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Supporters then scrambled to craft a more limited measure focused on medical cannabis businesses, but it was ultimately withdrawn before a vote could take place.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.”
U.S. Postal Service Issues Advisory On Mailing Hemp-Derived CBD
The U.S. Postal Service (USPS) quietly issued an advisory earlier this month clarifying rules around mailing cannabis preparations, saying that “some CBD products derived from industrial hemp can be mailable under specific conditions.”
The memo also signals that USPS will further loosen restrictions in the future in light of the passage of the 2018 Farm Bill, which federally legalized industrial hemp.
For now, the current advisory, which was first reported by the marijuana law blog Kight On Cannabis, stipulates that it is legal to mail hemp-derived CBD products in compliance with research-focused provisions of the earlier 2014 version of the federal agriculture legislation.
However, postal customers must first take certain steps such as providing a signed self-certification statement and documentation confirming the hemp producer is licensed through a state agriculture department.
Hemp mailed through USPS must also contain 0.3 percent THC—a policy that’s consistent with both the 2014 and 2018 Farm Bill definitions of hemp.
“The Postal Service has received an increasing number of requests to transport CBD oil and products containing CBD in Postal Service networks,” Travis D. Hayes III, a USPS business program specialist wrote in the March 4 advisory.
The federal agency said that the new instructions are due to change, given the broader legalization of hemp and its derivatives through the 2018 Farm Bill.
“Postal employees should be aware that the Agricultural Improvement Act of 2018 was recently signed into law,” the memo says. “This legislation removes industrial hemp from regulation under the Controlled Substances Act.”
But the agency said that it would wait until the legislation “is fully implemented” before it will “modify the mailability criteria for CBD and other cannabis products.”
The U.S. Department of Agriculture (USDA) is in charge of creating and implementing general regulations for hemp—instead of the Justice Department, which formerly oversaw enforcement against the crop—but it’s not clear when those rules will be formalized. Lawmakers and stakeholders have pressured the department to get the ball rolling, and it held a listening session last week to gather input from states and other interested parties.
But Agriculture Secretary Sonny Perdue has tried to temper expectations, emphasizing the need to “proceed slowly” given the crop’s complexity and saying that USDA plans to have its regulations ready for the 2020 growing season.
“We’re proceeding very judiciously obviously because of the uniqueness of the crop hemp and its relationship to other crops that we’re not encouraging,” he said last month, referring to marijuana.
While the USPS said that it issued the advisory because it was receiving an influx of inquiries about the rules governing mailing CBD, Kight On Cannabis suggested that it was prepared as a response to a legal dispute from last year surrounding the postal service’s seizure last year of hemp-derived CBD products that had been lawfully mailed.
Read the full USPS memo on mailing hemp-derived CBD below:
USPS CBD Hemp Clarification by on Scribd
Photo courtesy of Wikimedia/Kevin Payravi.
Marijuana Activists Protest John Boehner’s SXSW Speech
Advocates for social equity in the increasingly legal marijuana economy are protesting keynote speeches by former Republican House Speaker John Boehner and MedMen CEO Adam Bierman at South by Southwest (SXSW).
The Equity First Alliance, a group that promotes racial and social justice in the cannabis industry, said that Boehner and Bierman’s scheduled Friday appearances at the festival are a reflection of an ongoing trend where mostly white men are profiting off a market while people of color continue to disproportionately face criminalization for marijuana offenses.
Boehner has been the subject of ongoing criticism from marijuana advocates, who point out that he failed to act on cannabis reform, and opposed certain criminal justice reform legislation, during his 24 years in Congress. While he never introduced, cosponsored or voted in favor of marijuana bills in that time, he joined one of the largest cannabis firms, Acreage Holdings, as a board member last year.
Bierman has been accused in a lawsuit filed by a former employee of making racist and homophobic remarks. His company, which was valued at $1.6 billion last year, was also a member of a New York-based medical marijuana industry association that advocated against allowing home cultivation in a memo submitted to Gov. Andrew Cuomo. (The company told Marijuana Moment that it supports the right to home cultivation, but did not answer questions about its involvement in drafting the document. It was later asked to leave the group over Bierman’s alleged remarks.) Acreage remains a member of the same association.
“Our protest at SXSW sends a bold message in support of cannabis equity, justice, and repair,” the Equity First Alliance’s Felicia Carbajal said in a press release. “We stand together, recognizing that by defending the most marginalized among us, we defend all of us. We support the advocacy and resistance movements that reflect our multiple and intersecting identities, and we call on all defenders of human rights to join us.”
Activists held protest signs over a nearby highway and at a hotel where Boehner’s speech—which covers “the likely paths to national legalization and the challenges and opportunities America’s fastest growing industry face today”—will take place on Friday. The signs condemn “big marijuana” and call for social equity policies such as community reinvestment.
— Ministry of Hemp (@MinistryofHemp) March 15, 2019
“It’s clear this market is going to expand,” Boehner told CNBC in an interview ahead of the event. “And as it does, lawmakers in Washington have to look up and realize that the federal government is way out of step. It’s time for the federal government to get out of the way.”
In the press release, Equity First Alliance listed additional reasons they’re protesting as well as policies they support.
“In protest of:
—Those profiting off of cannabis without an intentional plan to repair and make whole individuals, families, and communities that have been devastated by the War on Drugs;
—Those profiting off of cannabis who once participated in prohibition;
—And those who would profit before freeing all cannabis prisoners and vacating all cannabis convictions
And calling for:
—10% of companies’ annual revenue to be reinvested in communities disproportionately harmed by the
War on Drugs;
—A new paradigm of social responsibility in the cannabis industry;
—And public policies that create an equitable, just, and reparative industry.”
“It’s hypocritical for an Austin based company like SXSW, a company imbedded in a city that preaches diversity and inclusion, to neglect the work of committing to create an inclusive space, and instead give a keynote platform to John Boehner,” Chas Moore, executive director of the Austin Justice Coalition, said. “This is disgusting.”
— AcreageHoldings (@AcreageCannabis) March 15, 2019
Marijuana Moment reached out to Acreage for comment, but a representative did not respond by the time of publication.
Photo courtesy of Gage Skidmore.
Model Legislation Aims To Help Cities Bring People Of Color Into Marijuana Industry
In the continuing work to diversify the legal cannabis space and include communities that have been hurt the most by the war on drugs, advocates have unveiled a model local ordinance that would help more people of color enter the industry.
The Model Municipal Social Equity Ordinance, released Monday by the Minority Cannabis Business Association (MCBA), “creates a baseline framework for adopting and advancing social equity in the cannabis industry as official public policy.”
Research shows that African Americans are almost four times more likely to be arrested on marijuana-related charges than their white counterparts—even while usage rates are virtually identical. But as legalization makes its way across the country, the effects of this systemic racial bias persist: More than 80 percent of legal cannabis businesses are owned by white people, according to one survey.
In other words, the communities that have been punished the most for something as simple as marijuana possession have yet to see many of the benefits associated with legalization.
To address this disparity, MCBA’s model ordinance calls for cities to create cannabis social equity programs to provide financial and technical support to people who might not be able to otherwise own, invest or otherwise work in the cannabis industry. For example, under current policies enacted elsewhere, they may not be able to afford the high costs associated with licensing. Or they may be barred from even applying to work in the industry because of a past drug conviction.
The model ordinance is designed to even the playing field. People who were arrested on charges related to marijuana prior to legalization, who had a family member arrested on such charges and/or lived in an area with disproportionately high cannabis arrest rates would be eligible to participate in the program. It also invites people with low income—defined as those with “household income of less than 80 percent of the current fiscal year median family income for the county of residence”—to participate as well.
“The licensing structure… prioritizes folks who have been impacted by the war on drugs for ownership,” Jason Ortiz, MCBA vice president, told Marijuana Moment in a phone interview. “Those folks are often left behind, if included at all. We put them at the front of the line.”
Another important part of the ordinance, Ortiz said, is that it empowers local governments to study the impact of marijuana prohibition on their communities and use that data to influence decisions on where money generated from the industry should go.
“If your community was specifically targeted for arrests, your community now has data to support why they should be the ones to receive the support that is generated,” he said.
The model ordinance also encourages cities to create a “community reinvestment fund” from tax dollars and other revenue from cannabis businesses to use for job training, re-entry services and other community-centered support.
Other provisions include the facilitation of “resentencing and expungement to restore the civil rights of prior cannabis arrestees” (such as the automated process recently instituted in San Francisco) and the end of “suspicionless drug testing,” among other considerations.
The next step, of course, is to get municipalities to actually adopt the model ordinance. That’s going to take community engagement and dialogue, Ortiz said.
“For us, the importance and relevance of this document is that it allows anyone anywhere to start to have a conversation about equity at their local and state level,” he said.
“The Model Ordinance is a statement from the communities we represent to the local lawmakers, regulators, entrepreneurs and other stakeholders who are building our nation’s cannabis industry one town at time–social equity is not only possible, it should be the industry standard moving forward,” Khurshid Khoja, co-chair of the MCBA Policy Committee, said in a press release. “Our work gives those actors the tools they need to make equity a present reality in our industry rather than a lost opportunity.”
In 2017, MCBA released a similar model bill for state legislatures championing industry-wide equity.
Photos/screen grabs from video produced by MCBA.