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Key Moments From The First Marijuana Hearing Of The New Congress

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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.”

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.”

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.”

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.

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.

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.”

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.”

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.

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.”

“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.”

This Is The Marijuana Banking Bill Democrats Plan To Pass In 2019: Draft Text Released

Photo courtesy of the House Financial Services Committee/YouTube.

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.

Kyle Jaeger is Marijuana Moment's Los Angeles-based associate editor. His work has also appeared in High Times, VICE and attn.

Politics

California Governor Says Marijuana Legalization Is A ‘Civil Rights’ Matter Amid Mass Protests Over Racial Injustice

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The governor of California discussed systemic racism and injustice that is inspiring mass protests across the country in a Friday speech, and he touted the state’s legalization of marijuana as an example of how it has addressed racial disparities in the criminal justice system.

Gov. Gavin Newsom (D) said at a press conference that he’s “very proud of this state” for going beyond issues such as implicit bias in policing and the “deadly use of force.” California’s leadership helped advance “a conversation about broader criminal justice reform to address the issues of the war on drugs” and “race-based sentencing,” he said.

“That’s why the state was one of the early adopters of a new approach as it relates to cannabis reform. Legalization around adult-use of marijuana,” he said. “It was a civil rights call from our perspective.”

“I was proud to be out in front in those efforts,” he added. “It was about addressing the disparities. It was about addressing incarceration. It was about addressing the ills of this war on drugs.”

Newsom also discussed the racially discriminatory sentencing of crack versus powder cocaine and other mandatory minimum sentencing policies. While the federal disparity was reduced over time since Congress passed the sentencing provision—a policy presumptive Democratic presidential nominee Joe Biden helped enacted during his time in the Senate and later sought to undo—California eliminated the distinction in terms of state sentencing in 2014.

Even so, the governor recognized that the reforms the state has enacted to date are “not enough” and more work needs to be done. He’s also not alone in drawing a connection between drug policy reform and racial justice.

Earlier this week, the governor of Virginia said that the passage of marijuana decriminalization legislation this year represents an example of how his state has addressed racial inequities that are inspiring mass protests over recent police killings of black Americans such as George Floyd and Breonna Taylor.

Sen. Cory Booker (D-NJ) also recently said racial disparities in marijuana criminalization is an example of a systemic injustice that underlies the frustration of minority communities.

Last week, 12 House members introduced a resolution condemning police brutality and specifically noting the racial injustices of the war on drugs. It now has 160 cosponsors.

The measure came one week after 44 members of the House sent a letter to the Justice Department, calling for an independent investigation into a fatal police shooting of Taylor in a botched drug raid.

In New York, there’s a renewed push to pass a package of criminal justice reform legislation that includes a bill to legalize marijuana. Sen. Julia Salazar (D) told Marijuana Moment that “in this particular moment, I think what’s the important factor here is that [criminalization] disproportionately impacts black and brown New Yorkers.”

“Because of the criminalization of the use of marijuana, more black and brown New Yorkers have interactions with police than they need to,” she said. “More people end up in the criminal justice system in the first place than is necessary at all.”

New Jersey Lawmakers File Marijuana Decriminalization Bill Ahead Of Broader Legalization Referendum

Image element courtesy of Gage Skidmore.

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American Bar Association Says Firms Working ‘Indirectly’ With Marijuana Industry Should Get COVID Relief

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The American Bar Association (ABA) sent a letter to the heads of the Treasury Department and Small Business Administration (SBA) on Friday, urging them to end a current policy preventing law firms that service state-legal marijuana businesses from receiving federal coronavirus relief.

SBA has made clear that cannabis companies are ineligible for its Paycheck Protection Program (PPP) loans—but its policy also bars those that work with marijuana businesses indirectly from getting the aid. ABA, which has nearly 200,000 dues-paying members, said it wants clarification or a formal policy change to make it so indirect businesses are not impacted.

“The ABA supports amending federal law to ensure that lawyers do not face the threat of criminal charges when they represent clients in states that have legalized marijuana,” the organization said. “Even before those changes are made to federal law, lawyers should also not be penalized for providing legal services to cannabis-related businesses that comply with state laws.”

ABA also argued that the policy is excessively broad in that it stipulates that companies that derive any revenue from servicing a cannabis business cannot receive relief during the pandemic. “Thus, a law firm where a single lawyer provided advice to a single marijuana business client on legal issues for a nominal fee would arguably be ineligible under this language for the SBA PPP loan program,” the organization wrote.

ABA’s letter further notes that 78 percent of firms are located in states where marijuana is legal in some form.

“We urge SBA to provide further guidance that it will not treat otherwise eligible businesses, including law firms, as disqualified from the PPP program based solely on having provided legal, financial/accounting, policy, or regulatory advice to a Direct Marijuana Business,” Judy Perry Martinez, ABA’s president, wrote.

Steve Fox, strategic advisor at the Cannabis Trade Federation, told Marijuana Moment that it’s “wonderful to see an organization with the reputation and stature of the ABA engage on this issue.”

“As they note, the SBA guidance is overly broad and unjustly punishes companies and firms all across the country. In fact, in some states, the cannabis industry is so ingrained in the economy, you have many hundreds of companies providing goods or services to cannabis businesses,” he said. “According to the plain language of the SBA guidance, they are all, with very minor exceptions, ineligible for PPP loans.”

“We stand with the ABA in urging the Treasury and Small Business Administration to issue further guidance, clarifying that ‘indirect marijuana businesses’ are eligible for PPP loans. If they fail to do so, Congress should remedy this situation at the earliest possible opportunity,” he added.

In February, ABA’s House of Delegates voted in favor of proposals endorsing pending federal legislation to protect banks that service cannabis businesses and calling for a clarification of rules to ensure that lawyers will not be penalized for representing clients in cases concerning state-legal marijuana activity.

Rep. Earl Blumenauer (D-OR) introduced a bill last month that would fix the COVID-19 relief access problem, calling for SBA eligibility for cannabis businesses and ancillary companies. That came after he led a letter with 34 bipartisan members of the House urging leadership to include the policy change in future coronavirus-related bills.

Sens. Jacky Rosen (D-NV) and Ron Wyden (D-OR) made a similar request to Senate leaders in a separate letter.

Separately, the ABA-supported Secure and Fair Enforcement (SAFE) Banking Act was included in a House-passed COVID-19 relief package last month.

A bipartisan coalition of 34 state and territory attorneys general asked Congress to pass the bill with that language, which would protect banks that service marijuana businesses from being penalized by federal regulators.

The head of the Federal Deposit Insurance Corporation said this week that marijuana business banking represents one of the most “challenging issues that I have encountered” at the agency.

Read ABA’s letter to the Treasury and SBA below: 

ABA letter to SBA on PPP by Marijuana Moment on Scribd

Federal Financial Regulatory Agency Head Says Marijuana Banking Among Most Challenging Issues

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Bermuda Government Releases Marijuana Legalization Bill For Public Feedback

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The government of Bermuda released a draft bill on Wednesday to establish a legal marijuana market in the self-governing British overseas territory.

“Surprising for some, public attitudes have evolved apace with global legislative reforms and in recognition that opening up pathways for new economic opportunities and activity is needed,” Attorney General Kathy Simmons said in a video on the proposal.

Under the proposed legislation, adults 21 and older would be able to possess and purchase up to seven grams of cannabis from licensed retailers.

A regulatory body called the Cannabis Advisory Authority would be responsible for issuing licenses and regulating the market. There would be seven types of licenses available: cultivation, retail, research, import, export, transportation and manufacturing.

Individuals with prior marijuana convictions would not be barred from participating in the industry.

Fees for the licenses would be set in a way designed to both stimulate the territory’s economy while also ensuring that they are not prohibitively expensive for “underserved and marginalized communities,” a summary of the bill states.

People with convictions for possessing seven grams or less would be eligible for expungement.

Last year, Bermudan lawmakers unveiled draft legislation to create a medical cannabis program. Public feedback signaled that people felt the bill imposed excessive regulations and that the territory should more broadly legalize marijuana altogether for adult use.

Now that this new draft legislation has been released, the government is again asking for public input up until July 3. On its site, individuals are prompted with seven specific questions that feedback is being sought on. That includes queries about licensing requirements and penalties.

Premier David Burt, who pledged last year to introduce marijuana legalization legislation, also encouraged individuals to weigh in on the proposed regulations.

“The Government has made a commitment to progressively liberalize cannabis laws in Bermuda and to create economic opportunities for citizens wishing to participate in a regulated cannabis scheme,” the site states. “The Government again wishes to ‘take it to the people’ by commencing a one month public consultation exercise on the proposed scheme.”

The attorney general said in her video that the government plans to “move ahead with a more simplified, regulated cannabis scheme, which builds on the strength of the original medicinal cannabis policy and which embraces the public feedback.”

“The revised proposal with provide for a regulated cannabis program which has been hybridized to meet Bermuda’s requirements while modeling the best available legal provisions in Canada, both provincial and federal, and to a lesser degree, examples from the Caribbean,” she said.

Several Caribbean nations have started exploring marijuana reform in recent years. Importantly, in 2018, the heads of 19 Caribbean nations agreed to “review marijuana’s current status with a view to reclassification,” emphasizing “human and religious rights” issues stemming from criminalization as well as “the economic benefits to be derived” from legalization.

Since then, lawmakers in the dual-island nation of St. Kitts and Nevis said they would be introducing legalization legislation. The government of Trinidad and Tobago brought two cannabis reform bills before Parliament last year—one to decriminalize low-level possession and another to legalize cannabis for medical and religious purposes.

Meanwhile, the governor of the U.S. Virgin Islands has been stressing the need to legalize marijuana in order to generate tax revenue for the U.S. territory’s fiscal recovery from the coronavirus pandemic.

The Jamaican government also recently announced that it will be allowing medical cannabis patients to make marijuana purchases online for pickup at “herb houses” as a means to combat the coronavirus pandemic.

Read the draft bill to legalize marijuana in Bermuda below:

Bermuda marijuana legalizat… by Marijuana Moment on Scribd

U.S. Virgin Islands Governor Touts Legal Marijuana’s Economic Potential At Revenue Meeting

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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