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.
Hemp Farmers Guaranteed Federal Crop Insurance Through Disaster Bill Amendment
The Senate approved a bill on Thursday that is mostly focused on providing relief aid to areas impacted by natural disasters—but it also includes a provision ensuring that hemp farmers qualify for federal crop insurance.
The hemp section was inserted into the legislation at the behest of Senate Majority Leader Mitch McConnell (R-KY). Though similar language already exists in the 2018 Farm Bill, which federally legalized hemp and its derivatives, the senator took an added measure to provide clarity to farmers who want access to the insurance option ahead of the 2020 planting season.
“Beginning not later than the 2020 reinsurance year, the Federal Crop Insurance Corporation shall offer coverage under the wholefarm revenue protection insurance policy (or a successor policy or plan of insurance) for hemp (as defined in section 297A of the Agricultural Marketing Act of 1946 (7 U.S.C. 1639o)),” text of the provision states.
“Provided, That such amount is designated by the Congress as being for an emergency requirement pursuant to section 251(b)(2)(A)(i) of the Balanced Budget and Emergency Deficit Control Act of 1985,” it continues.
The Senate passed the bill by a vote of 85 to 8. The House is expected to approve the disaster legislation by unanimous consent by the end of the week, and President Donald Trump has offered assurances that he will sign it into law.
The legalization of hemp has sparked strong interest among farmers in states from Colorado to Kentucky, but it will still be some time until the U.S. Department of Agriculture (USDA) develops and implements its federal regulatory guidelines.
Agriculture Secretary Sonny Perdue said that while his department would not rush its rulemaking process, it still intends to implement the regulations before the 2020 planting season. After that point, USDA would be able to approve regulatory plans submitted by individual states.
McConnell, who championed the hemp legalization provision, has urged the quick and effective implementation of such regulations, and he’s suggested that he’d introduce standalone legislation to resolve any “glitches” in its rollout.
While not a standalone bill, the hemp-focused provision of the disaster legislation seems to indicate he plans to make good on that promise.
The senator has made much of his pro-hemp agenda, arguing last month that his role in reforming hemp laws is at “the top of the list” of reasons why voters should reelect him in 2020. He also cited hemp as an agricultural alternative to tobacco when he introduced a bill this week to raise the minimum age requirement to purchase tobacco products from 18 to 21.
Congressional Report Urges DEA Action On Marijuana Cultivation Applications
A congressional committee report attached a large-scale spending bill containing marijuana-related protections has been amended to include a call for the Drug Enforcement Administration (DEA) to finally act on long-pending applications for federal licenses to grow cannabis for research purposes.
The legislation itself, which was released by a House subcommittee last week, could still be further amended as it goes through the legislative process. But as approved by the full House Appropriations Committee on Wednesday, the bill stipulates that none of the Fiscal Year 2020 funds it allocates may be used by the Justice Department to interfere in state-legal medical marijuana programs.
The provision has been federal law since 2014, but its inclusion in the initial subcommittee proposal as introduced is the earliest it has ever surfaced in the legislative process for the annual spending bill. While advocates hoped broader protections for adult-use cannabis states would also be included in the base legislation, that rider isn’t in the bill—at least not yet.
There was also a technical problem with the legislation that wasn’t resolved by the committee manager’s amendment, the text of which has not been posted but was obtained by Marijuana Moment. The medical cannabis provision lists the states and territories its protections apply to—but it left out the U.S. Virgin Islands, which legalized medical marijuana in January.
Similar errors have occurred in past versions of the legislation, when legal medical cannabis states North Dakota and Indiana were not included in an earlier version of the rider, and advocates hope that the language will be amended on the House floor.
But while that fix didn’t make it into the bill at the committee level, the directive to the DEA about cannabis cultivation licenses was added to the committee report attached to the bill via the manager’s amendment.
“The Committee urges the Drug Enforcement Administration to expeditiously process any pending applications for authorization to produce marijuana exclusively for us in medical research,” the revised report states.
The DEA has faced significant pressure from lawmakers, advocates and scientists to approve applications for additional marijuana manufacturers to produce research-grade cannabis. Currently there is only one federally authorized facility, and the quality of its product has long been criticized.
DEA announced a process to license additional cultivators during the final months of the Obama administration in 2016, but the Justice Department under then-Attorney General Jeff Sessions refused to act on more than two dozen pending applications. Current Attorney General William Barr has pledged to look into the matter, and has said he agrees that approving additional manufacturers is necessary.
Advocates hope that the new committee report language could help to finally spur movement at the department.
“The DEA is a disaster on marijuana and they need to stop obstructing research ASAP,” Michael Collins, director of national affairs for the Drug Policy Alliance, told Marijuana Moment.
“It’s beyond ridiculous that they won’t act on these applications. Even prohibitionists like Project SAM agree,” he added, referring to the anti-legalization group Smart Approaches to Marijuana. “And when the guys who get their drug policy from the 1920s say you’re behind the times, that’s pretty embarrassing.”
Justin Strekal, political director for NORML, said that Sessions “was the only government official opposed to cannabis research, and he is no longer employed.”
“Now is the time for AG Barr to follow through on his commitment and allow researchers pathways to consumer-grade cannabis,” he said.
Another provision included in the appropriations bill would offer protections for states that have implemented industrial hemp pilot programs under the 2014 Farm Bill. The Justice Department wouldn’t be allowed to use its funds to interfere in such programs under the proposal.
Of course, the 2018 version of the agriculture legislation removed hemp and its derivatives from the Controlled Substances Act, shifting regulatory responsibility onto the U.S. Department of Agriculture instead of the Justice Department, so that provision may not be especially relevant going forward.
The bill will next head to the Rules Committee, which will decide the list of amendments—potentially including additional cannabis-related ones—that can be considered on the House floor.
Read the text of the manager’s amendment with the DEA marijuana language below:
Managers Amendment FINAL by on Scribd
Photo courtesy of Mike Latimer.
House Committee Approves Immigration Bill With Marijuana Protections
A congressional committee voted in favor of a wide-ranging immigration bill on Wednesday, and the legislation includes marijuana-related protections for people who were brought to the U.S. as children.
Under the DREAM Act as approved, having low-level cannabis convictions, or engaging in state-legal cannabis-related activities such as working in the regulated marijuana industry, would not be counted against applications for permanent resident status for so-called Dreamers.
The House Judiciary Committee advanced the bill in a 19-10 vote, without specific discussion about the cannabis provisions.
The section concerning eligibility for permanent status stipules that having three or more misdemeanor convictions could be grounds for ineligibility—but the bill creates an exemption for “simple possession of cannabis or cannabis-related paraphernalia” or “any offense involving cannabis or cannabis-related paraphernalia which is no longer prosecutable in the State in which the conviction was entered.”
The text seems to indicate that immigrants who engaged in cannabis-related activities prior to a state reforming its marijuana laws would still be protected even if that activity was not state-legal at the time.
Similar language appears under a separate section about grounds for a provisional denial of an application for adjustment of status. Applicants would be exempted from such a denial if their conviction was for “simple possession of cannabis or cannabis-related paraphernalia” or “any offense involving cannabis or cannabis-related paraphernalia which is no longer prosecutable in the State in which the conviction was entered.”
A previous version of the legislation, filed in March, didn’t include the specific eligibility requirements related to certain criminal activity, nor did it contain any explicit marijuana protections. It’s possible that House Democrats thought up the exemptions during a brainstorming session earlier this month about potential bill revisions aimed at building more support.
The next likely stop for the DREAM Act will be the House Rules Committee before heading to a full floor vote.
There’s been growing interest in reforming marijuana policies as they apply to immigrants and visitors to the U.S.
Earlier this month, four congressional Democrats sent a letter to the head of the Justice Department and Department of Homeland Security to end the practice of rejecting naturalization applications solely because the applicant worked in a state-legal marijuana market. That came after the U.S. Citizenship and Immigration Services (USCIS) released a memo specifying that such activity could render them morally unfit for citizenship.
And last week, Rep. Earl Blumenauer (D-OR) introduced legislation aimed at resolving marijuana-related border issues, whereby visitors who admit to using cannabis or working in their country’s legal industry can be denied entrance.
Photo courtesy of Philip Steffan.