The federal government would save money if a bipartisan bill to give marijuana businesses access to banks is approved, according to a report released by the Congressional Budget Office (CBO) on Friday.
The legislation, which cleared the House Financial Services Committee in a bipartisan vote of 45 to 15 in March, would change federal law to protect financial institutions that service the cannabis industry from being penalized by regulators. That reform would set off a chain of events, beginning with a likely increase in the number of banks accepting deposits from those businesses, CBO reasoned.
Assuming the bill takes effect near the end of the 2019 fiscal year, the office estimates that starting in 2022, banks would see a $1.2 billion increase in deposits, and credit union deposits would grow by $200 million. By 2029, the amounts “would rise to $2.1 billion and $350 million, respectively.”
Because those deposits would have to be insured through the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA), the CBO took into account the possibility that individual financial institutions will fail, and the estimated cost of resolving those failures is $5 million.
That said, those direct spending costs would be “offset by assessments levied on insured financial institutions,” which would amount to about $9 million.
“As a result, CBO estimates, H.R. 1595 would decrease net direct spending by $4 million over the 2019-2029 period,” the office reported.
Rep. Ed Perlmutter (D-CO), the bill’s chief sponsor, told Marijuana Moment that its enactment would have benefits beyond fiscal savings.
“Getting cash off our streets and making our communities safer will come at no cost to the federal government and actually save money while providing a much-needed long-term banking solution for legitimate marijuana businesses across the country,” he said.
“This CBO score should only increase the significant momentum in Congress behind passing the SAFE Banking Act,” Neal Levine, CEO of the Cannabis Trade Federation, told Marijuana Moment. “It is now apparent that we can help diminish a serious threat to public safety at no net cost to the federal government. We look forward to the bill passing through the House and hope the Senate will follow suit.”
There are some implementation costs to take into account, CBO says. The administrative costs are estimated to be $3 million. But the FDIC and NCUA are able to charge premiums on the financial institutions they regulate to cover much of those costs. The total net administrative costs would, therefore, be about $1 million.
The Federal Reserve would also have to spend funds to implement the bill, and that would reduce remittances to the Treasury Department. Those remittances are considered revenue, which is expected to decrease by about $1 million if the legislation is implemented.
Then there are costs related to other provisions of the bill. Financial regulators would have to update and issue new guidance, which would “cost less than $500,000 over the 2019-2024 period.”
The legislation also requires the Government Accountability Office to study barriers to entry in the marijuana industry and to financial services for minority- and women-owned cannabis businesses. The costs are estimated to be less than $500,000 annually from 2020 to 2024.
The CBO also estimated that enacting the legislation “would not increase on-budget deficits by more than $5 billion in any of the four consecutive 10-year periods beginning in 2030.”
The CBO outlined “several noteworthy areas of uncertainty” that could change the calculus.
1. New guidance from federal financial regulators could be more or less stringent than existing guidance implemented under the Obama administration, which could impact the amount of deposits banks and credit unions will receive.
2. Data on cannabis-related deposits is currently “limited,” as federal restrictions have forced marijuana businesses to operate on a largely cash basis. That means CBO’s estimates on the amount of deposits financial institutions will see could end up being “greater or smaller.”
3. If those estimates do end up being different, costs associated with the bank and credit union insurance funds “could be higher or lower depending on the amount of premium collections and capital deposits and on changes in the resolution costs for financial institutions.”
Sahar Ayinehsazian, an associate attorney at Vicente Sederberg LLP who specializes in cannabis banking, told Marijuana Moment that most of the figures lined up with her expectations. However, given that many marijuana businesses have gravitated toward credit unions rather than banks, she said the estimate increase in deposits to those financial institutions may well end up being larger.
“Looking at the chances of this legislation passing from an economic standpoint, I think [the CBO score is] good news,” she said.
Other advocates agreed that the CBO estimate should help efforts to advance the bill.
“For years, cannabis advocates have been preaching the net benefits SAFE Banking would have on consumers, patients, financial institutions, regulators and taxpayers. This CBO cost estimate confirms that,” Michael Correia, director of government relations for the National Cannabis Industry Association, told Marijuana Moment. “The increase of insured deposits, coming from the added certainty this legislation brings, far outweighs the minor administrative costs to implement this bill.”
The House marijuana banking bill currently has 184 cosponsors, and a companion Senate version has 30 lawmakers signed on. The committee of jurisdiction in the upper chamber has not yet set a hearing or a vote, but pressure is increasing.
Banking associations from all 50 states urged the Senate to take up the legislation earlier this week. Other organizations that have called for a resolution to the cannabis banking dilemma include the National Association of Attorneys General, which has endorsed the bill, and the National Association of State Treasurers, representing state treasurers and finance officials, which adopted a resolution last week in favor of the legislation’s passage.
Want 4 million more reasons why members of Congress should support the #SAFEBankingAct, which would allow cannabis businesses to access the banking system in the 33 states where it’s legal? @USCBO says the legislation will save taxpayers $4M over 10 years.
— American Bankers Association (@ABABankers) May 24, 2019
The new analysis is just the third time that the CBO, which is mandated to score bills that pass full committees, has issued a report on the economic impact of standalone cannabis legislation. The agency scored two marijuana research bills that cleared committees last year.
This story was updated to include comment from Perlmutter and Correia.
Andrew Yang Contrasts Rampant Opioid Prescribing With Marijuana Criminalization
Andrew Yang contrasted the widespread prescribing of opioids with the ongoing criminalization of marijuana on Wednesday.
In a tweet, the entrepreneur and 2020 Democratic presidential candidate said there were “more opiate prescriptions in the state of Ohio than people in Ohio,” yet “marijuana is still classified as a schedule 1 drug” under the federal Controlled Substances Act.
#DidYouKnow – There were more opiate prescriptions in the state of Ohio than people in Ohio. But marijuana is still classified as a schedule 1 drug.
— Andrew Yang🧢 (@AndrewYang) December 11, 2019
He’s brought that point up before, at a presidential debate in October. Asked about his proposed to decriminalize possession of opioids to combat the drug overdose crisis, Yang brought up the statistic and criticized the government for failing to take action against pharmaceutic companies that aggressively marketed addictive painkillers.
“If the government turned a blind eye to this company, spreading a plague among its people, then the least we can do is put a resource into work in our communities so that people have a fighting chance to get well, even though this is not a money problem,” he said at the time.
— Andrew Yang🧢 (@AndrewYang) October 16, 2019
NBC News confirmed that, in 2010, federal data shows there were 102.4 opioid prescriptions in Ohio for every 100 persons. That’s decreased since then, with 2017 data showing 63.5 opioid prescriptions for every 100 persons in the state.
Yang, who supports comprehensive marijuana legalization, has also embraced other harm reduction policies. Beyond decriminalizing opioids, he said in an interview published last week that he’s in favor of providing federal funding for the establishment of safe injection facilities, where individuals can use illicit drugs under medical supervision and receive assistance getting into treatment.
Yang has not yet called for decriminalization of substances beyond opioids and cannabis, however. That policy is backed by rival contenders South Bend, Indiana Mayor Pete Buttigieg and Rep. Tulsi Gabbard (D-HI).
Sens. Bernie Sanders (I-VT) and Elizabeth Warren (D-MA) and former Housing and Urban Development Secretary Julián Castro, also presidential candidates, have called for the establishment of safe injection sites.
Photo courtesy of ABC News.
Marijuana Legalization Bill Filed In Virginia Ahead Of Attorney General’s Cannabis Summit
The attorney general of Virginia held a cannabis summit on Wednesday, with representatives of states that have legalized marijuana sharing their insights as lawmakers in the Commonwealth prepare to push reform legislation in the coming session.
This event came one day after a lawmaker prefiled a bill to legalize marijuana for adult use and expand the state’s existing limited medical cannabis program.
The event featured panels on marijuana decriminalization, social equity, public health, hemp, CBD and creating a pathway for eventual legalization. The goal was to answer policy questions and inform legislation, which Attorney General Mark Herring (D) hopes will start with decriminalization and expungements and later adult-use legalization.
Herring: “I don’t believe Virginia’s current system of needlessly criminalizing cannabis is working. The negative consequences of the current approach fall disproprtionately on African Americans and other people of color.”
— Martin Austermuhle (@maustermuhle) December 11, 2019
“I don’t believe that Virginia’s current approach of criminalizing cannabis is working,” Herring said in his opening remarks. “It is needlessly creating criminals and burdening Virginians with convictions.”
Today we're bringing together legislators, stakeholders, and policy experts to plot a course for a smarter, fairer, more just cannabis policy in VA. For me, that means decriminalizing now, resolving past convictions, & moving to legal, regulated adult use.https://t.co/aqWxQCVPIg
— Mark Herring (@MarkHerringVA) December 11, 2019
“The human and social costs are enormous, in addition to the millions of dollars it costs Virginia taxpayers. And the negative consequences of the current approach fall disproportionately on African Americans and people of color,” he said. “It’s clear to me that the time for cannabis reform has come. Justice demands it. Virginians are demanding it. And I’m going to help make sure we get this right.”
Watch video of the Virginia Cannabis Summit below:
Representatives from Colorado and Illinois discussed law enforcement and equity in regulated marijuana markets.
The prospects of passing reform measures greatly increased in Virginia after November’s election, which saw Democrats reclaim control of both chambers of the General Assembly for the first time in decades. Herring said the timing is right to “plot a course for a smarter, fairer, more just cannabis policy” in the state.
Sen. Dave Marsden (D), co-founder of the legislature’s recently established Cannabis Caucus, said at the summit that ensuring that the legal market is equitable is paramount.
.@SenDaveMarsden, who co-founded the new Cannabis Caucus, says focusing on equity will be important. “We can’t substitute a civil process for a criminal one and not expect it to lead to disparities,” he says of decriminalization, noting how people of color still impacted most.
— Martin Austermuhle (@maustermuhle) December 11, 2019
“We can’t substitute a civil process for a criminal one and not expect it to lead to disparities,” he said.
“Following several years of forming consensus around medical cannabis products, we have to be ready to take action in the upcoming legislative session to further reform our laws in this arena,” he said in a press release. “This effort will include a more robust medical cannabis program and Attorney General Herring’s summit is a big step in ensuring we are knowledgeable on the issue and prepared to do this right.”
“Virginia is ready for evidence-based reform and that is what we will provide.”
Del. Stephen Heretick (D) said the summit “is a great opportunity for me and my fellow legislators to learn from the experiences of other states as we consider how to create more fair, just, equitable, and effective cannabis laws here in Virginia.”
Decriminalization is the first proposal on the agenda when the next session starts, the attorney general said. That would fulfill a campaign promise of Gov. Ralph Northam (D), who ran on the issue in 2017 and talked about in his State of the Commonwealth address this year.
“It’s time for public policy to catch up with public opinion, and NORML applauds Attorney General Herring for his efforts to foster and advance evidence-based cannabis laws,” Jenn Michelle Pedini, executive director of Virginia NORML said. “We look forward to supporting the attorney general and the Virginia Cannabis Caucus in their work reforming marijuana laws for a safer Commonwealth.”
While Northam hasn’t voiced support for recreational legalization, Herring said last week that Wednesday’s summit is one resource that will help the state move toward comprehensive reform.
“Criminalizing marijuana possession is not working.” Attorney General @MarkHerringVA said he will host a #cannabis summit to advance decriminalization in Virginia. #CheddarLive pic.twitter.com/ecB4BSQo5w
— Cheddar (@cheddar) December 3, 2019
“Based on my conversations, he supports decriminalization,” Herring, who is also running for governor in 2021, said. “Like a lot of people, I think they’d like to get more information about what legalization and what regulated, adult-use would look like.”
A bill to decriminalize marijuana and make possession of up to one ounce punishable by a maximum $50 civil penalty was prefiled in the legislature last month.
This latest legalization bill, introduced by Del. Lee Carter (D), will likely be a heavier lift. It would allow adults 21 and older to possess and purchase cannabis from licensed retailers, and it would impose a 10 percent tax, revenue from which would go toward a veterans fund, transportation and local municipalities that allow marijuana businesses to operate.
“While a majority of Virginians agree with Attorney General Herring that marijuana should be legal for responsible use by adults, it may take a bit more work to convince the Virginia General Assembly to send such a bill to the governor’s desk,” Michelle Pedini told Marijuana Moment. “Todays summit is an important, and historic, step toward that goal, and NORML is proud to be a part of it.”
Photo courtesy of Nicholas C. Morton.
Thailand Prime Minister Uses Medical Marijuana At Event With Ganja Mascot
Top officials in Thailand are getting the word out about medical marijuana—in part by distributing cartoon cannabis dolls and publicly using marijuana oils.
Prime Minister Prayut Chan-o-cha announced the launch of the government’s medical cannabis education site on Wednesday and appeared at an event alongside a person wearing a spectacled marijuana leaf costume called Dr. Ganja. Children were also present, carrying their own Dr. Ganja dolls.
The Thai government officially launches its medical cannabis "educational" website today.https://t.co/zhzZU61q3c
The Prime Minister gets a ganja doll, kids get a ganja doll, everybody gets a ganja doll!
Photo credit: Bhumjaithai Party pic.twitter.com/lVf1WTguqQ
— Prim Chuwiruch (@prim_chuwiruch) December 11, 2019
Prayut argued in favor of the therapeutic use of cannabis, stating that it represents a potential treatment option for low-income people in particular. According to The Nation Thailand, he also demonstrated marijuana products, inhaling an oil and applying some to the back of his ears. The prime minister also said he plans to purchase some oils himself.
The government’s education site features information about where to find cannabis clinics, what kinds of products are available and infographics laying out basic research into marijuana.
Thai lawmakers have made clear their excitement about medical cannabis, with several filmed participating in a ritual dance in August to celebrate the first batch of marijuana oil.
— Reuters Latam (@ReutersLatam) August 8, 2019
Months after Thailand opted to legalize medical marijuana, the ruling party unveiled draft legislation in September that allows individuals to cultivate up to six cannabis plants for personal use.
Photo courtesy of Bhumjaithai Party.