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.
Photo courtesy of YouTube/House Appropriations Committee.
Bipartisan Lawmakers Tell DEA To Let Researchers Study Marijuana From Dispensaries
A bipartisan coalition of lawmakers from the House and Senate sent a letter to the Justice Department on Friday, requesting a policy change allowing researchers to access marijuana from state-legal dispensaries to improve studies on the plant’s benefits and risks.
The letter, led by Rep. Harley Rouda (D-CA) and Sen. Brian Schatz (D-HI), cites feedback from federal health agencies, which have said that existing restrictions on cannabis have inhibited research. One problem in particular is that there’s only one federally authorized manufacturer of research-grade marijuana.
While the Drug Enforcement Administration (DEA) said that it is in the process of approving additional manufacturers, it’s been more than three years since they first announced that applications for more growers would be accepted and, more recently, the agency said it would have to develop alternative rules to approve proposals that have been submitted.
“At the same time, the status quo does not address a barrier to research raised by both [the National Institutes of Health] and [the Food and Drug Administration],” the lawmakers wrote in the new letter. That barrier is a ban on researchers being able to obtain marijuana from dispensaries.
“Both agencies recommended that researchers should be able to obtain cannabis from state-legal sources,” the letter states.
Today, @SenBrianSchatz and I sent a bipartisan letter to AG Barr, urging the DEA to amend current policies to improve research on cannabis.
It’s time to bring our drug research policies into the 21st century.https://t.co/bfpPUhUvQf
— Rep. Harley Rouda (@RepHarley) December 6, 2019
Further, the lawmakers said that there are “problems in industry development of licensed drugs with data from products obtained from third-parties, such as the University of Mississippi.”
“In many states, cannabis law and regulations already provide for licensing of industrial manufacturing activities, and products are available for medical use in those states, but not for research leading to FDA licensure,” they wrote.
“There is a need for a greater diversity of cannabis products so that research on benefits and risks reflects the realities of what consumers and patients are using. NIH and FDA have strongly recommended streamlining the process for conducting research and product development activities with cannabis and other Schedule I substances, and that the DEA take action to assure that interpretations of processes and policies are universally applied in local DEA jurisdictions.”
The lack of chemical diversity in the federal government’s cannabis supply has been repeatedly pointed out. One study found that the research-grade cannabis is more similar to hemp than marijuana in commercial markets.
To resolve the research issues, the coalition made two recommendations: 1) to amend internal policy “so as to allow researchers with Schedule I licenses to obtain cannabis-derived products from state authorized dispensaries for research purposes” and 2) issue guidance clarifying that hemp researchers do not need a DEA license to obtain and study hemp because it was federally legalized under the 2018 Farm Bill.
The letter requests a response from DEA by December 20.
A total of 21 members of Congress signed the letter, including Sens. Kamala Harris (D-CA) and Cory Gardner (R-CO), along with Reps. Earl Blumenauer (D-OR), Barbara Lee (D-CA) Matt Gaetz (R-FL) and Joe Kennedy (D-MA).
“Our nation’s cannabis research laws are archaic,” Rouda said in a press release. “Forty-seven states have legalized some form of cannabis consumption—we must ensure our federal agencies and other licensed institutions can comprehensively study the benefits and risks of cannabis products.”
“I thank Senator Schatz, and my colleagues on both sides of the aisle, for joining me to make this common-sense request,” he said. “It’s time to bring our drug research policies into the 21st century.”
Attorney General William Barr received a similar letter from lawmakers about the need to expand the number of federally authorized marijuana cultivators in April.
Read the lawmakers’ full letter on expanding marijuana research below:
Oregon Activists Begin Signature Gathering For 2020 Drug Decriminalization Initiative
Oregon activists have begun collecting signatures for a statewide initiative to decriminalize possession of all drugs.
Three months after petitioners quietly submitted the proposed ballot measure—titled the “Drug Addiction Treatment and Recovery Act” (DATRA)—the signature gathering process has started, with organizers deployed to Portland to raise support.
A long road lies before the activists, who need to collect 112,020 valid signatures from voters in order to qualify for the 2020 ballot. Funding and polling will decide whether they mount a full push for the decriminalization measure in the months to come.
To that end, their efforts are being helped by David Bronner, CEO of the soap company Dr. Bronner’s, who told Marijuana Moment on Thursday that he will be investing $250,000 in the decriminalization campaign. An additional $500,000 will go to a separate Oregon initiative to legalize psilocybin for therapeutic purposes.
The Drug Policy Alliance (DPA), which backed Oregon’s successful marijuana legalization initiative in 2014, is also supporting this new effort to make low-level drug possession an infraction punishable by a $100 fine with no jail time, rather than a misdemeanor. It remains to be seen how involved in the campaign DPA will be, however.
Peter Zuckerman, a chief petitioner for the decriminalization initiative, told OregonLive on Thursday that it’s not guaranteed that the campaign will proceed and that much rides on how much money the group can raise, whether there’s public support for the reform move and how staff recruitment comes together.
He said the main thrust of the measure is to take a “health-based approach to drug addiction rather than a criminal justice-based approach.”
The proposal caught the attention of Oregon’s teachers’ union, which said that it supports decriminalizing drug possession but wrote in a comment submitted to the secretary of state in October that it was not taking an official position because it’s concerned about another provision that would shift cannabis tax revenue away from schools.
DATRA would make it so most of that revenue would be used to fund addiction treatment programs.
At the same time that activists are collecting signatures and weighing whether to move ahead with the broad decriminalization initiative, another advocacy group is pushing for a measure to legalize psilocybin for therapeutic use, allowing individuals to receive treatment with the psychedelic fungus at licensed health facilities. The group launched its signature drive in September.
Advocates in Portland are also hoping to advance a local measure to decriminalize psilocybin and other psychedelics such as ayahuasca and ibogaine.
Bronner wrote in a blog post that the decriminalization and therapeutic psilocybin legalization campaigns are “already coordinating closely and conserving resources on the statewide signature drive.”
He told Marijuana Moment that “we see this as the perfect one two punch in Oregon, legalizing psilocybin therapy that has so much promise for treating drug addiction, at the same time Oregon shifts to a treatment not jail approach.”
“And 100 percent confident it’s coming together,” he said.
All of this comes amid a national movement to decriminalize psychedelics, with activists in almost 100 cities across the U.S. considering pushing for reduced penalties for substances such as psilocybin and ayahuasca. Decriminalize Nature, which is aiding in and tracking these efforts, is also receiving donations from Bronner, he said.
Decriminalization is also gaining traction on the national stage, with two presidential candidates—South Bend, Indiana Mayor Pete Buttigieg and Rep. Tulsi Gabbard (D-HI)—voicing support for the policy change. Former Housing and Urban Development Secretary Julián Castro, another candidate, recently said that he’s open to broad decriminalization, while entrepreneur Andrew Yang backs decriminalizing opioids.
North Dakota Activists Submit Measure To Legalize Marijuana In 2020
North Dakota activists submitted a measure to legalize marijuana for adult use to state officials on Thursday, an organizer confirmed to Marijuana Moment.
Legalize ND, the group behind the proposed statutory initiative, delivered the measure to the secretary of state’s office. It’s expected to be validated within days, after which point petitions will be distributed to collect signatures in support of qualifying for the 2020 ballot.
It’s been about a year since organizers began working on the measure, which would allow adults 21 and older to possess and purchase cannabis for personal use. The proposal is more narrowly tailored than a legalization initiative from the same organization that voters rejected in 2018, however.
The previous version didn’t include any restrictions on cultivation or possession, and it didn’t involve a licensing scheme. By contrast, the new measure would prohibit home cultivation, limit possession to two ounces, impose a 10 percent excise tax and establish a regulatory body to approve licenses for marijuana businesses.
“One of the largest complaints from last time was the mantra of ‘poorly written,'” Legalize ND’s David Owen told Marijuana Moment in a phone interview. “They targeted the lack of legal experience from our team and they targeted a lack of ‘qualified lawyers’ to be drafting language that would go into the state’s statutory law.”
But he said he’s confident the campaign will be successful this time around, in part because they spent months drafting the language with the North Dakota Legislative Council.
Asked what he’d say to voters still on the fence about legalization, Owen replied that it would depend on what their initial concerns were:
“If it’s a concern over home grow, well it’s simple, we don’t have that anymore. If it’s a concern of people having too much, we have a reasonable possession limit now—in their eyes, I still think possession limits are fundamentally arbitrary, but they wanted a possession limit so we have that now. If people go, ‘well what about the quality of the language?’ I can point to how it’s literally written by Legislative Council, so either every attorney who works for the state of North Dakota is incompetent or this is well written.”
In order to qualify for next year’s ballot, the group must collect 13,452 valid signatures from voters before July 6, 2020.
“I think the most important thing isn’t what it would do, but what it would stop from happening,” Owen told local radio station KFGO on Wednesday. “We currently have a system where people are unable to find a job because of a criminal record, we have a system where people are continuing to get marijuana charges and lose their housing, we have families being separated because of parents losing custody over their children for marijuana charges. That all stops when this is legalized.”
Listen to Owen’s radio interview about the new marijuana ballot measure below:
Internal polling that received outside funding, which Owen said cannot be publicly released because of the wishes of the donor, shows the initiative is “slightly ahead” among voters.
In an earlier interview with Marijuana Moment in February, Owen said that it’s “very probable that we can do it” this time around, but much of that depended on the extent to which opposition campaigns are involved and how much funding outside groups are able to offer.
Currently, North Dakota has a medical cannabis program, and the governor signed legislation in May decriminalizing low-level marijuana possession.
Photo courtesy of Philip Steffan.