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Lawmakers Press Treasury Official On Marijuana Business Banking Access

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Two members of a House appropriations subcommittee pressed a top U.S. Treasury Department official on the issue of banking access for the marijuana industry on Tuesday.

At a hearing, Rep. Mark Amodei (R-NV) commented on what he described as a double standard whereby private sector cannabis businesses are put through hoops to secure bank accounts while government entities are able to deposit tax revenue from cannabis sales into federally regulated institutions and “there is no scrutiny whatsoever.”

The congressman said he generally understood why banks like Wells Fargo, which “hasn’t had a great couple of years,” would be sensitive to federal drug laws and avoid servicing state-legal cannabis businesses.

He gave another hypothetical example of a bank rejecting a “plumber, who may have done work on a rental property for the landlord, which is leased to somebody who grows or distributes King’s X,” which appeared to be a reference to a strain of cannabis called King’s Cross.

That situation is “maybe not OK,” he said.

“I’m not trying to put that all on you because Congress has to fill a void. I get that,” Amodei told Sigal Mandelker, the Treasury official testifying before the panel. “But right now, status quo is if you’re a government entity, putting your cash from marijuana in a federal depository institution, as near as I can figure, it’s just fine.”

“Why are all the private sector people being told, ‘find a way to launder your money,’ but you have the government political subdivisions are [told], ‘pay the IRS in cash?'” he asked. “As a matter of fact, some of them are overpaying them and getting Treasury checks back, so we’ve essentially laundered the money for them.”

Mandelker, the Treasury Department’s under secretary for terrorism and financial intelligence, didn’t have a specific answer to that question. Instead, she said that marijuana remains federally illegal and there’s nothing her department’s Financial Crimes Enforcement Network (FinCEN)  “does or can do in this area changes that.”

“That continues to be the state of federal law,” she said. “In that context, of course, banks have to make their own decisions about risk-based decisions as we ask them to do in a variety of circumstances about what they are and aren’t willing to bank.”

“We don’t tell them what to bank. They make those decisions based on a variety of circumstances, including their concerns about whether or not engaging in certain types of banking is going to bring regulatory scrutiny on them, or alternatively, concerns that it may be involved in money laundering or other illicit activity.”

Mandelker also assured the congressman that federal guidance on marijuana banking, which was issued in 2014 to inform financial institutions about the types of suspicious activity reports they should file with regard to state-legal cannabis companies, is still in effect.

“That guidance remains in place. We haven’t changed it. We continue to review it,” she said. “But as you mentioned, this is really something I think that Congress needs to look at because nothing that we do can or does change what is prohibited under federal law.”

Later in the hearing, Rep. Charlie Crist (D-FL) brought up his state’s medical marijuana program and said that “between the economic impact and the benefit to seniors, veterans, persons with certain disability and other conditions, I think that medical marijuana is extremely important in my state.”

But because of federal law, his state’s cannabis businesses are essentially treated “like criminal enterprises that your office might have to approach,” he said.

Crist wanted to know whether it would make Mandelker’s job easier if “every dollar of every transaction were banked, traced and taxed within our banking system.”

“Would this give your department more control and oversight over illicit activities that contribute to the problem of financial crimes and money laundering?” he asked.

Again, the witness said her department didn’t have a role in setting federal laws, but she did say she knew that some banks in certain states were accepting marijuana business accounts. Those that choose to work with cannabis companies can at least adhere to the Obama-era guidelines she mentioned earlier, she said.

However, she was not prepared to comment specifically on whether giving marijuana businesses legal access to banking services would bolster the Treasury’s ability to monitor financial crimes.

“We’re happy to take that question and do additional analysis,” she said.

It might not be longer before Congress sees firsthand how expanding banking access to marijuana businesses will affect federal financial regulation, though. A bipartisan bill that would shield banks that accept marijuana accounts gained five more cosponsors on Monday, meaning that more than a quarter of the House is now officially backing the legislation.

A draft of that bill was also the subject of the first cannabis-related hearing of the 116th Congress last month.

Federal Reserve Head Calls For Clarity On Marijuana Banking Issues

Photo courtesy of YouTube/House Appropriations Committee.

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.

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Texas Lawmakers Approve Marijuana Decriminalization In Committee Vote

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A Texas House committee approved a marijuana decriminalization bill on Monday that would make simple possession punishable by a fine, with no jail time, and without having to go on an individual’s criminal record.

The legislation passed in a 5-2 vote out of the Criminal Jurisprudence Committee and now heads to a separate panel responsible for placing bills on the calendar for floor debates.

Possession of one ounce or less of cannabis would be punished with a $250 fine for the first two offenses. After that, possession would be considered a class C misdemeanor, which is still a lesser penalty compared to current law. As it stands, possession of two ounces or less is a class B misdemeanor punishable by a fine of up to $2,000 and up to 180 days in jail as well as a permanent criminal record, which carries steep collateral consequences.

Earlier this month, the committee held a hearing on the legislation and heard testimony about the long-term impacts of having a low-level cannabis conviction on a person’s record and how removing criminal penalties for possession can free up law enforcement resources so that officers can tackle more serious crimes.

Advocates are hopeful that the full House will embrace the modest reform measure, even as the legislature contemplates other cannabis policies such as expanding the state’s limited medical marijuana program.

“We are very optimistic about the chances of HB 63 passing on the floor of the Texas House,” Heather Fazio, director of Texans for Responsible Marijuana Policy, told Marijuana Moment. “Overall, lawmakers on both sides of the aisle agree that we shouldn’t be wasting valuable criminal justice resources arresting and prosecuting people for small amounts of marijuana. Texas is ready.”

While medical cannabis expansion, to say nothing of adult-use legalization, remains a dubious prospect in the conservative stronghold, removing the threat of jail time for possession has gained popularity among Texas Republicans. Delegates for the Republican Party of Texas adopted a platform plank last year that endorses marijuana decriminalization, for example.

“We support a change in the law to make it a civil, and not a criminal, offense for legal adults only to possess one ounce or less of marijuana for personal use, punishable by a fine of up to $100, but without jail time,” the plank states.

What’s more, the policy has even received a tentative green light from Gov. Greg Abbott (R), who has said he is open to legislation that would reduce penalties for simple possession.

During a gubernatorial debate last year, Abbot said he doesn’t want to see “jails stockpiled with people who have possession of small amounts of marijuana” and floated the idea of reducing the penalty for marijuana possession from a class B to a class C misdemeanor.

According to Texans for Responsible Marijuana Policy, the legislation currently has 32 authors or co-authors.

Connecticut Lawmakers Approve Marijuana Legalization Bill In Key Committee

Photo courtesy of Philip Steffan.

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Connecticut Lawmakers Approve Marijuana Legalization Bill In Key Committee

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A key committee in the Connecticut legislature approved a bill to legalize marijuana on Monday.

The General Law Committee, which is one of two panels that heard testimony about legalization legislation last week, voted 10 to 8 to advance the bill.

Beyond legalizing cannabis for adult use, the legislation also includes a number of social equity provisions aimed at encouraging participation in the legal industry by individuals from communities that have been disproportionately impacted by the drug war. A governor-appointed commission would be charged with giving such individuals advance time to apply for a marijuana business license and promote diversity in hiring.

“At the end of the day, if we’re moving, it’s not about revenue. It’s about equity,” Rep. Juan Candelaria (D) said at the meeting. “It’s about ensuring that these communities that have been impacted, that we say we’re not going to stay idle anymore.”

The commission would also be required to study the potential impacts of allowing cannabis microbusinesses and a home cultivation option, which are not currently included in the bill. Delivery would be permitted, however.

While advocates generally support the bill, there are some outstanding concerns about the lack of a home grow option. The lack of specific licenses for delivery services and on-site consumption facilities is another sticking point.

“Marijuana prohibition was borne of misinformation and racism and it continues to be enforced unequally to this day,” Karen O’Keefe, director of state policies at the Marijuana Policy Project, said at last week’s hearing.

It’s not yet clear whether the legislature will ultimately pass this proposal or a separate bill in the Senate, but if either does end up on the desk of Gov. Ned Lamont (D), he’s expected to sign. The governor called legalization one of his “priorities” last year and also discussed the issue during a budget speech last month.

The legislature’s Judiciary Committee is expected to vote on legalization legislation on Thursday.

A separate bill to revise the state’s medical cannabis program by adding opioid use disorder to the list of qualifying conditions and eliminating a registration certification fee for patients and caregivers was also approved by the General Law Committee on Monday.

Connecticut Lawmakers Hold Two Simultaneous Hearings On Marijuana Legalization Bills

This story was updated to note the committee’s vote tally.

Photo courtesy of Philip Steffan.

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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Marijuana Legalization Vote Cancelled Due To Lack of Support In New Jersey Senate

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Marijuana reform advocates experienced a setback on Monday after bill to legalize cannabis in New Jersey was pulled from the agenda due to a lack of votes to pass the legislation in the Senate.

The proposal would have allowed adults 21 and older to possess, consume and purchase marijuana from licensed retailers. It included a number of social equity provisions meant to encourage participation in the industry by individuals from communities most harmed by the war on drugs, and it also would’ve created a pathway for expedited expungements for prior cannabis convictions.

Two committees—the Assembly Appropriations Committee and Senate Judiciary Committee—approved companion cannabis legalization bills last week.

But while Gov. Phil Murphy (D) and leading lawmakers reached a compromise on certain details on how to carry out legalization earlier this month, the legislation faced resistance and was taken off the table hours before scheduled votes in the Senate and Assembly.

“History is rarely made on the first try,” Murphy said in a press conference. “Certainly I’m disappointed but we are not defeated… We all remain committed to passing this bill and making our state a national model for justice and opportunity because ultimately this is the right thing to do for New Jersey, and we know the people of New Jersey are on our side.”

“While we are all disappointed that we did not secure enough votes to ensure legislative approval of the adult use cannabis bill today, we made substantial progress on a plan that would make significant changes in social policy,” Senate President Stephen Sweeney (D) said in a statement. “This fight is not over. We need to learn from this experience and continue to move forward. While this legislation is not advancing today, I remain committed to its passage.”

“The legalization of adult-use marijuana will get passed in the state of New Jersey, one way or another,” he added at a press conference. “Anybody who thinks this is dead, they’re wrong.”

Assembly Speaker Craig Coughlin (D) echoed those sentiments.

“Today we may not be able to get a bill over the finish line but I’m proud of the effort we made and the discussions we had. It’s a big and complicated issue,” he said in a press conference. “We all remain committed to enacting fair and responsible legislation that will be groundbreaking and a national model.”

According to a whip count tracking tool for the legislation that was created by NJ.com, a majority of senators (23) planned to vote “no” as of Monday morning, compared to just eight who said they’d vote in favor of the bill, with nine others undetermined. Other sources indicated that 18 senators planned to vote “yes.”

In the days leading up to the Monday session, the legislation received a number of high-profile endorsements, including from 2020 Democratic presidential candidate Sen. Cory Booker (D-NJ), Rev. Al Sharpton and CNN host Van Jones. The governor’s office also released a list of quotes supporting the bill from lawmakers, activists and spiritual leaders.

“With this bill, New Jersey legislators can send a strong message to the country that marijuana legalization and social justice must be inextricably linked,” Booker said last week. “I’m hopeful our state will succeed in setting this example.”

Those endorsements were ultimately not enough to convince a sufficient number of on-the-fence state senators, some of whom raised concerns about the potential public health and safety impacts of legalization.

“This is a tragedy for social and racial justice in New Jersey. This legislation was supported by a broad coalition of civil rights, advocacy and faith organizations across the state and the majority of New Jersey voters,” Roseanne Scotti, New Jersey state director for the Drug Policy Alliance, said. “But, we will not give up. We will continue to fight for marijuana legalization legislation centered on racial and social justice. It is only a matter of time before this legislation is enacted and all New Jerseyans can share in the benefits it will create.”

Prohibitionist organization Smart Approaches to Marijuana described the news as a “huge victory for us.”

“They told us legalization was inevitable, and this action proves them wrong, Kevin Sabet, the group’s president, said in a press release.

With the cancellation of the vote, it may be months before lawmakers take up the idea again.

“Voters and lawmakers both agree that the practice of treating marijuana consumers as second-class citizens must end. Unfortunately, legislative intransigence regarding how best to create a regulatory framework has resulted in, at least for now, a continuation of the failed policy of marijuana criminalization in the Garden State,” NORML Political Associate Tyler McFadden said in a press release.

“[I]t should be acknowledged that, to date, no state has taken legislative action to regulate the adult use marijuana market,” she said. “In every jurisdiction where regulations exist, they were enacted by a direct vote of the citizenry. Based on current polling in New Jersey, we have little doubt that, if provided the opportunity, Garden State voters would take similar action.”

A poll last month found that New Jersey adults support legalizing marijuana, 62 percent to 32 percent.

Diversity Provisions Added To Marijuana Banking Bill Up For Congressional Vote This Week

This story was updated to add comment from Sweeney, DPA, NORML and SAM.

Photo courtesy of WeedPornDaily.

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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