Will 2019 be the year that Congress blocks the federal government from enforcing prohibition in legal marijuana states? A bipartisan team of lawmakers in the House and Senate are optimistic that it will, and they introduced legislation on Thursday to accomplish that goal.
Reps. Earl Blumenauer (D-OR) and David Joyce (R-OH) filed the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act, appearing alongside cosponsors Reps. Barbara Lee (D-CA) and Joe Neguse (D-CO) at a press conference. Sen. Cory Gardner (R-CO) and Elizabeth Warren (D-MA) filed the Senate version of the bill.
Watch the press conference below:
STATES Act Introduction https://t.co/vQMd6appgZ
— Earl Blumenauer (@repblumenauer) April 4, 2019
The legislation would amend the Controlled Substances Act to protect people complying with state legal cannabis laws from federal intervention, and the sponsors are hoping that the bipartisan and bicameral nature of the bill will advance it through the 116th Congress.
President Trump voiced support for a previous version of the legislation last year.
“I’ve been working on this for four decades. I could not be more excited,” Blumenauer told Marijuana Moment in a phone interview.
While other legislation under consideration such as bills to secure banking access for cannabis businesses or study the benefits of marijuana for veterans are “incremental steps that are going to make a huge difference,” the STATES Act is “a landmark,” he said.
46 states have some legalized some form of cannabis. Yet far too many people still face federal prosecution and roadblocks in their daily lives — especially people of color. I’m proud to support the #STATESAct to stop federal interference in legal cannabis enterprises. pic.twitter.com/lhjTHB1Sft
— Rep. Barbara Lee (@RepBarbaraLee) April 4, 2019
The congressman said it will take some time before the bill gets a full House vote, however. Rep. Jim McGovern (D-MA) recently suggested that the legislation would advance within “weeks,” but Blumenauer said it will “be a battle to get floor time” and he stressed the importance of ensuring that legislators get the chance to voice their concerns and get the answers they need before putting it before the full chamber.
“We want to raise the comfort level that people have. We want to do it right,” he said. “There’s no reason that we have to make people feel like they’re crowded or rushed.”
Today, I introduced the STATES Act w/ @RepDaveJoyce @SenCoryGardner @SenWarren. Our outdated cannabis laws have ruined lives, devastated communities and wasted resources. This is the next logical step for Congress to catch up w/ the rest of America & fix a badly broken system. pic.twitter.com/YUW3iqwu25
— Earl Blumenauer (@repblumenauer) April 4, 2019
Asked whether he’d had conversations with House Speaker Nancy Pelosi (D-CA) about moving cannabis bills forward this Congress, Blumenauer said there’s been consistent communication between their offices and that the speaker is “very sympathetic” to the issue and “understands the necessity of reform.”
There are 26 initial cosponsors—half Democrats and half Republicans—on the House version. Reps. Ro Khanna (D-CA), Lou Correa (D-CA), Ed Perlmutter (D-CO), Matt Gaetz (R-FL) and Don Young (R-AK) are among those supporters. The previous version ended the 115th Congress with 45 cosponsors.
Today, I joined my colleagues to introduce bipartisan legislation that will ensure the cannabis industry in Colorado is not held back by the federal governments delay in legalization, by ensuring they can access banks & loans & that the threat of federal prosecution is removed. pic.twitter.com/yQlBjtQN3b
— Rep. Joe Neguse (@RepJoeNeguse) April 4, 2019
On the Senate side, there are 10 lawmakers initially signed on: Warren and Gardner, along with Sens. Catherine Cortez Masto (D-NV), Michael Bennet (D-CO), Amy Klobuchar (D-MN), Ron Wyden (D-OR), Dan Sullivan (R-AK), Kevin Cramer (R-ND), Lisa Murkowski (R-AK) and Rand Paul (R-KY).
People of good faith – both in the industry and outside of it – are at risk of being a federal felon despite complying with state law. And the cash on the streets is a big public safety and law enforcement concern.
— Cory Gardner (@SenCoryGardner) April 4, 2019
“Our federal marijuana laws are outdated and pose a threat to our public health and safety. Marijuana should be legalized, and we must reverse the harm of these failed policies by wiping clean the records of those unjustly jailed for minor marijuana crimes,” Warren said in a press release, although the STATES Act does not contain provisions addressing past cannabis convictions.
“Congress should take immediate action on these important issues by passing the bipartisan STATES Act and protecting states, territories, and tribal nations as they implement their own marijuana laws without federal interference,” she added.
“In 2012, Coloradans legalized marijuana at the ballot box and the state created an apparatus to regulate the legal marijuana industry. But because of the one-size-fits-all federal prohibition, state decisions like this put Colorado and other states at odds with the federal government,” Gardner said. “The federal government is closing its eyes and plugging its ears while 47 states have acted. The bipartisan STATES Act fixes this problem once and for all by taking a states’ rights approach to the legal marijuana question. The bipartisan, commonsense bill ensures the federal government will respect the will of the voters – whether that is legalization or prohibition – and not interfere in any states’ legal marijuana industry.”
The federal government is closing its eyes and plugging its ears while 47 states have acted and it's time the federal government respects the will of Colorado voters. https://t.co/w33JVo1Y7s
— Cory Gardner (@SenCoryGardner) April 4, 2019
For the most part, the latest versions of the legislation are identical to the previous Congress’s bills, though there are two exceptions. Previously, there was a provision exempting hemp from the definition of marijuana, but that was removed—presumably because it is no longer needed in light of the passage of the 2018 Farm Bill, which federally legalized the crop.
The bigger change is that the new version contains a section that requires the Government Accountability Office to conduct a study on the “effects of marihuana legalization on traffic safety.”
Among other data points, the office would be directed to collect info on “traffic crashes, fatalities, and injuries in States that have legalized marihuana use, including whether States are able to accurately evaluate marihuana impairment in those incidents.” A report on those effects would be due one year after the law is enacted.
“This bipartisan legislation signals the eventual end of marijuana prohibition at the federal level,” Steve Hawkins, executive director of the Marijuana Policy Project, said in a press release. “It reflects the position held by a strong majority of Americans that states should be able to develop their own cannabis policies without interference from the federal government.”
“It also reflects the position President Trump took on marijuana policy throughout his campaign, and we are hopeful that he will have the opportunity to sign it into law,” Hawkins said. “While we look forward to the day when Congress is ready to enact more comprehensive reform, we fully embrace the states’ rights approach proposed by this bill.”
The National Cannabis Industry Association, which represents marijuana businesses, also backs the legislation.
“The STATES Act is being reintroduced at a key moment when bipartisan support for cannabis policy reform is at historic levels in both chambers of Congress and among the general public,” said Aaron Smith, the group’s executive director. “Regulating cannabis is working well in the states that have enacted more sensible policies, and legitimate businesses are creating jobs and generating revenue while helping to replace the illicit market. Those businesses shouldn’t have to worry about being treated like criminals by the federal government and deserve clarity that is set in law as opposed to the whims of federal prosecutors.”
According to a press release circulated by Warren’s office, the bill is also supported by ACLU, American Bankers Association, Americans for Prosperity, Americans for Tax Reform, Competitive Enterprise Institute, Cooperative Credit Union Association, Credit Union National Association and National Conference of State Legislatures, as well as a number of Indian tribes.
Read the text of the newly filed STATES Act below:
States Act by on Scribd
Photo courtesy of Don Murphy.
Congressman Says Marijuana Could Be Legal Sooner If Trump Stops Tweeting
The plan to federally legalize marijuana is well underway, Rep. Earl Blumenauer (D-OR) said in a new interview. But it’d be moving a lot quicker if it weren’t for distractions emanating from the president’s Twitter account, he joked.
Blumenauer gave a status update on his plan to end federal cannabis prohibition during a Sunday KATU-TV interview in which he was asked whether he felt Congress was still on track to legalize marijuana by year’s end.
“We are in really great shape. We’ve had a number of votes in the House. The things I’ve put in the blueprint are moving forward,” the congressman said, adding that the Judiciary Committee held a major hearing on legalization legislation in July.
Blumenauer issued a memo to his party’s leadership last year—which he called a “blueprint”—in which he laid out a step-by-step plan by which House committees could advance incremental cannabis legislation while building up to the eventual federal legalization of marijuana by the end of 2019.
“We’ve got things keyed up. I think there’s a great chance of doing it this Congress—maybe even this fall—depending on how crazy things get,” he said in the TV interview.
“Every time I turn around, there’s some other national catastrophe or Trump is out there with Twitter storms,” he cautioned. “It’s not a manageable situation, but the issues dealing with cannabis are on the right track.”
“We can get it wrapped up this Congress, maybe even this year.”
Watch Blumenauer’s marijuana comments, starting at about 9:35 into the video below:
While the 116th Congress is by many measures the most cannabis friendly in history, advocates hoped that reform legislation would move more expeditiously, especially in the Democratic-controlled House.
I recently spoke with @BrianWoodKATU on Your Voice Your Vote about some pressing issues: gun violence, my visit to the southern border, healthcare reform, cannabis legalization, the housing crisis, and more…https://t.co/Nb2V2a13Q4
— Earl Blumenauer (@repblumenauer) August 19, 2019
For example, a bipartisan bill that would protect banks that service marijuana businesses from being penalized by federal regulators cleared the House Financial Services Committee in March, but it didn’t get a full House floor vote before the August recess like advocates anticipated.
That said, companion legislation did get a somewhat unexpected hearing in the Senate Banking Committee even after the panel’s chair indicated it wouldn’t advance as long as cannabis remains federally illegal.
Blumenauer also said in the interview that voters are ahead of Congress on the issue, moving forward with state-level legalization efforts while legislative action on Capitol Hill crawls ahead. And beyond the U.S.’s border, the congressman mentioned that Mexico will be implementing legalization this fall.
Photo courtesy of KATU 2.
Credit Unions Can Bank Hemp Businesses, Federal Agency Announces
A federal financial agency released updated guidelines on banking in the hemp industry on Monday, following up on requests from multiple lawmakers to provide clarity on the issue.
The National Credit Union Administration (NCUA) said in its interim guidance that providing banking services to hemp businesses is allowable since the crop and its derivatives were federally legalized under the 2018 Farm Bill. The notice also emphasized the economic potential of hemp and the role credit unions can play as the industry continues to develop.
“Lawful hemp businesses provide exciting new opportunities for rural communities,” NCUA Chairman Rodney Hood said in a press release. “I believe today’s interim guidance keeps with the mission of the nation’s cooperative credit system to serve people who have been overlooked and underserved.”
“Many credit unions have a long and successful history of providing services to the agriculture sector,” he said. “My expectation is that credit unions will thoughtfully consider whether they are able to safely and properly serve lawfully operating hemp-related businesses within their fields of membership.”
Growth in hemp-related commerce will create a need for capital & financial services. Interim guidance gives #creditunions the ability to step in & provide hemp-related businesses these customary financial services. Learn more: https://t.co/otTzUt3tL7
— The NCUA (@TheNCUA) August 19, 2019
— The NCUA (@TheNCUA) August 19, 2019
In a letter sent to Sen. Michael Bennet (D-CO) last month, which the presidential candidate’s Senate office shared exclusively with Marijuana Moment, Hood noted that NCUA was “working on possible future guidance to financial institutions” but that such guidance would be subject to change depending on what regulations the U.S. Department of Agriculture (USDA) ultimately develops.
In the meantime, the new interim guidance notes that “growth in hemp-related commerce could provide new economic opportunities for some communities, and will create a need for such businesses to be able to access capital and financial services” while clarifying that credit unions “may provide the customary range of financial services for business accounts, including loans, to lawfully operating hemp related businesses within their fields of membership.”
While NCUA said that it is “generally a credit union’s business decision as to the types of permissible services and accounts to offer,” it highlighted the need to comply with the Bank Secrecy Act (BSA) and with Anti-Money Laundering (AML) requirements, in particular:
—Credit unions need to maintain appropriate due diligence procedures for hemp-related accounts and comply with BSA and AML requirements to file Suspicious Activity Reports (SARs) for any activity that appears to involve potential money laundering or illegal or suspicious activity. It is the NCUA’s understanding that SARs are not required to be filed for the activity of hemp-related businesses operating lawfully, provided the activity is not unusual for that business. Credit unions need to remain alert to any indication an account owner is involved in illicit activity or engaging in activity that is unusual for the business.
—If a credit union serves hemp-related businesses lawfully operating under the 2014 Farm Bill pilot provisions, it is essential the credit union knows the state’s laws, regulations, and agreements under which each member that is a hemp-related business operates. For example, a credit union needs to know how to verify the member is part of the pilot program. Credit unions also need to know how to adapt their ongoing due diligence and reporting approaches to any risks specific to participants in the pilot program.
—When deciding whether to serve hemp-related businesses that may already be able to operate lawfully–those not dependent on the forthcoming USDA regulations and guidelines for hemp production–the credit union needs to first be familiar with any other federal and state laws and regulations that prohibit, restrict, or otherwise govern these businesses and their activity. For example, a credit union needs to know if the business and the product(s) is lawful under federal and state law, and any relevant restrictions or requirements under which the business must operate.
“Hemp provides new opportunities for communities with an economic base involving agriculture,” the notice states. “The NCUA encourages credit unions to thoughtfully consider whether they are able to safely and properly serve lawfully operating hemp-related businesses within their fields of membership.”
“Lending to a lawfully operating hemp-related business is permissible.”
After USDA releases its rules for the hemp industry, which are expected to come ahead of the 2020 planting season, NCUA said it “will issue additional guidance on this subject.”
Senate Majority Leader Mitch McConnell, who like Bennet has also pressured federal regulators to clear up confusion around hemp banking, took credit for NCUA’s response and celebrated the new guidance.
At @senatemajldr’s request, @TheNCUA issues guidance to assist legal #hemp industry. Hearing concerns from his constituents, McConnell urged NCUA to provide clarification to help address this barrier in #Kentucky. @KYCreditUnions applauds the positive news https://t.co/5kaQmxJE1x
— Senator McConnell Press (@McConnellPress) August 19, 2019
“I’m delighted to hear the NCUA has answered my call on behalf of Kentuckians to ensure the legal hemp industry can access much-needed financial services,” McConnell said in a press release. “Although President Trump signed into law my initiative last year to remove hemp from the federal list of controlled substances, many of my constituents have told me about their difficulty receiving loans and other services that are necessary to successfully run a hemp business.”
“Through this guidance by the NCUA, I look forward to more hemp farmers, processors and manufacturers starting or growing their operations with the help of Kentucky’s credit unions,” he said. “As Senate Majority Leader, I’ll continue advocating for Kentucky’s priorities throughout the federal government, and I’m proud of today’s positive news.”
Credit unions have generally been friendlier to the marijuana and hemp industries than have conventional banks, and NCUA has similarly taken a more proactive role in evolving to meet the demands of these burgeoning markets.
For example, the agency’s head clarified earlier this month that credit unions wouldn’t be punished simply for serving hemp businesses so long as they were following standard procedures. NCUA also released a draft rule in July that would allow people with past drug convictions to work at credit unions.
Cannabis banking issues have received significant congressional attention this session, with a bipartisan consensus emerging around creating a legislative fix so that hemp and marijuana businesses are able to access financial services.
The hemp industry in particular has enjoyed bipartisan support since the crop was legalized, but while marijuana remains a federally controlled substance, more lawmakers from across the aisle are expressing interest in affording cannabis businesses the same access in order to increase financial transparency and mitigate public safety risks associated with operating on a largely cash-only basis.
The House Financial Services Committee approved a bill in March that would protect banks that service marijuana businesses from being penalized by federal regulators, and the Senate Banking Committee also held a hearing on the issue last month.
Banking Chairman Mike Crapo (I-ID), who suggested earlier this year that his panel wouldn’t convene to discuss the matter as long as cannabis is federally illegal, has since taken a stance that the issue needs to be resolved.
But while advocates hoped that legislation to address marijuana banking problems would be taken up by the full House ahead of the August recess, that window closed and attention is now turned to a potential hearing in the fall.
Photo courtesy of Brendan Cleak.
Marijuana Taxes Differ In Legalized States, Complicating Projections
The marijuana legalization movement is often described as a state-level experiment—and one aspect of its implementation that’s garnering more attention is how legalized jurisdictions approach cannabis taxes in different ways.
Pew Charitable Trusts has been monitoring taxation in the legal industry and released a report on Monday that explains the challenges of establishing effective tax schemes and accurately projecting revenues, especially considering that experts don’t have a sizable body of historical data on which to base predictions like they do for alcohol and tobacco.
That said, there are some lessons to be taken from recent years since early legalizers implemented their respective programs.
Because tax rates differ significantly for marijuana businesses and consumers depending on the state, revenue from cannabis sales has varied, leaving policymakers in a flux as they work to meet budget goals and predict future trends, Pew reported.
Revenue was 40 percent higher in the first six months of sales than Nevada anticipated, for example, while sales in California were 45 percent lower than initially projected.
Here’s a breakdown of marijuana tax revenue in five adult-use states:
Pew also observed that revenue growth is slowing in Colorado and Washington, the first states to legalize for recreational use, as the market evolves.
— Pew States (@PewStates) August 19, 2019
“Supporters of legalizing recreational marijuana expected a new revenue source for states, but market uncertainties continue to challenge revenue forecasters and policymakers,” Pew concluded. “The difficulty in forecasting revenue is compounded by the fact that states have only recently begun to understand the recreational marijuana market: the level of consumer demand for recreational marijuana products, the types of users and how much they might pay for the drug, and competition with the black market.”
“States have learned some lessons but continue to grapple with unknowns.”
In order to prevent budget shortfalls that could impact funding for certain programs, policymakers should take caution and bear in mind the differences “between marijuana revenue’s short-term growth and long-term sustainability.”
“While these new dollars can fill immediate budget needs, they may prove unreliable for ongoing spending demands,” Pew said. “Policymakers should look to other, more familiar sin taxes for lessons on how to manage marijuana tax revenue most effectively.”
Photo courtesy of WeedPornDaily.