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Marijuana Banking Measure Rejected By Congressional Committee

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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Supporters then scrambled to craft a more limited measure focused on medical cannabis businesses, but it was ultimately withdrawn before a vote could take place.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.

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.”

In a separate House appearance the same month, he testified that fixing cannabis banking issues is at the “top of the list” of his department’s concerns.

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.”

This piece was first published by Forbes.

Marijuana Moment is made possible with support from readers. If you rely on our cannabis advocacy journalism to stay informed, please consider a monthly Patreon pledge.

Tom Angell is the editor of Marijuana Moment. A 20-year veteran in the cannabis law reform movement, he covers the policy and politics of marijuana. Separately, he founded the nonprofit Marijuana Majority. Previously he reported for Marijuana.com and MassRoots, and handled media relations and campaigns for Law Enforcement Against Prohibition and Students for Sensible Drug Policy. (Organization citations are for identification only and do not constitute an endorsement or partnership.)

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Legal Marijuana States Have Generated Nearly $8 Billion In Tax Revenue Since Recreational Sales Launched, Report Finds

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States that have legalized marijuana for adult use have collectively generated nearly $8 billion in tax revenue from cannabis since legal sales first began in 2014, according to a new report from the Marijuana Policy Project (MPP).

The analysis examined the tax structure and revenue streams of all 18 states that have legalized recreational cannabis, though sales have not launched yet in seven of those states. Overall, it shows that establishing regulated marijuana markets gives states a steady and generally growing source of revenue that can support various programs and services.

Last year alone, the adult-use states collected $2.7 billion in taxes from cannabis sales. And as more markets come online and others mature, that’s expected to continue to grow.

For example, California took in more than $1 billion in tax revenue from recreational marijuana in 2020—a 62 percent increase from 2019.

Illinois has consistently been breaking monthly cannabis sales records since its program started in January 2020, and if the trend keeps up, it could create upwards of $1 billion in tax revenue this year. For the first time, marijuana taxes outpaced those derived from alcohol in the state last quarter.

The report does not factor in local tax revenue that individual municipalities may impose on cannabis sales, like in Denver where residents pay an additional 5.5 percent tax that has generated hundreds of thousands of dollars for the city.

“Legalizing cannabis for adults has proven to be a wise investment,” Jared Moffat, state campaigns manager at MPP, said in a press release. “Not only are states seeing the benefits of a regulated market and far fewer cannabis-related arrests—they’re benefitting in a direct, economic way, too.”

MPP also broke down different ways that adult-use states are using those tax dollars.

In Colorado, $404.5 million in marijuana tax revenue has supported the state’s public school system. Oregon invests 40 percent of its cannabis revenue to public education, as well as 25 percent to fund mental health and treatment programs. And in California, $100 million in cannabis tax dollars have gone to community groups to help people most impacted by punitive drug laws.

“Before legalization, money from cannabis sales flowed through an underground market that endangered public safety and disrupted communities. But now, we see all across the country that revenue from the legal cannabis industry is supporting schools, health care, and a range of other beneficial public programs,” Moffat said. “It’s no wonder that residents in legalization states overwhelmingly see legalization as a success.”

Reform advocates aren’t the only ones interested in seeing how states are approaching the tax side of marijuana legalization. The U.S. Census Bureau also has plans to begin collecting and compiling data on revenue that states generate from legal cannabis.

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Illinois Will ‘Blow Past’ $1 Billion In Legal Marijuana Sales In 2021, Chamber Of Commerce President Says

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“Are we going to get to a billion dollars? I think we’re going to blow past the billion dollars based on the experience in smaller states,” the Chamber leader said.

By Elyse Kelly, The Center Square

Illinois’s cannabis industry is growing up fast, with adult-use recreational cannabis sales expected to hit $1 billion by year-end.

In March alone, Illinoisans spent $110 million on recreational marijuana.

Todd Maisch, president and CEO of the Illinois Chamber of Commerce, said one factor contributing to Illinois’ explosive growth is that most neighboring states haven’t legalized marijuana yet.

“What we saw early on in states like Washington and Colorado is they did have demand come in from surrounding states, which frankly benefits our industry and benefits the taxes collected,” Maisch said.

Cannabis sales have already surpassed alcohol’s tax revenues for the state, and Maisch said he thinks $1 billion estimates are conservative.

“Are we going to get to a billion dollars? I think we’re going to blow past the billion dollars based on the experience in smaller states,” Maisch said.

There are only a couple of things that could stop Illinois’ explosive cannabis market growth, Maisch said. He said that policymakers could ruin things by pushing taxes too high as evidenced by the tobacco market.

“As taxes have gone up and up and up, they’ve pushed people all the way into the black market or they’ve created this grey market in which people are ostensibly paying some of the taxes, but they’re still getting sources of tobacco products that avoid much of the tax,” Maisch said.

The other thing that could head off continued growth is other states opening up recreational-use markets.

“So if you start to see surrounding states go to recreational, that’s definitely going to flatten the curve because we’re not going to be pulling in demand from other states,” Maisch said.

Maisch points out some concerns that accompany the explosion of Illinois’s recreational cannabis market including workforce preparedness.

“All of those individuals who are deciding to go ahead and consume this product are really taking themselves out of a lot of job opportunities that they would otherwise be qualified, so there’s a real upside and a downside,” Maisch said.

While it’s easy to track the revenues this industry brings into state coffers, he points out, it will be harder to track the lack of productivity and qualified individuals to operate heavy machinery and other jobs that require employees to pass a drug test.

This story was first published by The Center Square.

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Missouri Regulators Derail Medical Marijuana Business Ownership Disclosure Effort With Veto Threat

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Missouri regulators say they feel requiring medical marijuana business license ownership disclosures under a House-approved amendment could be unconstitutional, and they may urge the governor to veto the legislation. 

By Jason Hancock, Missouri Independent

An effort by lawmakers to require disclosure of ownership information for businesses granted medical marijuana licenses was derailed on Thursday, when state regulators suggested a possible gubernatorial veto.

On Tuesday, the Missouri House voted to require the Department of Health and Senior Services provide legislative oversight committees with records regarding who owns the businesses licensed to grow, transport and sell medical marijuana.

The provision was added as an amendment to another bill pertaining to nonprofit organizations.

Its sponsor, Rep. Peter Merideth, D-St. Louis, said DHSS’s decision to deem ownership records confidential has caused problems in providing oversight of the program. He pointed to recent analysis by The Independent and The Missourian of the 192 dispensary licenses issued by the state that found several instances where a single entity was connected to more than five dispensary licenses.

The state constitution prohibits the state from issuing more than five dispensary licenses to any entity under substantially common control, ownership or management.

On Thursday, a conference committee met to work out differences in the underlying bill between the House and Senate.

Sen. Eric Burlison, a Republican from Battlefield and the bill’s sponsor, called the medical marijuana amendment an “awesome idea. I think it’s awesome.”

However, he said opposition from the department puts the entire bill in jeopardy.

“The department came to me,” he said, “and said they felt that this was unconstitutional.”

DHSS has justified withholding information from public disclosure by pointing to a portion of the medical marijuana constitutional amendment adopted by voters in 2018 that says the department shall “maintain the confidentiality of reports or other information obtained from an applicant or licensee containing any individualized data, information, or records related to the licensee or its operation… .”

Alex Tuttle, a lobbyist for DHSS, said if the bill were to pass with the medical marijuana amendment still attached, the department may recommend Gov. Mike Parson veto it.

The threat of a veto proved persuasive, as several members of the conference committee expressed apprehension about the idea of the amendment sinking the entire bill.

Merideth said the department’s conclusion is incorrect. And besides, he said, the amendment is narrowly tailored so that the information wouldn’t be made public. It would only be turned over to legislative oversight committees.

Rep. Jered Taylor, R-Republic, chairman of the special committee on government oversight, said the amendment is essential to ensure state regulators “are following the constitution, that they’re doing what they’re supposed to be doing.”

The medical marijuana program has faced intense scrutiny in the two years since it was created by voters.

A House committee spent months looking into widespread reports of irregularities in how license applications were scored and allegations of conflicts of interest within DHSS and a private company hired to score applications.

In November 2019, DHSS received a grand jury subpoena, which was issued by the United States District Court for the Western District. It demanded the agency turn over all records pertaining to four medical marijuana license applications.

The copy of the subpoena that was made public redacted the identity of the four applicants at the request of the FBI. Lyndall Fraker, director of medical marijuana regulation, later said during a deposition that the subpoena wasn’t directed at the department but rather was connected to an FBI investigation center in Independence.

More recently, Parson faced criticism for a fundraiser with medical marijuana business owners for his political action committee, Uniting Missouri.

The group reported raising $45,000 in large donations from the fundraiser. More than half of that money came from a PAC connected to Steve Tilley, a lobbyist with numerous medical marijuana clients who has been under FBI scrutiny for more than a year.

This story was first published by Missouri Independent.

GOP Senator Who Trashed Marijuana Banking Amendment Years Ago Is Now Cosponsoring Reform Bill

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