4 million more reasons why members of Congress should support the #SAFEBankingAct, which would allow cannabis businesses to access the banking system in the 33 states where it’s legal? @USCBO says the legislation will save taxpayers $4M over 10 years.
— American Bankers Association (@ABABankers) May 24, 2019
The new analysis is just the third time that the CBO, which is mandated to score bills that pass full committees, has issued a report on the economic impact of standalone cannabis legislation. The agency scored two marijuana research bills that cleared committees last year.
This story was updated to include comment from Perlmutter and Correia.
Federal Small Business Administration Pressed On Supporting Marijuana Industry
Sen. Jacky Rosen (D-NV) pressed a federal official responsible for advocating for small businesses on Wednesday about whether existing laws and regulations are preventing the growth of state-legal marijuana markets.
The line of questioning comes as members of Congress are preparing legislation aimed at removing barriers to small business assistance for cannabis industry participants.
The senator said at a hearing of the Senate Small Business and Entrepreneurship Committee that her state’s legal industry is attracting small businesses and entrepreneurs who are selling millions of dollars of product each month. She asked Major Clark, acting chief counsel of the office of advocacy at the Small Business Administration (SBA), about the unique barriers these companies face under federal prohibition.
“Senator, that’s a difficult question,” Clark replied. “We have not actually studied the issue of marijuana in that regard, and we have not because the federal government has not yet legalized it.”
“We do, in conversations with a lot of businesses, get inquires as to what they can do and how they can do it. But to actually do an analysis of it, we have not yet done that,” he said. “I’m sure that as soon as the federal government decides to legalize this substance, we will begin to study its impact and the ability to use it in a more economical context within the state.”
Watch the conversation about small business assistance for cannabis operators at 35:50 in the video below:
Rosen followed up to get Clark’s opinion about whether marijuana companies would benefit from some of the guidelines and resources the SBA offers to small businesses in other industries.
“These types of businesses can benefit from some of these types of things, but again, because this issue is an issue that has not reached the surface of being legalized, we have actually stayed away from trying to advise these businesses on these particular aspects,” he said.
Nevada’s cannabis industry cannot thrive without access to financial services. At yesterday’s @SmallBizCmte hearing, I asked what steps @SBAgov is taking to break down regulatory barriers for our nation’s legal marijuana businesses to ensure they can continue to grow. pic.twitter.com/lyfXGwpoRf
— Senator Jacky Rosen (@SenJackyRosen) May 24, 2019
Sen. James Lankford (R-OK), chair of the committee, weighed in on the issue after the Rosen’s time expired, saying that he recognizes the difficulty that federal agencies face when it comes to regulating a controlled substance.
“It is a unique challenge dealing with a Schedule I drug on the federal side and to also know that some states, including my own, have said that they want to allow it,” Lankford said, referring to the medical cannabis law that Oklahoma voters approved in 2018. “And the federal government and the [Food and Drug Administration] continues to study it and say there’s no medicinal gain from this product.”
“It’s a Schedule I drug. I get it,” he said. “The science, and whether it is SBA or whoever it is continues to be able to deal with that.”
While lawmakers push to get marijuana businesses access to federally authorized financial services, industry advocates say that SBA-specific reform legislation may be on the horizon.
The day after Rosen questioned the SBA official about cannabis policy, Khurshid Khoja, a board member for the National Cannabis Industry Association, said at a press conference on Capitol Hill that a bill was being drafted to “essentially get SBA services for cannabis businesses and for cannabis businesses from disproportionately impacted communities.”
Watch the SBA reform discussion at about 32:15 in the video below:
“The House Small Business Committee is looking into the issue and is interested in holding a hearing and drafting legislation this summer that addresses these issues,” a cannabis policy lobbyist who didn’t wish to be named in order to discuss plans that are in development, told Marijuana Moment separately.
Photo courtesy of Brian Shamblen.
GOP Congressman Exposes Flaws In VA Marijuana Research Projects
Rep. Matt Gaetz (R-FL) emphasized the importance conducting clinical trials on medical marijuana at the U.S. Department of Veterans Affairs (VA) on Tuesday, a topic on which he has often focused.
He also criticized the catch-22 of VA cannabis research, arguing that while the department is able to conduct clinical trials on marijuana, it doesn’t effectively publicize those studies, leaving veterans who might be interested in participating in the dark.
The congressman started by asking whether Mike Colston, director of mental health policy and oversight at the Department of Defense, felt that giving veterans access to medical cannabis could reduce suicides.
Colston said “there’s far more research to be done” and that there’s “insufficient evidence for or against that position.”
Gaetz cited research showing reductions in opioid use in states that have loosened cannabis laws, and he questioned whether “the current offramp for opioid addiction,” which typically involves prescribing long-term opioids that are less potent and less prone to abuse, “is a more effective offramp than medical cannabis.”
“I just think those are the three evidence-based therapies right now that meet the medical bar,” Colston said, referring to bupenehprine, methadone and naltrexone. “Obviously more research can change that.”
That prompted Gaetz to expand on VA policy as it pertains to medical cannabis. He asked for confirmation that the department’s doctors cannot currently recommend marijuana to veterans in states where it’s legal.
They can’t do that because “there’s a federal law against it right now,” Keita Franklin, national director of suicide prevention at the VA, claimed. (This has been a point of contention for legalization advocates, who argue that only the VA’s own internal administrative policies, and not an overarching federal law, blocks such recommendations.)
But VA officials can conduct clinical trials on marijuana, Franklin said.
“We have two ongoing research studies going on right now in this space,” she said. “I think we are open to research, yes.”
The congressman wanted to know if the VA publishes information about these studies and where to find it. The VA official wasn’t sure—and that was exactly Gaetz’s point.
“I don’t think anyone is clear, which is the source of my frustration because I think that there are a lot of these clinical trials that are seeking veterans,” he said. “The VA, due to a lack of clarity, won’t publicize that information or make it available, and then we’re unable to do the research that Captain Colston says is necessary to advance additional options for veterans trying to get off opioids and to stop them from killing themselves.”
Lawmakers have introduced legislation this session that would allow VA doctors to issue medical cannabis recommendations and require the department to conduct clinical trials on the plant’s potential therapeutic benefits for veterans, among other cannabis and veterans-related bills.
But if the VA is mandated to research the plant, Gaetz wants the department to better publicize the studies so that would-be participants actually know about them.
Photo courtesy of YouTube.