A powerful Senate committee chairman said on Wednesday the he opposes House-passed marijuana banking legislation and laid out potential changes he would like to see to the bill before he takes it up in his panel.
Among other amendments being floated for public feedback is a 2 percent THC potency limit on products in order for cannabis businesses to qualify to access financial services as well as blocking banking services for operators that sell high-potency vaping devices or edibles that could appeal to children.
“I remain firmly opposed to efforts to legalize marijuana on the federal level, and I am opposed to legalization in the State of Idaho,” Sen. Mike Crapo (R-ID), who chairs the Senate Banking Committee, said in a press release. “I also do not support the SAFE Banking Act that passed in the House of Representatives. I have significant concerns that the SAFE Banking Act does not address the high level potency of marijuana, marketing tactics to children, lack of research on marijuana’s effects, and the need to prevent bad actors and cartels from using the banks to disguise ill-gotten cash to launder money into the financial system. I welcome input from all interested parties on how to thoughtfully address these concerns.”
The Secure And Fair Enforcement (SAFE) Banking Act, which would shield banks from being punished by federal regulators for working with state-legal marijuana businesses, passed the House in September with strong bipartisan support.
Crapo’s committee held a hearing on cannabis businesses’ access to financial services in July, though he had previously said that he did not support taking up the legislation in his panel while marijuana remains federally illegal. He then said he wanted to bring it up by the end of 2019, though later indicated in an interview with Marijuana Moment last month that impeachment could delay things. Now, he is taking the step of floating amendments to the House-passed proposal before moving forward with a vote.
The new document from the chairman largely tracks with comments he made in another Marijuana Moment interview in October in which he said laid out some areas of concern.
“The things we’re looking at are, first of all, to make sure we improve and clarify the interstate banking application of all of this,” Crapo said at the time. “Secondly, money laundering issues with regard to legacy cash to make sure how that is managed properly. [Financial Crimes Enforcement Network] issues and other related issues. And then finally the health and safety issues about what is going to be banked.”
“Take tobacco for example, every state I think has some kind of regulatory parameters around the utilization of tobacco, even if it’s just an age limit on who can purchase it or what have you and the types of products that are going to be allowed,” he continued. “That gets into a legal issue that I think the states need to be more engaged in, but it also impacts the question on what would be banked. Those kinds of issues—health and safety, interstate commerce and money laundering.”
Crapo is also floating new federal studies on marijuana and its effects, clarifying hemp businesses’ banking access and measures to deal with legacy cash and interstate commerce, among other areas for potential amendments. He also suggested that measures requiring studies on study on diversity and inclusion in the cannabis industry be removed from the legislation.
“I appreciate Chairman Crapo’s concerns and willingness to work on this important issue. However, there is an urgent public safety risk facing the majority of communities and Americans today that needs to be resolved, and I believe our bill, which passed the House with 321 Democratic and Republican votes, responsibly addresses the conflict between state marijuana laws and federal banking laws,” said Rep. Ed Perlmutter (D-CO), who is the lead sponsor of the SAFE Banking Act in the House. “This issue requires a pragmatic approach that takes into the account the will of voters across the country. I look forward to working with Chairman Crapo and my colleagues in the Senate as we work to resolve these differences and enact legislation to protect businesses, residents and communities.”
Legalization advocates were not pleased with the proposals.
“These guidelines are essentially gutting the intention of this bill,” National Cannabis Industry Association Director of Government Relations Michael Correia told Marijuana Moment.
“While the chairman may oppose broader cannabis policy reform, he clearly recognizes the problems created by lack of access to banking services,” he said. “The SAFE Banking Act, which has already been passed by an overwhelming bipartisan majority of the House, addresses many of the chairman’s concerns, particularly public safety and transparency. We’re happy to discuss these items with the Senate Banking Committee in a markup, but every day that goes by without addressing this particular issue results in small businesses suffering and unnecessarily puts people’s lives at risk.”
Financial services industry trade associations also reacted to the news.
“We respect Chairman Crapo’s request for additional public input on the SAFE Banking Act, and we look forward to providing the Senate Banking Committee with the information it needs,” James Ballentine, the executive vice president of congressional relations for the American Bankers Association, said in a statement. “ABA, like many other stakeholders, has already provided the committee relevant information on several of the issues identified by the chairman including legacy cash, interstate commerce and ‘Operation Chokepoint.’ We continue to believe that the SAFE Banking Act responsibly addresses the current legal limbo over cannabis banking, and a strong bipartisan majority in the House shares that view. We urge the committee to gather this information in a timely manner so the Senate can follow the House’s lead and pass legislation that will help protect communities across the country from an increasing public safety threat.”
Ryan Donovan, chief advocacy officer for the Credit Union National Association, said that his group “appreciate[s]” Crapo sharing his concerns.
“America’s credit unions are eager to continue engaging with the chairman as he seeks a solution that enhances community safety through access to mainstream financial services,” he said.
Crapo is asking interested parties to send feedback on the new proposals to [email protected], though his office did not list a date by which responses are requested.
Read Crapo’s full statement on marijuana banking below:
Chairman Crapo Outlines Concerns with Cannabis Banking Legislation
Requests feedback on potential changes to address public health and safety
WASHINGTON – Senate Banking Committee Chairman Mike Crapo (R-Idaho) is inviting public feedback on ways to address public health and money laundering concerns with cannabis banking. Input is also requested on “Operation Choke Point,” an Obama-era initiative in which federal agencies devised and relied upon a list of politically disfavored merchant categories (e.g., firearm manufacturers, payday lenders, etc.) with the intent of “choking-off” these merchants’ access to payment systems and banking services.
“I remain firmly opposed to efforts to legalize marijuana on the federal level, and I am opposed to legalization in the State of Idaho,” said Chairman Crapo. “I also do not support the SAFE Banking Act that passed in the House of Representatives. I have significant concerns that the SAFE Banking Act does not address the high level potency of marijuana, marketing tactics to children, lack of research on marijuana’s effects, and the need to prevent bad actors and cartels from using the banks to disguise ill-gotten cash to launder money into the financial system. I welcome input from all interested parties on how to thoughtfully address these concerns.”
Currently, 33 states have some form of legal marijuana for a variety of uses. This has created challenges for businesses in those states and has resulted in increased pressure for depository and financial institutions to provide financial services to both state-sanctioned businesses and ancillary services providers that may provide services to state-sanctioned businesses. The ancillary service providers offer a variety of services to state-sanctioned businesses, such as legal services, plumbing services, fertilizers and other agricultural supplies, real estate, and leasing, among many others. As a result, Senators Jeff Merkley (D-Oregon) and Cory Gardner (R-Colorado) introduced S. 1200 on April 11, 2019. While marijuana would still be illegal at the federal level, this proposed legislation seeks to provide legal certainty for banks who wish to serve not only marijuana companies, but also the ancillary service providers, meaning that banks can accept cash from legally-operating state cannabis companies and related service providers without the fear of adverse actions being taken against them by federal financial regulators.
On July 23, 2019, the Senate Banking Committee held a hearing titled, “Challenges for Cannabis and Banking: Outside Perspectives.” At the hearing, Senator Crapo discussed his concerns with the public health and safety issues surrounding marijuana; legacy cash and money laundering; FinCEN guidance and rulemaking; interstate commerce and banking; and initiatives similar to “Operation Choke Point.”
Options for addressing these concerns include, but are not limited to, the following:
- Add public health and safety solutions as a requirement for banks to do business with legally-operating state cannabis companies. Options to consider include THC potency; clear and conspicuous disclosures on products; marketing; effects on minors, unborn children and pregnant women; and age restrictions, among other considerations.
- Prevent bad actors and cartels from using legacy cash and the financial system to disguise ill-gotten cash or launder money.
- Update 2014 FinCEN rulemaking and guidance regarding marijuana-related businesses, and ensure FinCEN has all of the necessary tools it needs to prosecute money launderers and promulgate rulemakings.
- Respect state rights in interstate commerce and banking for institutions who operate in multiple states with different state rules.
- Eliminate “Operation Choke Point” and preventing future “Operation Choke Point” Initiatives. Under fear of retribution, many banks have stopped providing financial services to members of lawful industries for no reason other than political pressure, which takes the guise of regulatory and enforcement scrutiny.
Public feedback is requested on the following issues that include potential options for addressing concerns and questions outlined below. Interested parties may submit proposals to Committee staff at [email protected]
Issue 1: Options for addressing public health and safety concerns.
There is a lack of federal research evaluating marijuana and its effects. The National Institute on Drug Abuse has found that marijuana use significantly impairs a user’s judgment, motor skills and reaction time. Other studies have found a direct relationship between blood THC concentration and impaired driving ability. Additionally, the Surgeon General released an advisory on Marijuana’s Damaging Effects on the Developing Brain, noting that THC binds to receptors in the brain, producing a euphoria and a variety of harmful effects, including intoxication, and memory and motor impairments. The Surgeon General also noted the harmful effects of THC use during pregnancy and on young developing brains. Surgeon General Adams also released an Advisory on e-cigarette use among youth, and the recent surge in the market, which he states is a cause for great concern.
The appropriate federal agencies shall conduct a national study on the effects of marijuana and publicly report on considerations related to public health and safety of cannabis, cannabis products and their delivery mechanisms, including as it pertains to the marketing and varying potency of cannabis and cannabis products, particularly, but not limited to, minors, pregnant women and effects on unborn children. The federal government agencies, within the study, should also make recommendations on the manufacturing and marketing practices of the cannabis industry to minimize their appeal to minors and harm to minors, pregnant women and unborn children.
The studies shall include the following:
a. The types and delivery mechanisms (e.g., smoking, vaping, edibles, drinking, etc.) for all cannabis and cannabis products currently available or under development in the marketplace;
b. The potency of the cannabis and cannabis products, available in their final form, and how the potency has changed over time, including how it impacts addiction;
c. How various potencies and serving sizes may impact individuals’ health and safety, and whether different potencies and serving sizes are harmful to individuals’ health and safety, including how human physiology affects impairment, particularly as it relates to minors and pregnant women;
d. How different types of products and delivery mechanisms have affected minors’ access to cannabis and cannabis products, and how it impacts purchasing decisions over an individual’s lifetime;
e. The degree to which different levels of potency, serving sizes or consumption impair individuals’ judgment or cognitive reasoning, and trends of the prevalence of individuals operating a vehicle or machinery under the influence of cannabis; and
f. The extent to which other jurisdictions with various levels of cannabis legalization have made determinations, as reflected in law or public policy, on the health and safety effects of cannabis or cannabis products, require disclosure of potency or serving sizes, and have restricted or otherwise limited the potency of cannabis cultivated, sold, or purchased in their respective jurisdictions.
Question: Are there any other additional health considerations, other than those explicitly stated in the outline, that should be considered, and which federal agencies are most appropriate to be involved in the aforementioned study?
Considerations for addressing health and safety concerns associated with financial institutions who provide financial services to cannabis-related legitimate businesses:
a. Each state must implement clear and conspicuous disclosure of THC potency of cannabis and cannabis products (on a percentage and milligram basis in final products) through a label on the final packaged products at the point of sale. Among the contents of any state labeling requirements should be proper warnings, contaminants, potency and serving sizes, and ingredients;
b. A potency threshold of 2 percent THC content on a percentage and milligram basis in the final product;
c. The 2 percent threshold will apply until each state legislature affirmatively determines the appropriate level of THC potency for cannabis and cannabis products (on a percentage and milligram basis in final products) that appropriately addresses the health and safety risks to its citizens;
d. Preventing distribution to anyone under the age of 21;
e. Preventing the banking of edibles that are in many kid-friendly forms like candies and gummies; and
f. Preventing the banking of high potency THC vape and e-cigarette products.
Question: Are there any other additional health considerations that should be attached to the safe harbor?
Issues 2, 3: Options for addressing legacy cash and money laundering.
FinCEN Rulemaking and Guidance: Amend the Act to direct FinCEN to promulgate a rulemaking within a specified period of time, after enactment of this Act, to address issues pertaining to the provision of financial services to the marijuana industry and ancillary businesses, including Suspicious Activity Reports (SARs) and dealing with legacy cash.
FinCEN will retain meaningful oversight authority of the activities between cannabis-related legitimate businesses (CRLBs) and their financial institutions. FinCEN will be required to promulgate rulemakings and update their guidance pertaining to Bank Secrecy Act (BSA) expectations for marijuana-related businesses to address the following:
a. Requiring thorough customer due diligence standards;
b. Thorough processes and procedures to ensure funds from cannabis-related businesses and service providers are not associated with illicit activities;
c. Clearly delineating the BSA obligations of financial institutions when engaging in business with cannabis-related businesses or individuals who engage with cannabis-related businesses, including for indirect relationships such as ancillary businesses;
d. Requiring the filing of SARs in a manner that preserves FinCEN’s ability to address illicit activity; and
e. Clarifying the treatment of hemp.
Additionally, Section 7 of S. 1200 should be amended to ensure that the Federal Financial Institutions Examination Council (FFIEC) must consult with FinCEN on its development of uniform guidance and examination procedures for depository institutions as they relate to CRLBs and service providers.
Suspicious Activity Reports: Amend Section 6 of the Act regarding FinCEN’s guidance to ensure the guidance does not impair the ability of FinCEN to deter illicit activity, consistent with the rulemaking described above.
Question: In such a rulemaking, what additional requirements are needed for financial services firms to ensure that bad actors are not accessing the financial system, the sources of cash entering the financial system are fully understood and validated, Suspicious Activity Reports continue to be appropriately filed, and expectations for indirect relationships are clear commensurate with their risk?
Issue 4: Options for addressing interstate commerce and banking.
Interstate Commerce: Amend the Act to clarify that financial institutions must comply with all applicable laws related to cannabis and cannabis products in each respective state in which they operate, and ensure that nothing in the Act would facilitate interstate commerce of cannabis.
Additionally, given the tension between the state legality of cannabis and federal illegality, it should be made clear that the federal banking regulators should consult with state regulators ahead of any implementation, or give some notice.
Question: Does the bill, as drafted, facilitate interstate commerce? Should there be an explicit statement in the bill clarifying that the bill does not permit interstate commerce of marijuana?
Issue 5: Options for addressing hemp provisions and “Operation Choke Point.”
Add the following new provisions:
a. House hemp provision; and
b. The Financial Institution Customer Protection Act language included in the House-passed version of H.R. 1595, but with the following additional amendments: (1) change the term “may” to “shall”; and amend to reflect and add the following:
(1)An appropriate Federal banking agency shall not formally or informally request or order a depository institution to terminate a specific account or group of customer accounts or to otherwise restrict or discourage a depository institution from entering into or maintaining a banking relationship with a specific customer or group of customers unless –
(A) the institution is engaging in unsafe or unsound practices or violating a rule, law, regulation or other condition imposed in writing due to its relationship with the specific customer.
(B) an appropriate Federal banking agency shall not take any action under (A) with respect to a group or category of customers and shall only take action under (A) after it has made a determination in writing with respect to specific customer that the conditions set forth under (A) are satisfied.
(C) for purposes of (A), reputational risk shall constitute neither an unsafe or unsound practice nor a violation of rule, law, regulation or other condition imposed in writing.
Under (b) Notice Requirement, amend (2) to reflect the following: (2) Justification Requirement – A justification described under paragraph 1(A) should only be based on if the institution engaged in an unsafe or unsound practice or violated a rule, law, regulation or other condition imposed in writing.
Under (c) Customer Notice, add the following: (2) In the written notice and determination, the depository institution shall also provide the determination and justification for why the termination is needed, including any specific laws or regulations, or unsafe and unsound practices, the depository institution believes are being violated by the customer or group of customers.
Question: Do the proposed amendments to the Financial Institution Customer Protection Act, as passed in the House, adequately curb potential future choke point scenarios?
Additional amendments for consideration:
Studies: Strike Sections 8, 9 and 10 directing studies. Section 8 of S. 1200 requires the Federal banking regulators to issue an annual report to congress on diversity and inclusion; Section 9 of S. 1200 requires the Government Accountability Office (GAO) to conduct a study on diversity and inclusion; and Section 10 requires the GAO to conduct a study on the effectiveness of reports on suspicious transactions filed.
Preserving Regulatory Actions: Amend the Act to clarify that federal banking regulators can still take certain actions, including enforcement actions, against depository institutions, such as those actions related to poor underwriting and engaging in unsafe or unsound practices.
This story was updated to include reaction from advocates.
Virginia Lawmakers Send Marijuana Legalization Bill To Governor’s Desk Just Hours Before Deadline
Virginia lawmakers approved a bill to legalize marijuana with just hours left before the deadline to get legislation to the governor this session.
The Senate and House of Delegates approved differing reform proposals earlier this month, and negotiators have since been working to reconcile the bills in conference committee—a contentious process that at times appeared as if it would end without a deal.
But on Saturday, lawmakers agreed to the bicameral compromise plan.
The Senate voted 20-19 to approve the conference committee report on its bill as well as the identical version for the House legislation. The House voted to approve the conference report on its bill, 48-43, with two abstentions. When considering the Senate version, the House voted 47-44, with one abstention.
“It’s been a lot of work to get here,” Sen. Adam Ebbin (D), the lead sponsor of the Senate version of the legislation, said prior to the Senate vote. “But I would say that we’re on the path to an equitable law allowing for responsible adults to use cannabis.”
House Majority Leader Charniele Herring (D), the chief sponsor of the her chamber’s legalization bill, said that “racial justice is about more than addressing penalties for simple possession.”
“It is about reformative justice that provides equitable and social economic opportunity for individuals and communities which have been harmed by disproportionate policing and prosecution of cannabis,” she said. “Legalizing cannabis does not end systematic racism but it does remove one of the tools used in advancing systematic racism.”
The compromise legislation now goes to the desk of Gov. Ralph Northam (D), who supports ending cannabis prohibition.
Among the most pressing issues for lawmakers to negotiate in recent weeks was the timeline for crafting regulations for the cannabis market. The Senate has pushed for a reenactment clause to be included which would extend the process into next session, whereas the House side wanted to complete legislative work during the current session, arguing that enough research has already been done to effectively decide the issue. But Senate negotiators won out, meaning that the legislature will revisit cannabis regulations and post-legalization penalty structures next session.
Another major area of contention dealt with how the state would approach cannabis possession in the time between the bill’s signing and implementation of legal sales going into effect. Under both versions, the adult-use market wouldn’t launch until January 1, 2024 to give the state time to establish a regulatory agency to oversee the program. While the Senate had wanted to make the legalization of simple possession and home cultivation take effect starting on July 1 of this year, negotiators ultimately agreed to delay it to coincide with commercialization in 2024.
In the meantime, under the deal, a new Virginia Cannabis Control Authority will begin work this July to lay the ground for a legal marijuana industry.
Here are some of the other major provisions that were resolved in conference:
Referendum—The Senate version of the bill would have asked voters to weigh in on legalization through a nonbinding referendum on this November’s ballot. But the issue became increasingly contentious in recent days and conference negotiators decided to drop the idea.
Local control—Whereas the Senate measure called for individual cities to be able to ban marijuana businesses from operating in their area, the House version did not include an opt-out provision. Conferees decided to allow municipalities to elect to ban cannabis commercialization, but they must do so by December 31, 2022.
Penalties for youth—Under the House bill, minors caught possessing cannabis would be subject to a $25 fine with a referral to substance misuse treatment. The Senate, meanwhile, proposed a $250 fine for youth possession for the first offense and then criminal charges and even jail time for subsequent convictions. The agreed-upon final legislation would continue the current approach of treating youth possession as a delinquency, subject to a civil penalty of up to $25, but add a mandatory substance misuse treatment or education program or both. There would be no interaction with courts for such youths. For people between the ages of 18 and 20, the conference deal would continue the existing $25 fee that exists under the state’s decriminalization law and add that they may be ordered to enter a treatment or education program or both.
Social equity—Both versions of the legislation called for licensing priorities for social equity businesses, but there were differences in how each chamber defined what constitutes a social equity applicant. The final legislation defines an equity business as one that has at least 66 percent ownership by people who have been convicted of misdemeanor marijuana offenses (or have family members with such convictions) or people who live in a geographic area that is economically distressed or has a disproportionate rate of cannabis policing. People who graduated from a historically black college or university located in the state would also qualify. Also, beginning on July 1, the state would establish Cannabis Equity Reinvestment Fund and a Cannabis Equity Business Loan Fund.
Vertical integration—The House’s measure would ban vertical integration, a process that would allow a single company could control aspects of growing, processing and selling marijuana products. The Senate, meanwhile, wanted to allow vertical integration only if a cannabis business paid a $1 million fee into a state equity fund. Under the final legislation, vertical integration will be generally limited but will allow existing medical cannabis and hemp businesses to partially vertically integrate. Micro-businesses will also be able to vertically integrate.
In general under the legislation, adults 21 and older would be able to purchase and possess up to one ounce of cannabis and cultivate up to four plants for personal use. It also allows people to petition for suspended or modified sentences for marijuana convictions and establishes criteria for sealing past records.
The bill would set a cannabis excise tax of 21 percent and allow localities to add an additional 3 percent tax on top of the state’s existing 6 percent retail sales tax. Revenue would partly fund pre-K education programs for at-risk youth and would support the new equity funds as well as addiction prevention and treatment services and public health initiatives.
Marijuana Moment is already tracking more than 700 cannabis, psychedelics and drug policy bills in state legislatures and Congress this year. Patreon supporters pledging at least $25/month get access to our interactive maps, charts and hearing calendar so they don’t miss any developments.
Learn more about our marijuana bill tracker and become a supporter on Patreon to get access.
The proposal would create a new cannabis-focused state agency to regulate the legal market as opposed to having it fall under the existing alcoholic beverage authority as was the case under the governor’s original plan.
Post-legalization penalties set to go into effect in 2024, which are subject to renewal by the legislature next session, would include a $25 fine for possessing between one ounce and one pound in public. For public consumption, there would be a civil penalty of no more than $25 for first offense. A second offense would come with a $25 civil penalty and an order to enter a substance misuse treatment or education program, or both. Third or subsequent offenses would constitute a Class 4 misdemeanor with no possibility of jail time. Meanwhile, bringing marijuana across state lines would be a Class 1 misdemeanor.
Now that the final bill is headed to Northam’s desk, the governor will have the opportunity to suggest amendments to lawmakers, who can then adopt the suggestions as is or change or reject them, at which point the bill would go back to the governor for final action.
Jenn Michelle Pedini, executive director of Virginia NORML, said the bill’s passage “is another historic step for cannabis justice” that will “replace the failed policy of cannabis prohibition with one that promotes Virginia’s economy as well as Virginians’ public health and safety.”
“This effort remains a work in progress and our efforts in Virginia are far from over,” Pedini, who also serves as NORML’s national development director, said. “NORML is dedicated to continuing our work with lawmakers and regulators to advance legislative reforms that are most closely aligned with the views of the majority of Virginians who desire a safe, legal cannabis market. In particular, we hope to expedite the timeline with which Virginia adults will no longer face either criminal or civil penalties for the personal possession and cultivation of cannabis.”
Matt Simon, senior legislative analyst for the Marijuana Policy Project, said it’s “exciting that Virginia is on track to end cannabis prohibition and replace it with sensible regulation.”
“Lawmakers in other states are already taking notice and seeking to learn from Virginia’s example,” he said.
Earlier on Saturday, the ACLU of Virginia and other groups had urged lawmakers to defeat the final proposal prior to the release of its actual text, saying that the provisions as described in media reports showed it to be a “symbolic marijuana legalization bill made behind closed doors that does not advance the cause of equal justice and racial justice.”
BREAKING: We, @thcjusticenow, @RISEforYouth, and @JusticeFwdVa urged Virginia lawmakers to vote no on a symbolic marijuana legalization bill made behind closed doors that does not advance the cause of equal justice and racial justice in Virginia. https://t.co/kS47X9qK7g
— ACLU of Virginia (@ACLUVA) February 27, 2021
The Virginia NAACP argued that the bill, based on press accounts, “includes Systemically Racist probable cause provisions” and pledged that its members “will not stand by while Jim Crow’s sister Jane tries to creep her way into Virginia law.”
We will not stand by while Jim Crow’s sister Jane tries to creep her way into Virginia law.”
— Virginia NAACP (@NAACPVirginia) February 27, 2021
But after the bill’s text came out, NAACP issued an updated statement saying that while the final legislation “is not perfect, it’s a step in the right direction.”
The Virginia NAACP will not rest until full equity and restorative justice is achieved.”
— Virginia NAACP (@NAACPVirginia) February 28, 2021
The ACLU, for its part, maintained its opposition, saying that lawmakers “failed to legalize marijuana for racial justice” and “paid lip service to the communities that have suffered decades of harm caused by the racist War on Drugs with legislation that falls short of equitable reform and delays justice.”
The new changes, which would not legalize simple possession until 2024, do nothing to break the chains of marijuana prohibition.
It would delay & deny justice to all those whose lives have been upended & who are still being harassed by police on the streets every day.
— ACLU of Virginia (@ACLUVA) February 28, 2021
All of this legislative action comes a little over a month after Northam and top lawmakers initially unveiled their legalization proposal.
The cannabis legislation’s structure was informed by separate studies conducted by a legislative research body and a working group made up of state cabinet officials.
Support for legalizing marijuana is strong in Virginia, according to a poll released this month. It found that a majority of adults in the Commonwealth (68 percent) favor adult-use legalization, and that includes most Republicans (51 percent).
The legislature has also taken up a number of other more modest cannabis reform proposals this session.
Bills to allow medical patients to access whole-flower cannabis in addition to oils, facilitate automatic expungements for certain marijuana convictions, protect employment rights of medical cannabis patients and allow those in hospice and nursing facilities to access medical marijuana have also advanced this session.
Virginia lawmakers passed separate legislation last year that decriminalized possession of up to an ounce of marijuana, replacing existing penalties with a $25 civil fine and no threat of jail time. The law took effect last July.
Read a summary of the provisions of the Virginia marijuana legalization conference report below:
Photo courtesy of Philip Steffan.
New Mexico House Approves Marijuana Legalization Bill, With Senate Action Imminent
The New Mexico House of Representatives on Friday approved a bill to legalize marijuana in the state, one day ahead of a scheduled Senate committee hearing on that chamber’s separate proposals to end cannabis prohibition.
The legislation that cleared the House—which would allow adults 21 and older to possess “at least” two ounces of cannabis and grow up to six mature and six immature plants for personal use—recently sailed through two committees before moving to the floor, where it was approved in a 39-31 vote.
The measure is favored by reform advocates because—unlike other House and Senate reform measures that have been introduced this session—it would prioritize using tax revenue from marijuana sales to support reinvestments in communities most impacted by the war on drugs. It also stands out for including provisions to automatically expunge prior cannabis convictions.
Meanwhile, the Senate Tax, Business & Transportation Committee will take up three separate legalization bills on Saturday.
Rep. Javier Martinez (D) introduced the House legislation, which would establish a system of regulated marijuana sales. It would require rules for the market to be implemented by January 2022.
“As I dove into this work years ago, I realized that, to me, legalizing recreational cannabis is not about the money,” Martinez said on the floor prior to the vote. “It’s a great revenue source for the state, but that’s not why I’m doing it.”
“Legalizing adult use of cannabis is probably going to be good for tourism. Legalizing is probably going to be good in terms of creating jobs and a new homegrown industry,” he said. “But really when you get to the core of why I’m doing this and why I’ve worked on this for so long, it’s because I have seen the faces of the people who have most been impacted by this terrible and unwinnable war on drugs. It’s one that we cannot win.”
The Taxation & Revenue Committee approved a substitute version of the measure on Wednesday that includes a number of changes, including moving the start of legal sales back to January 1, 2022 from October 1 of this year. That would apply to existing medical cannabis dispensaries and microbusinesses, with sales for other retailers set to start September 2022.
Language was also removed in committee that earmarked tax revenue for a community reinvestment fund and a low-income patient subsidy program. The fund accounts will still be created, but it would be up to lawmakers to steer money to them in future sessions once cannabis revenue starts coming in.
Other modifications include language on regulatory authority for the cannabis market, allowing health and safety inspections of businesses, addressing workplace and employment issues, replacing fines and fees for youth who violate the law with a civil infraction penalty, stipulating that people can petition for resentencing for offenses made legal and adjusting the state excise tax on marijuana from nine percent to eight percent while giving local jurisdictions the option to levy an additional four percent tax.
On the floor on Friday, members additionally accepted a technical amendment to add back in a section of the bill that had been inadvertently deleted by committee staff.
Rep. Randal Crowder (R) offered an amendment to allow local jurisdictions to opt out of allowing marijuana businesses. But after it was pointed out to him that its broad language would have unintentionally impacted medical cannabis operations as well as recreational ones, he withdrew it. A second, revised version, was more narrowly drafted to focus only on adult-use operations, but it was blocked by a successful motion to table it.
“Cannabis legalization in New Mexico is one step closer to the finish line,” Emily Kaltenbach, senior director of resident States and New Mexico for the Drug Policy Alliance, said after the vote. “After tonight’s debate, we’re even more optimistic that this bill has a path to the governor’s desk.”
She argued that the House bill is superior to the three measures the Senate panel will take on Saturday.
“Given HB 12 puts the lives of New Mexicans ahead of solely business interests, it is critical it be the vehicle for legalization as the issue moves forward,” she said. “HB 12 legalizes cannabis in an equitable way that begins to repair the harms that have disproportionately impacted Hispanic/Latinx, Black, Native and Indigenous people in New Mexico. New Mexicans are absolutely ready to see marijuana legalization become a reality in the state, but they have made it clear that repairing the damage done by the drug war is non-negotiable.”
For her part, Gov. Michelle Lujan Grisham (D) has repeatedly talked about the need to legalize as a means to boost the economy, especially amid the coronavirus pandemic. She said during a State of the State address last month that “a crisis like the one we’ve experienced last year can be viewed as a loss or as an invitation to rethink the status quo—to be ambitious and creative and bold.”
The governor also included cannabis legalization as part of her 2021 legislative agenda that she released last month and said in a recent interview that she’s “still really optimistic about cannabis” this session.
That optimism is bolstered by the fact that several anti-legalization Democrats, including the Senate president pro tem and the Finance Committee chair, were ousted by progressive primary challengers last year.
Additional pressure to end cannabis prohibition this year is coming from neighboring Arizona, where voters approved legalization in November and where sales officially launched earlier this month.
New Mexico shares another border with Colorado, one of the first states to legalize for adult use. Cannabis is also expected to be legalized across the southern border in Mexico, with lawmakers facing a Supreme Court mandate to end prohibition by April.
Earlier, in 2019, the House approved a legalization bill that included provisions to put marijuana sales mostly in state-run stores, but it died in the Senate. Later that year, Lujan Grisham created a working group to study cannabis legalization and issue recommendations.
Polling indicates that voters are ready for the policy change. A survey released in October found that a strong majority of New Mexico residents are in favor of legalization with social equity provisions in place, and about half support decriminalizing drug possession more broadly.
Last May, the governor signaled that she was considering actively campaigning against lawmakers who blocked her legalization bill in 2020. She also said that she’s open to letting voters decide on the policy change via a ballot referendum if lawmakers can’t send a legalization bill to her desk.
Photo courtesy of Mike Latimer.
Connecticut Marijuana Hearing Shows Governor’s Legalization Bill Likely To Be Amended After Equity Pushback
Connecticut lawmakers took a full day’s worth of public testimony on Friday about Gov. Ned Lamont’s (D) plan to legalize and regulate marijuana for adults. The legislation has drawn harsh criticism from social equity advocates since its unveiling earlier this month as part of the governor’s budget, and the bill’s supporters said at Friday’s hearing that they’re open to making changes to address those concerns.
“This is not a final bill,” Lamont’s chief of staff, Paul Mounds, told equity advocates during his testimony to the legislature’s Judiciary Committee. “We want to sit at the table. We want you at the table.”
Before Friday’s official legislative hearing, a group of reform advocates critical of the governor’s proposal held a press conference to bring attention to what they say are shortcomings of the bill’s licensing, equity and criminal justice provisions. Among them, they argue the governor’s plan, SB 888, would give an overwhelming advantage to businesses in the state’s existing medical marijuana system by allowing them early control of the legal adult-use industry. That would likely make it hard for smaller applicants or Black and brown people trying to enter the new market as business owners rather than as employees.
One speaker at the press conference, Rep. Anne Hughes (D), said she would be willing to vote against the governor’s bill if it doesn’t end up including a stronger emphasis on equity.
“If we put equity applicants at the back of the line,” Hughes said, “I don’t think we can ever repair that. I don’t think we can catch up.”
Critics of the governor’s plan have drawn attention to a separate legalization bill, HB 6377, which includes additional equity measures, such as early registration for equity license applicants and funding for low-interest business loans.
Supporters of the governor’s bill struck a conciliatory tone at Friday’s hearing, denying that the two proposals are in conflict. “These bills aren’t competing,” said Jonathan Harris, a senior advisor to the governor. “They’re actually complementary.”
Jason Ortiz, a drug policy advocate and president of the Minority Cannabis Business Association who served as chair of the governor’s cannabis licensing working group last year, has been critical of Lamont’s proposal, arguing that the administration effectively ignored his suggestions for how to build an equitable industry. In a Facebook post on Thursday, he said the governor’s legalization plan “creates a white only market for an indefinite period of time.”
At Friday morning’s press conference, Ortiz said equity advocates would be happy to help strengthen Lamont’s proposal.
“We were available months ago and we’re available now. The governor just needs to pick up his phone and call Reps. [Robyn] Porter and her colleagues,” he told Marijuana Moment after the event, referring to backers of the separate legalization bill, HB 6377.
State Senate Majority Leader Bob Duff (D), meanwhile, has said the cannabis legalization bills need to be “pulled apart and put back together,” according to The Connecticut Examiner, adding that there’s still “a lot of work to be done.”
“We need to be start taking all of these different ideas and putting them together,” House Speaker Matt Ritter (D) told the Examiner, “so we can have an actual bill to rally the votes behind.
For her part, Porter, who chairs the Labor Committee, said during Friday’s hearing that she’s confident that HB 6377’s provisions will be considered in an eventual compromise bill.
As introduced by Lamont in his budget proposal earlier this month, SB 888 would allow adults 21 and older to possess up to 1.5 ounces of cannabis and purchase products from licensed stores, which would be scheduled to open in May 2022.
Homegrow would be forbidden under the plan, and some but not all marijuana-related convictions from before October 2015 would be automatically expunged. Fiscal estimates project the market could make the state more than $33 million in revenue in fiscal year 2023, growing to $97 million by 2026. Beginning in 2024, half of all state excise tax would be earmarked for municipal aid and equity spending.
Ortiz—whose criticisms were acknowledged by Lamont advisor Harris at Friday’s hearing—identified a number of criminal justices areas of the bill he said were “lacking” during his testimony to the panel, noting that SB 888 does not decriminalize home cultivation or expunge an array of cannabis convictions, including for possession of more than for ounces of cannabis.
“At the core of equity is decarceration, getting folks out of prison; decriminalization, making sure we’re not putting more people in prison; and expungement, making sure the records of whatever interaction they have don’t follow them,” he said. “SB 888 acknowledges the need for all of those, but then doesn’t actually do it in policy.”
Fascinating to watch what's unfolding in Connecticut between the cannabis bill that represents equity (HB 6377) and the cannabis bill that represents a whole lot of lip service and nothing else (SB 888, hearing now). Follow @therealcurect to stay updated and show support. https://t.co/UB6AxrC8wv
— Shaleen Title (@shaleentitle) February 26, 2021
Friday’s hearing—the first to consider the governor’s legalization proposal—drew extensive written and oral testimony. Among those who submitted statements ahead of the hearing were a number of state officials expressing their support for legalization, which is expected to bring tens of millions of dollars in state revenue.
“S.B. 888 will help create jobs, foster an emerging and growing industry in our state, and help support the state and local tax base—all areas that are critical as our state emerges from the pandemic,” wrote David Lehman, commissioner of the state Department of Economic and Community Development and a senior economic advisor to the governor.
Officials also said the policy change would align Connecticut with other nearby states, ensure limits on advertising and products designed to appeal to children, protect the rights of employers to prohibit cannabis use and support social justice.
“Legalizing cannabis means taking meaningful strides to address our state’s criminalization of cannabis to date and the disproportionate impact this has had on communities of color,” said Marc Pelka, undersecretary for criminal justice policy and planning at the Office of Policy and Management.
Commissioner of Consumer Protection Michelle Seagull and others noted that nearby sources of legal, regulated cannabis are increasingly available to state residents. “Massachusetts, Maine, and Vermont already have some form of a market for adult-use cannabis,” she wrote, “bills were just signed into law by New Jersey’s Governor, and New York and Rhode Island are poised to legalize adult-use this year. We cannot ignore or avoid this fact.”
That was a sentiment echoed by Department of Emergency Services and Public Protection Commissioner James Rovella, who pointed out that surrounding states are enacting legalization and that “cannabis is already among us and law enforcement is dealing with it and expending resources on it.”
Department of Banking Commissioner Jorge L. Perez similarly said the governor’s proposal “recognizes that the trend nationally and in nearby states is to legalize the adult use of recreational cannabis” and that it regulates marijuana in way that “prioritizes public health, public safety, and social justice.”
Department of Mental Health and Addiction Services Commissioner Miriam Delphin-Rittmon said she appreciates that the bill “protects public health by providing adult access to safe products and preventing advertising and retail locations that would appeal to children.”
Others who submitted testimony in support include Department of Revenue Services Commissioner Mark D. Boughton, Department of Labor Commissioner Kurt Westby and Department of Motor Vehicles Commissioner Sibongile Magubane.
Some in law enforcement and health care submitted testimony against the legalization plan.
“The rush towards legalization of recreational marijuana ignores how profit-driven corporations hooked generations of Americans on cigarettes and opioids, killing millions and straining public resources,” said the Connecticut State Medical Society. “Connecticut has an obligation to protect the health and welfare of its citizens and rushing to legalize a potentially unsafe drug abdicates this responsibility.”
The state Police Chiefs Association, meanwhile, said it opposes the bill primarily because no qualified roadside test exists to detect cannabis-impaired driving. “While the presence of a police officer trained in Advanced Roadside Impairment Driving Enforcement (ARIDE) or the presence of a Drug Recognition Expert (DRE) may potentially assist in the evaluation of a motorist,” the group said, “there is presently no legal device in which to test such operators. The DRE evaluation mentioned in this [bill] is a process which occurs after the arrest is made.”
The governor’s own written testimony ahead of Friday’s hearing underscored the drug war’s failure. “The war on cannabis did little to protect public health and safety, and instead caused significant injustices for many residents, especially people in black and brown communities,” Lamont wrote.
“One thing on which most of us agree is that social equity must be included in any adult-use market we create. While there is significant consensus around that goal, there are many different approaches as to how to best accomplish it,” he added. “This hearing is the continuation of this critical conversation.”
Despite disagreement over policy details, many expect legalization to happen Connecticut’s near future. Ritter, the speaker, said in November that legalization in the state is “inevitable.” He added later that month that “I think it’s got a 50–50 chance of passing [in 2021], and I think you should have a vote regardless.”
Should this year’s effort fail, Ritter said he will move to put a constitutional question on the state’s 2022 ballot that would leave the matter to voters. A poll released last year found that nearly two-thirds of voters (63.4 percent) either “strongly” or “somewhat” supported recreational legalization.
Photo courtesy of Rick Proctor