The first marijuana hearing of the 116th Congress kicked off on Wednesday. A House financial subcommittee asked witnesses about how banking access can improve public safety, how operating on a cash-only basis inhibits transparency and, at one point, whether the cash at these businesses smells like cannabis.
“The absence of a broader, permanent regulatory framework continues to keep nearly all banks out of this growing industry despite a clear interest,” Rep. Gregory Meeks (D-NY), chair of the subcommittee, said at the start of the session. “Today’s hearing will allow us to begin consideration of draft legislation to bring transparency, accountability and address a major driver of violent crime in this space.”
Presiding over the Consumer Protection and Financial Services Subcommittee hearing on "Challenges and Solutions: Access to Banking Services for Cannabis-Related Businesses" pic.twitter.com/TC0soeE2RM
— Rep. Gregory Meeks (@RepGregoryMeeks) February 13, 2019
Prior to the hearing, a bipartisan group of lawmakers circulated a draft bill that would shield banks from being penalized by federal financial regulators and affirm that profits from cannabis-related transactions “shall not be considered as proceeds from an unlawful activity.”
“Today, after six years, we finally have a hearing, and it comes too late,” Rep. Denny Heck (D-WA), who is a cosponsor of the the legislation, said in his opening remarks. “Too late to prevent dozens of armed robberies in my home state of Washington. Too late for Travis Mason… a 24-year-old Marine veteran in Aurora, Colorado, who reported for work as a security guard and Green Heart Dispensary on June 18, 2016, and was shot dead that night by an armed robber.”
“We have the power in this committee to prevent murders and armed robberies,” he said, referring to the fact that preventing marijuana businesses from accessing banks means that they must operate on an all-cash basis. “We must use it and we must use it now because we are already late.”
We've needed banking access for cannabis businesses for the past six years. It is unacceptable for Congress to allow such a critical public safety threat to go unaddressed. We're late, and it's past time to pass the #SAFEBanking Act. pic.twitter.com/Lzcm85YgyV
— Denny Heck (@RepDennyHeck) February 13, 2019
Rep. Ed Perlmutter (D-CO), another bill cosponsor, said that if lawmakers oppose legalization, “that’s their business.”
“But the American voters have spoken, and continue to speak, and the fact is you can’t put the genie back in the bottle,” he said. “Prohibition is over.”
Today’s hearing is a big deal for the thousands of employees, businesses and communities who have been put at risk b/c they have been forced to deal in piles of cash. We need #SAFEBanking to get cash off the streets & make our communities safer. https://t.co/fEmJbQc2X8
— Rep. Ed Perlmutter (@RepPerlmutter) February 13, 2019
I appreciate the Subcommittee allowing me to testify during the hearing. This comes 6 years after @RepDennyHeck & I first introduced our #SAFEBanking legislation. I also appreciate @RepSteveStivers & @WarrenDavidson bipartisan support of solving the cannabis banking problem. https://t.co/6ChK0qVc87
— Rep. Ed Perlmutter (@RepPerlmutter) February 13, 2019
Witnesses at the hearing included California State Treasurer Fiona Ma, Law Enforcement Action Partnership (LEAP) Executive Director Major Neill Franklin, banking representatives, a D.C.-based medical marijuana dispensary owner and the chair of the anti-legalization group Smart Approaches to Marijuana (SAM).
“The Committee is undoubtedly aware that cannabis businesses are not alone in struggling to gain access to banking—even though theirs is the most difficult situation. Any business that handles significant amounts of currency is also subject to greater scrutiny by the financial services industry for all of the reasons that are well understood by members of this committee,” Ma said in written testimony.
“W/o a bank account, legal #marijuana businesses must operate on a cash basis, making them targets for robberies, supporters of the legislation testified. In CA, cannabis dispensaries have dropped off duffel bags & suitcases full of cash to pay their taxes…" @fionama @FSCDems
— CA State Treasurer (@CalTreasurer) February 13, 2019
She said “an effective safe harbor mechanism in federal law promotes the safety of the public, improves the efficiency of collecting the taxes and fees we use to regulate the industry, and does not allow the banks and credit unions to totally abdicate their responsibilities to know their customers and avoid illicit money laundering.”
Rep. Ted Lieu (D-CA) said he was glad to see Ma testify. Legal marijuana “is here to stay & entrepreneurs & consumers deserve safe banking options,” he wrote on Twitter.
Glad to see @CalTreasurer @fionama as one of the witnesses in today's @FSCDems hearing on access to banking services for cannabis-related businesses. Legal #cannabis is here to stay & entrepreneurs & consumers deserve safe banking options. Watch LIVE here: https://t.co/KfPk9zVpaE
— Rep. Ted Lieu (@RepTedLieu) February 13, 2019
Rep. Dina Titus (D-NV) echoed that point and said that Nevada “is proof that the era of marijuana prohibition is over” and that it’s “time for the federal government to start acting like it.”
The first ever Congressional hearing on marijuana banking is taking place right now. Nevada is proof that the era of marijuana prohibition is over. It's time for the federal government to start acting like it.
— Dina Titus (@repdinatitus) February 13, 2019
Franklin, a retired Maryland police officer, said that current laws “encourage tax fraud, add expensive monitoring and bookkeeping expenses and—most importantly—leave legitimate businesses vulnerable to theft, robbery and the violence that accompany those crimes.”
“I’m not one for fear mongering—what I testify to here today is rooted in experience and research,” he said. “Any police officer who has worked the street, or investigated enough robberies, will testify to the same regarding any business forced to handle large amounts of cash.”
He told members of the subcommittee that the “safety of thousands of employees, business owners, security personnel, police officers and community members is in your hands.”
Rep. Maxine Waters (D-CA), chair of the full House Financial Services Committee, thanked Meeks for making this the first subcommittee hearing of the session and called the issue “so important.”
“So many people have been waiting on it,” Waters said before the subcommittee broke for a recess. “I appreciate it so much.”
The hearing was well-attended, as Rep. Alexandria Ocasio-Cortez (D-NY) highlighted in a tweet showing a line of people holding places in line for lobbyists and “those who can afford it pay people to hold their spot.”
Apparently this is a normal practice, and people don’t bat an eye.
The first few people in line are guaranteed a seat in a given hearing.
This was the hearing for marijuana banking laws. Lobbyists and those who can afford it pay people to hold their spot so they get in 1st.
— Alexandria Ocasio-Cortez (@AOC) February 13, 2019
During the hearing, Ocasio-Cortez asked whether providing banking access to the marijuana industry would be “compounding the racial wealth gap right now,” giving an advantage to mostly white, wealthy business owners over individuals from communities disproportionately impacted by the drug war.
Corey Barnette, the DC marijuana business owner, said he agreed that the industry as it exists today is not reflective of society as a whole, but he also argued that banking access can provide even smaller prospective business owners with means “within reach” to start a cannabis company.
During one of the lighter moments in the hearing, Rep. Rashida Tlaib (D-MI) asked Barnette whether the cash at his dispensary smelled like marijuana.
“I heard it’s true,” Tlaib said. “The money does smell, correct?”
“That has been the case in some instances,” Barnette replied.
While SAM board chair Jonathon Talcott was seldom addressed by members throughout the hearing, Rep. Roger Williams (R-TX) asked the witness whether it was “a universally accepted fact that marijuana is not a gateway drug and has no negative negative impacts to public health.”
Talcott claimed that cannabis “is very clearly a gateway drug” and peddled anecdotes about “marijuana-induced psychosis” in states that have legalized.
At the Consumer Protection and Financial Institutions Subcommittee hearing where we're discussing the challenges and solutions concerning cannabis-related businesses and their access to banking services. pic.twitter.com/MCjOwlyNOf
— Rep. Jennifer Wexton (@RepWexton) February 13, 2019
Heck, one of the banking bill cosponsors, addressed what’s motivated him to be an advocate for legislation on financial services solutions for the marijuana industry. He said it was his brother, who died after being exposed to herbicides while serving in the Vietnam War.
“Toward the end of his life, the only relief he could find was from the illegal consumption of marijuana,” Heck said. “I’ve always thought and lived with the irony that the same nation that asked my brother to put on a uniform and put his life at risk—in an activity that eventually did in fact take his life—held him to be criminal when he found the relief in the only way he could.”
And if creating a safeguard for banks makes it easier for marijuana businesses to provide that relief to patients, then that’s reason enough to fight for reform, Heck said.
“Congress has an opportunity to make a simple policy change that will greatly benefit communities and small businesses by approving cannabis banking reform,” Aaron Smith, executive director of the National Cannabis Industry Association, said in a press release. “Representatives Perlmutter and Heck should be commended for pushing for this hearing so that this issue can get the attention it deserves and we can move toward a sensible policy that will increase public safety and transparency in this burgeoning industry.”
Rep. Earl Blumenauer (D-OR), who released a blueprint outlining the legislative path to marijuana legalization, said in a press release that tackling “the access to banking issue” is “one of the first dominos that should fall.”
The hearing shows that Congress is “finally making progress toward addressing the irrational, unfair, and unsafe denial of regular banking services for state-legal marijuana businesses around the country,” he said.
“Today’s hearing was a big deal for the thousands of employees, businesses and communities across this country who have been put at risk because they have been forced to deal in piles of cash while Congress sticks its head in the sand,” Perlmutter, the other bill cosponsor, said in a press release. “The American voters have spoken and continue to speak, and the fact is you can’t put the genie back in the bottle. The SAFE Banking Act is focused solely on taking cash off the streets and making our communities safer, and only Congress can take these steps to provide this certainty for businesses and financial institutions across the country.”
I appreciate today's first-ever hearing on #cannabis banking & I encourage all my colleagues to consider the #SAFEBanking Act as a way to get cash off the streets and make our communities safer. Only Congress can provide certainty for these businesses and financial institutions. pic.twitter.com/o1fHWXNOcr
— Rep. Ed Perlmutter (@RepPerlmutter) February 14, 2019
47 states plus the District of Columbia have spoken & legalized some form of recreational or medical marijuana, including CBD. 318.2 million people live in these 47 states – that’s 97.7% of the population. Time to align state and federal law on this issue with #SAFEBanking.
— Rep. Ed Perlmutter (@RepPerlmutter) February 13, 2019
“We listened to hours of testimony today about the dangerous position we put store owners and employees in by forcing them to do all of their business in cash. We can fix this. We don’t have to force them to operate in a way that makes it difficult to secure and track their funds,” Heck added. “Regardless of our views of marijuana use, the voters have decided in states all over this country that they want recreational and medicinal markets. To continue to do nothing to protect public safety would be negligence.”
Photo courtesy of the House Financial Services Committee/YouTube.
New Hampshire Marijuana Legalization Effort Runs Up Against New Republican Legislature
“Eventually it will get passed. But I don’t think it will happen until we get a new governor.”
By Christian Wade | The Center Square
Marijuana advocates are continuing a push to legalize the drug for recreational use in New Hampshire, but the effort faces an unlikely path in the Republican-controlled Legislature.
A bipartisan bill filed in the state House of Representatives this month would, if approved, legalize recreational cannabis for adults over 21 and set up a system of regulation and taxation for the drug that would allow retail sales. It’s similar to proposals filed in previous legislative sessions, all of which have failed to win approval.
“The battle continues,” said Rep. Rebecca McWilliams, D-Concord, a primary sponsor of the bill. “We keep refining it and negotiating and trying to come up with something that could potentially get to the two-thirds vote needed to override the governor’s veto.”
The proposal would allow adults 21 and older to possess up to one ounce of weed and would authorize regulated cultivation and retail sales. Adults would be allowed to grow up to six marijuana plants at home. A state-run cannabis commission would set regulations and oversee the new industry. The proposal calls for a 9% tax on recreational pot sales.
But the measure faces a steep climb in the state legislature—which swung back to the GOP in the November 3 elections—not to mention the threat of a veto by Republican Gov. Chris Sununu, who opposes legalization.
McWilliams acknowledges the measure faces long odds in the biennial legislative session and said lawmakers who support the effort lack the votes to override a Sununu veto. But she said the effort is building more support with every passing year.
“Eventually it will get passed,” she said. “But I don’t think it will happen until we get a new governor.”
While marijuana remains an illegal drug under federal law, she said there’s a chance the new Democrat-controlled Congress and White House could lift the federal prohibition on pot.
Nationally, 68 percent of Americans back the legalization of marijuana, according to a recent Gallup poll, which noted that support has been inching up steadily over the years.
To date, 15 states, the District of Columbia, and the U.S. territory of Guam have legalized recreational marijuana. Thirty-six states have medical marijuana programs.
New Hampshire has often been described as a “cannabis island” with neighboring states and Canada allowing recreational marijuana cultivation and retail sales.
While the Granite State decriminalized marijuana possession in 2017, recreational growing and sales are not authorized.
In 2014, the Democrat-controlled House approved a legalization bill but it failed to pass the Senate. Similar proposals have been refiled every session, but have failed to gain traction.
The state has also allowed medical marijuana dispensaries since 2013, but cultivating the drug for personal use is still a felony.
Lawmakers approved a bill in 2019 that would have allowed medical pot patients to grow their own supply, but Sununu vetoed it, citing public safety concerns.
This piece was first published by The Center Square.
American Medical Association Asks Court To Overturn Medical Marijuana Vote In Mississippi
Two medical associations are throwing their support behind a lawsuit challenging the constitutionality of the medical marijuana ballot initiative that Mississippi voters overwhelmingly approved in November, arguing that it creates “risks to public health” and places a “burden” on physicians.
The American Medical Association (AMA) and its state affiliate, the Mississippi State Medical Association (MSMA), recently filed an amicus brief backing the legal challenge being considered by the state Supreme Court, which was brought by the city of Madison just days before the election.
The lawsuit argues that legalization proposal is invalid because of a state law that dictates the percentage of signatures required per district to qualify a ballot initiative.
While Mississippi’s secretary of state and attorney general have strongly criticized the suit, calling it “woefully untimely” and contesting the merits, AMA and MSMA are backing the challenge nonetheless.
“Making sure the constitutional amendment map is followed is always important, but given the nature of the initiative at issue and the substantial ramifications it poses for Mississippi’s public health and the medical community, particular care is warranted here,” the brief states, according to a blog post published by AMA on Friday.
The groups further argue that, outside of the statutory concerns outlined in the suit, the medical cannabis legalization initiative “poses significant risks to public health and puts a burden on Mississippi physicians.”
“While it is possible there may be beneficial medicinal uses of marijuana, numerous evidence-based studies demonstrate that significant deleterious effects abound,” the brief states, adding “without question, the public health risks are immense.”
Additionally, because marijuana remains federally illegal, the voter-approved measure would put physicians in “quite the pinch,” it says. “Yet physicians will be expected by their patients (though perhaps not required by Initiative 65) to sign off on certifications to receive their supply. Perhaps no liability will lie under state law, but what about federal law?”
In fact, federal courts have ruled that doctors have a First Amendment right to discuss medical cannabis with their patients without risking federal sanction.
“As everyone knows, all it takes to file a lawsuit is a piece of paper and a filing fee, so even if a physician is judged correctly and immunity is appropriate, the matter will still have to be litigated,” the AMA and MSMA brief continues. “And with increased exposure and litigation comes increased costs, not least of which is rising professional liability insurance premiums.”
The legal challenge brought by Madison cites a state law stipulating that “signatures of the qualified electors from any congressional district shall not exceed one-fifth (1/5) of the total number of signatures required to qualify an initiative petition for placement upon the ballot.” But that policy went into effect when Mississippi had five congressional districts, and that’s since been reduced to four, making it mathematically impossible to adhere to.
Advocates see desperation in the court filing, with the medical associations now making a last-ditch effort to overturn the will of voters.
“These are cynical attempts to undermine the democratic process,” Carly Wolf, state policies coordinator for NORML, said. “Legalization opponents have shown time and time again that they cannot succeed in either the court of public opinion or at the ballot box.”
“Thus, they are now asking judges to set aside the votes of over a million Americans in a desperate effort to override undisputed election outcomes,” she said. “Whether or not one supports marijuana legalization, Americans should be outraged at these overtly undemocratic tactics.”
Paul Armentano, deputy director of NORML, said “AMA’s position is woefully out of step with both public opinion and scientific consensus, as well as with the opinions of the majority of physicians.”
“It is regrettable that this organization would go on record in attempting to nullify the vote of a supermajority of Mississippi voters,” he said.
It’s also not especially surprising that these particular groups would join in this legal challenge given their earlier attempts to get voters to reject the reform initiative.
Weeks before the vote, AMA and MSMA circulated a sample ballot that instructed voters on how to reject the activist-led cannabis measure. The mailers said the associations were “asking for you to join us in educating and encouraging our population to vote against Initiative 65.”
Ultimately, however, nearly 74 percent of Mississippi voters approved the legalization initiative.
It will allow patients with debilitating medical issues to legally obtain marijuana after getting a doctor’s recommendation. It includes 22 qualifying conditions such as cancer, chronic pain and post-traumatic stress disorder, and patients would be allowed to possess up to 2.5 ounces of marijuana per 14-day period.
Marijuana Moment reached out to AMA and MSMA for additional information about the brief, which has not yet been posted on the state court’s public docket, but representative did not immediately respond.
The Mississippi case is just one example of legalization opponents asking the courts to overturn the will of voters who approve marijuana reform.
In South Dakota, another legal challenge against the constitutionality of a legalization initiative is playing out. In this case, plaintiffs—with the backing of Gov. Kristi Noem (R)—are claiming that the recreational marijuana measure violates a state statute requiring that proposals that appear on the ballot on deal with a single subject.
Over in Montana, opponents of a voter-approved initiative to legalize cannabis for adult use attempted to get the state Supreme Court to invalidate the proposal ahead of the vote, but the justices rejected that request, arguing that they failed to establish the urgency needed to skip the lower court adjudication process. They didn’t rule on the merits, however.
The plaintiffs then announced they were pursuing action in a lower court, arguing that the statutory proposal unlawfully appropriates funds, violating a portion of the state Constitution that prohibits such allocations from being included in a citizen initiative.
Separately, the Nebraska Supreme Court ruled in September that a medical marijuana legalization initiative could not appear on the state’s November ballot following a legal challenge, even though activists collected enough signatures to qualify.
The court determined that the measure violated Nebraska’s single-subject rule that limits the scope of what can be placed on the ballot before voters. Activists have already introduced a new initiative that they say will satisfy the court’s interpretation of state law—and their also working on a broader adult-use legalization measure.
New York Governor Releases More Details On Marijuana Legalization Proposal
New York Gov. Andrew Cuomo (D) has released more details of his marijuana legalization proposal, including plans to reinvest in communities most impacted by the war on drugs.
Following his State of the State address last week, in which the governor said enacting the reform could boost the economy while promoting social equity, he unveiled an outline of his agenda that provides more insights into what the state’s legal cannabis market could look like. Next, he’s expected to release the full budget proposal on Tuesday, which will contain much more detailed legislative language.
The State of the State Book released on Friday says Cuomo’s upcoming proposal would create an Office of Cannabis Management to regulate the program, establish national standards and best practices to encourage responsible marijuana consumption and provide for “robust social and economic equity benefits to ensure New York’s law will create an egalitarian adult-use market structure that does not just facilitate market entry but ensures sustained market share for entrepreneurs in communities that have been most harmed by cannabis prohibition.”
Notably, it also states that the plan will “correct past harms by investing in areas that have disproportionally been impacted by the war on drugs, understanding that expunging past cannabis convictions helps to correct the injustice faced on the day that someone was arrested, but fails to correct the lasting harms that arrest has had on citizens, families, and communities.”
That’s important, as the governor in past years has pushed for marijuana tax revenue to be put into the state’s general fund, rather than specifically allocating resources for community reinvestment, as some lawmakers and advocates have urged.
That said, it remains to be seen exactly how the governor’s forthcoming budget will go about “investing” in communities that have been harmed by past prohibition enforcement and whether it will be deemed adequate by legislators and activists who have balked at his past proposals.
Cuomo has included legalization in his last two annual budget plans, but the issue has consistently stalled over details in negotiations.
That said, the legislature will have more influence this year after Senate Democrats secured a supermajority in the November election. If Cuomo were to veto any bill over details he didn’t like, they could potentially have enough votes to override him.
The governor’s new outline also talks about making investments in research into harm reduction and education campaigns to deter youth use and impaired driving.
“Cannabis legalization will create more than 60,000 new jobs, spurring $3.5 billion in economic activity and generating an estimated $300 million in tax revenue when fully implemented,” the document says.
A separate section describes plans to bolster the state’s hemp industry.
To accomplish that, Cuomo will call together a workgroup “composed of hemp growers, researchers, producers, processors, manufacturers, and trade associations to make recommendations for the further development of hemp as a multi-use agricultural commodity and a mature cannabinoid wellness market.”
“The hemp workgroup will explore ways to provide more opportunities for New York growers and manufacturers and work to help facilitate the development of safe New York products that will meet the needs of informed consumers,” the plan says. The group’s recommendations could build upon regulations for hemp and CBD that were developed last year.
But for many advocates, it’s recreational legalization that has the spotlight this session. And to that end, New York lawmakers have made comments in recent months that indicate they feel the reform is inevitable, despite differing opinions on the specifics.
The top Republican in the New York Assembly said last month that he expects the legislature to legalize cannabis this coming session.
Senate Majority Leader Andrea Stewart-Cousins (D) said in November that she also anticipates that the reform will advance next year, though she noted that lawmakers will still have to decide on how tax revenue from marijuana sales is distributed.
Cuomo also said that month that the “pressure will be on” to legalize cannabis in the state and lawmakers will approve it “this year” to boost the economy amid the health crisis.
The push to legalize in New York could also be bolstered by the fact that voters in neighboring New Jersey approved a legalization referendum in November.
Legislators prefiled a bill to legalize cannabis in New York earlier this month. The legislation, introduced in the Senate by Sen. Liz Krueger (D) and 18 other lawmakers, is identical to a version she filed last year that did not advance.
Separately, several other bills that focus on medical marijuana were recently prefiled in New York, and they touch on a wide range of topics—from tenants’ rights for medical cannabis patients to health insurance coverage for marijuana products.