A powerful congressional committee voted on Wednesday to reject a measure to protect banks that open accounts for marijuana businesses from being punished by federal financial regulators. Supporters then scrambled to craft a more limited measure focused on medical cannabis businesses, but it was ultimately withdrawn before a vote could take place.
The broader measure would have prevented the U.S. Department of Treasury from taking any action to “penalize a financial institution solely because the institution provides financial services to an entity that is a manufacturer, producer, or a person that participates in any business or organized activity that involves handling marijuana or marijuana products” in accordance with state or local law.
After a lengthy and impassioned debate during which at least 19 lawmakers spoke, it was defeated on a voice vote by the House Appropriations Committee.
Despite the fact that a growing number of states are legalizing marijuana for recreational or medical use, many financial institutions have remained reluctant to work with cannabis businesses for fear of running afoul of money laundering laws under ongoing federal prohibition.
As a result, many marijuana growers, processors and retailers operate on a cash-only basis, which can make them targets for robberies.
The issue is “not whether or not one approves of marijuana,” said Rep. David Joyce (R-OH), the chief sponsor of both banking amendments, before the vote. “This is about public safety and financial transparency.”
Either rider, if it were successfully attached to legislation to fund the Treasury Department for Fiscal Year 2019, would have provided added assurance to banks that federal officials won’t close them down for working with the cannabis industry.
A similar measure was approved by the full House of Representatives in 2014 by a margin of 231 to 192, but was not included in final spending legislation that year, and congressional Republicans have since blocked floor votes on most cannabis measures.
In the lead up to the Wednesday banking vote, several advocates and Capitol Hill staffers expressed confidence in interviews that the measure would pass. But a number of likely Republican supporters were absent during the debate, and others who are sympathetic to marijuana law reform expressed varying concerns about the specific proposal. As a result, supporters did not force a roll call tally following the defeat on a voice voice.
Joyce then went back to the drawing board and crafted the narrower medical-focused amendment, which he hoped would find enough support to pass. But after a brief debate on the second proposal, Chairman Rodney Frelinghuysen (R-NJ) asked Joyce three times to withdraw the amendment instead of forcing a vote. The Ohio congressman twice pressed ahead and said he wanted the committee to weigh in on the measure, only to give in at the last moment and pull the measure.
By seeking to adopt the language in the appropriations panel, before the overall spending bill heads to the Rules Committee, which is where marijuana amendments have gone to die for the past several years, advocates were attempting to circumvent an effective blockade that has prevented progress on cannabis reform in the House.
In a similar move last month, the Appropriations Committee approved a measure to protect state medical cannabis laws from Justice Department interference following several instances of that measure being blocked by the Rules Committee.
In a separate sign of the mainstreaming of marijuana politics on the other side of the Capitol, on Wednesday the Senate Appropriations Subcommittee on Commerce, Justice, Science and Related Agencies included that far-reaching medical marijuana language in the initial version of the Justice Department funding bill as introduced by Republican leaders, meaning that no vote or amendment will even be necessary to advance the provision in that chamber this year.
The Senate panel is scheduled to take up its version of the Treasury Department funding bill, which is called the Financial Services and General Government Appropriations Act, next week.
The Fraternal Order of Police, which opposes legalization, sent a letter this week urging House lawmakers to reject the cannabis banking move.
Letter to @USRepRodney & @NitaLowey advising them of our strong opposition to any amendment that would allow the marijuana industry full access to the American banking system. Drug cartels will be given the opportunity to launder money under the guise of marijuana normalization pic.twitter.com/y5a0gHPIUi
— National FOP (@GLFOP) June 12, 2018
While U.S. Attorney General Jeff Sessions in January rescinded Obama-era guidance that generally protected state marijuana laws from Justice Department interference, Treasury Department officials have for now kept in place a separate memo that provides some direction and limited protection to banks that work with cannabis businesses.
Also on Wednesday, Federal Reserve Chairman Jerome Powell was asked about cannabis banking issues during a press conference.
“This is a difficult area, because many state laws permit the use of marijuana and federal law still doesn’t,” he said. “So it puts federally chartered banks in a very difficult situation.”
The Fed chairman implied that he would like the issue to be resolved with a change in policy.
“It would great if that could be clarified,” Powell said. “Our mandate has nothing to do with marijuana, so we just would love to see it clarified.”
Another top Trump administration official, Treasury Sec. Steven Mnuchin, has indicated on a number of occasions that he sees the importance of allowing marijuana businesses to store their profits in banks.
“I assure you that we don’t want bags of cash,” he testified before a House committee in February. “We do want to find a solution to make sure that businesses that have large access to cash have a way to get them into a depository institution for it to be safe.”
Prior to his confirmation by the Senate last year, Mnuchin said in response to written questions from a senator that marijuana businesses’ banking and tax issues are “very important.”
President Trump himself last week indicated that he supports broader changes to federal marijuana prohibition so that states can set their own legalization laws without interference.
“I really do. I support Senator Gardner,” the president said when asked by a journalist if he supports the legislation, filed last week by Sens. Cory Gardner (R-CO) and Elizabeth Warren (D-MA).
The Treasury Department legislation, which also covers funding policy for the District of Columbia, contains provisions that prohibit the city from spending local or federal funds to enact a broader system of legal marijuana sales and from using federal monies to support supervised drug consumption facilities.
Meanwhile, separate standalone bills to permanently solve the marijuana industry’s financial services issues have record levels of support. House legislation filed by Rep. Ed Perlmutter (D-CO) has 94 cosponsors and a companion Senate bill sponsored by Sen. Jeff Merkley (D-OR) has 18 lawmakers signed on.
The marijuana banking amendment, as proposed before the House Appropriations Committee, reads:
“None of the funds made available in this Act may be used, with respect to the States of Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming, or with respect to the District of Columbia, Puerto Rico, or Guam, to penalize a financial institution solely because the institution provides financial services to an entity that is a manufacturer, producer, or a person that participates in any business or organized activity that involves handling marijuana or marijuana products and engages in such activity pursuant to a law established by a State or a unit of local government.”
The medical cannabis banking amendment reads:
“None of the funds made available by this Act may be used, with respect to the States of Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming, or with respect to the District of Columbia, Puerto Rico, or Guam, to penalize a financial institution solely because the institution provides financial services to an entity that is a manufacturer, producer, or a person that participates in any business or organized activity that involves handling medical marijuana or medical marijuana products and engages in such activity pursuant to a law established by a State or a unit of local government as it pertains to medical marijuana. Any entity that engages in any activity involving marijuana that is not exclusively for medical purposes shall not be covered by this provision.”
Bank Of America Cancels Account Of Marijuana And Psychedelics Research Institute Registered With DEA
The second-largest bank in the U.S. is shutting down the account of a research institute that’s federally authorized to cultivate and study Schedule I substances like marijuana and psilocybin mushrooms.
Bank of America (BoA) abruptly notified the Scottsdale Research Institute (SRI) that it would be closing its accounts last week, without a clear explanation of the reasoning. A letter from the bank that was shared with Marijuana Moment on Monday says the decision was made after “a careful review of your banking relationship” and that the action is “final and won’t be reconsidered.”
SRI has spent years fighting for expanded access to research-grade controlled substances to study their therapeutic potential, in part by litigating against the Drug Enforcement Administration (DEA) on issues such as cannabis scheduling. In May, it received preliminary approval from the agency to be one of the first new federally authorized cultivators of cannabis for research, effectively ending a decades-long monopoly on such manufacturing.
The institute is already getting bids from other financial institutions that want to take on the account after chief investigator Sue Sisley shared the news of the BoA closure on social media.
“We just wanted to expose wrongdoing of these big banks,” Sisley told Marijuana Moment, adding that they want to “show the public that even federally legal operations are being unfairly targeted by these large banks who refuse to look at our federal regulatory documents.”
Bank of America closes down account of Federally-licensed cannabis researcher. SRI conducts FDA approved controlled trials evaluating cannabis as medicine for treating pain/PTSD in military veterans & terminally ill patients this TRAGICALLY shuts down our research @BankofAmerica pic.twitter.com/Q0a2nFvIIX
— Sue Sisley, MD (@suesisleymd) October 16, 2021
It takes significant resources to obtain and maintain DEA clearance to grow and study Schedule I substances like marijuana. One theory that Sisley floated was that BoA may have decided to end the business relationship after SRI was more recently cleared to cultivate psilocybin for research, but the bank provided “zero justification.”
“Maybe it was the mushrooms that freaked them out?”
Marijuana Moment reached out to BoA for comment, but representatives did not respond by the time of publication.
Sisley said the institute received “no warning,” with “no ability to speak to somebody logical who could review our operating agreement with DEA. We have been plant-touching since our start with Bank of America 10 years ago” and were “always transparent about that.”
“We have a contract with DEA. We are growing cannabis for [Food and Drug Administration] clinical trials and selling it to the DEA,” she said. “It’s unconscionable the way they are behaving—and further proof that the word ‘cannabis’ continues to be completely radioactive even though this is a 100 percent federally legal operation.”
“Fortunately, there are banks that care about the progress of federally regulated and federally legal research and are eager to step up and support us immediately,” Sisley added. “We will be moving our funding from Bank of America and never returning there. Our research continues without harm because other banks that care about scientific freedom were able to step up. Bank of America doesn’t even have the decency to provide an explanation after a decade of banking with an openly plant-touching business.”
SRI has been behind several legal challenges imploring the federal government to remove research barriers for Schedule I drugs like marijuana and psychedelics.
In August, a federal appeals court has dismissed SRI’s petition to require DEA to reevaluate marijuana’s scheduling under the Controlled Substances Act (CSA)—but one judge said in a concurring opinion that the agency may soon be forced to consider a policy change anyway based on a misinterpretation of the medical value of cannabis.
The lawsuit received oral arguments in June and largely centered on DEA’s 2020 denial of a one-page marijuana rescheduling petition filed by a separate individual. In its response, the agency argued that marijuana has no currently accepted medical value.
The petitioners initially filed their lawsuit, Sisley v. DEA, against the federal agency in May of last year, contending that DEA’s justification for maintaining a Schedule I status for cannabis violates the Constitution on numerous grounds. DEA attempted to dismiss the case, but the Ninth Circuit rejected that request in August.
In a separate case, the institute successfully forced DEA to issue an update on the status of its application to grow cannabis and then got the Justice Department to hand over a “secret” memo that DEA allegedly used to justify a delay in deciding those proposals.
Meanwhile, DEA is taking additional steps to promote research into the potential risks and benefits of marijuana and certain psychedelics. Last week it proposed a dramatic increase in the legal production substances like cannabis, psilocybin, LSD, MDMA and DMT to be used in research next year.
DEA had already massively upped its proposed 2021 quota for cannabis and psilocybin last month, but now it’s calling for significantly larger quantities of research-grade marijuana and a broader array of psychedelics to be manufactured in 2022.
But despite these developments and the changing policy landscape surrounding marijuana and psychedelics at the state and local level, many financial institutions remain reluctant to service clients that work with these currently federally illicit products.
The number of banks and credit unions reporting that they work with marijuana businesses ticked up last quarter, according to federal data released last month.
Lawmakers have been working to to enact clear, statutory protections for banks and credit unions that work with the marijuana industry to alleviate remaining hesitation in the financial services industry about working with cannabis businesses. That would be accomplished through House-passed standalone legislation, or an amendment that was attached to a defense spending bill last month.
In the meantime, Sisley said SRI could sue BoA over the account cancelation, but it has other things to focus on.
“We have important work to do,” she said. “We need to stay on our path to helping whole plant cannabis flower walk through the entire FDA drug development process.”
Image element courtesy of Kristie Gianopulos.
Americans Want To Live Where Marijuana Is Legal, Real Estate Survey Finds
Americans would rather live in states where marijuana is legal than in those that continue to criminalize cannabis consumers. That’s according to a new survey published on Monday by real estate company Redfin.
Among those who recently moved to a new metro area, 46 percent said they prefer to reside somewhere marijuana is “fully legal,” compared to just 22 percent who want to live in a place with prohibition still in effect.
The share of those who like legalized jurisdictions includes more than one in ten respondents—12 percent—who say they would only consider living in places where cannabis can be legally purchased. On the other side, 10 percent said they would rule out moving to areas that have ended criminalization.
Thirty-two percent of people taking the survey said they don’t care about the marijuana issue when it comes to where to live.
The survey, which involved 1,023 U.S. residents who moved to a new home during the 18 months prior to answering the questions in August, also asked about other issues such as abortion policy, voting rights and anti-discrimination laws for gender and sexual orientation.
Redfin said that while public policies on cannabis and other issues are important factors in deciding where to move, other considerations often take precedence.
“People take the politics of a place into consideration when deciding where to move, but the truth of the matter is that other factors including housing affordability and access to jobs and schools take priority,” Taylor Marr, the deputy chief economist for the company, said in a press release. “Oftentimes this means someone will move from a blue state to a red state (or vice versa), but choose a home in a neighborhood where most people hold the same political views as they do. Austin—a liberal Texas enclave that’s attracting scores of left-leaning folks from pricier coastal cities—is just one example.”
Prior analyses, including one published this year that uses data from online real estate marketplace Zillow, has shown that marijuana legalization is associated with higher home property values. “Home values increased $6,338 more in states where marijuana is legal in some form, compared to states that haven’t legalized marijuana,” it concluded.
Last year, a separate analysis from economists at the University of Oklahoma similarly found that states that legalize marijuana see a boost in housing prices, with the effect most pronounced once nearby retail outlets open for business.
Research—including a study released this month that was authored by a federal official with the U.S. Department of Agriculture—has tied cannabis legalization to lower crime rates, a key factor in home values and neighborhood desirability.
Nevada Sold More Than $1 Billion In Marijuana In One Year, Officials Report
Nevada retailers sold more than $1 billion in medical and recreational marijuana over a one-year period, state officials announced on Wednesday.
The Nevada Cannabis Compliance Board (CCB) and the Nevada Department of Taxation released the data, which shows $1,003,467,655 in taxable cannabis purchases in Fiscal Year 2021, which ran from July 1, 2020 to June 30, 2021.
By contrast, total marijuana sales for the prior 2020 fiscal year amounted to $685 million.
This is what Nevadans expected since the legalization of recreational marijuana. Education remains one of my top priorities, and I’m proud to see promised tax revenue from cannabis sales directly funding our students and classrooms. https://t.co/iy64R47v4G
— Governor Sisolak (@GovSisolak) October 13, 2021
The bulk of the marijuana purchases ($791,100,017) came from Clark County, where Las Vegas is located. Another $135,326,790 of cannabis was sold in Washoe County, with Reno being the major city in that jurisdiction. The $77,040,859 remainder came from other counties.
Ten percent of tax revenue from recreational cannabis sales will support pubic education funding, as prescribed under a bill that Gov. Steve Sisolak (D) previously signed.
“This is what Nevadans expected since the legalization of recreational marijuana,” the governor said in a press release about the new sales data. “Education remains one of my top priorities, and I’m proud to see promised tax revenue from cannabis sales directly funding our students and classrooms.”
Sisolak also signed a bill in June to legalize marijuana consumption lounges in the state.
The new social use license types statewide and giving consumers this option—especially in the tourist-centric state—could further boost marijuana and other tax revenues.
The governor has also committed to promoting equity and justice in the state’s marijuana law. Last year, for example, he pardoned more than 15,000 people who were convicted for low-level cannabis possession.
That action was made possible under a resolution the governor introduced that was unanimously approved by the state’s Board of Pardons Commissioners.
Marijuana Moment is already tracking more than 1,200 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.
Meanwhile, states across the U.S. have been touting marijuana sales and the resulting tax revenue as markets continue to mature.
For example, Illinois marijuana retailers have sold nearly $1 billion worth of legal recreational cannabis products so far in 2021, officials recently reported.
Maine recreational marijuana sales broke another marijuana sales record in August, exceeding $10 million for the first time since the adult-use market launched in October 2020.
Arizona brought in about $21 million in medical and adult-use marijuana tax revenue in July, state officials reported on a new webpage that enables people to more easily track how the industry is evolving.
California collected about $817 million in adult-use marijuana tax revenue during the 2020-2021 fiscal year, state officials estimated in August. That’s 55 percent more cannabis earnings for state coffers than was generated in the prior fiscal year.
A recent scientific analysis of sales data in Alaska, Colorado, Oregon and Washington State found that marijuana purchases “have increased more during the COVID-19 pandemic than in the previous two years.”
In July alone, at least three states saw record-breaking sales for recreational cannabis. The same goes for Missouri’s medical marijuana program.
Michigan marijuana sales broke another record in July with more than $171 million in cannabis transactions, according to data from the state’s regulatory body. There were $128 million in adult-use sales and $43 million in medical cannabis purchases.
Throughout the pandemic, many states allowed cannabis retailers to remain open—with governors and regulators in several markets declaring marijuana businesses to be essential services—and some jurisdictions issued emergency rules allowing curbside pickup, delivery services or other more relaxed policies in order to facilitate social distancing.
Meanwhile, New York officials are projecting that marijuana tax revenue will help keep the state’s budget afloat as cigarette sales continue to decline over the coming years. But retails sales have yet to launch as of now.
Read the marijuana sales data that Nevada officials released below: