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Supporters then scrambled to craft a more limited measure focused on medical cannabis businesses, but it was ultimately withdrawn before a vote could take place.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.”
Washington Still Doesn’t Know What Good Marijuana Is (Or How To Test For It)
Retail sales of legal marijuana have been underway in Washington state for more than four years—and state regulators in charge of quality control still aren’t sure what good cannabis is, or how to test for it.
All product sold in stores is supposed to be tested for mold, pesticides and other contaminants by labs evaluated and accredited by a private company under contract.
That will change sometime soon. The Washington State Liquor and Cannabis Board, which regulates marijuana sales, has until January 15 to come up with recommendations for how the state should begin accrediting testing labs.
But in order to do that, regulators—or state lawmakers, or both—have to decide what, exactly, makes good weed. And nobody—not in Washington state, nor elsewhere in the U.S. where marijuana is legal—can seem to agree what that is, according to a draft government report posted online Thursday.
“Current quality standards… are insufficient to support a robust, science-based cannabis laboratory accreditation program,” the Washington Department of Ecology document says.
A “Cannabis Science Workgroup” comprised of experts in chemistry, biology, medicine and other fields to determine minimum standards for cannabis quality should be formed, wrote Sara Sekerak, a senior chemist and project manager at the department.
To reach this determination, researchers with the agency reviewed quality-control standards in four states. They found that “[w]idely accepted quality standards for testing cannabis and cannabis products do not yet exist.”
“Accreditation does not designate product standards or quality standards,” the report adds. “However, these are necessary to support meaningful accreditation.”
Eventually, testing labs in Washington will be accredited by a state agency. Until that happens, quality may remain erratic.
Because of weak or nonexistent state rules, labs “are allowed to design their own levels” of quality control and quality assurance. There are no readily available samples of agreed-upon “quality” cannabis to set a basic standard by, as there is for drinking water and other consumer goods.
Untrained workers collecting samples for testing may taint the samples. And current accreditation standards applied by the International Organization for Standardization (ISO) are not sufficient, the report found.
New York Liquor Stores Want To Sell Marijuana
Instead of creating a whole new system of specialized stores to distribute marijuana when it becomes legal, New York should just allow existing liquor and wine retail outlets to sell cannabis to adults. That’s the position of a new advocacy effort launched by owners of booze shops this month.
“With more than 2,000 wine and liquor stores from Buffalo to Montauk, we offer existing retail space with quick and cheap access to the market in every corner of the state,” reads the website for the group, which is called The Last Store on Main Street. “That means more tax revenue, and sooner, for the State to fulfill basic responsibilities and invest in the future of our neighborhoods.”
The group, which previously defeated an effort to allow wine sales in grocery stores, says that its members shops “operate under a highly regulated system that can easily and reasonably be expanded to cover marijuana retail without building new bureaucracy that only serves to eat into the tax revenues the industry creates.”
Jeff Saunders, the group’s founder, said alcohol retailers are worried that unless they are allowed to sell cannabis, their revenues could suffer.
“Recreational marijuana sales have resulted in significant declines in wine and liquor sales in other states, resulting in job loss and even stores closing,” he said, according to the news outlet New York Upstate.
On the group’s website, New Yorkers who agree with the goal of allowing weed sales in liquor stores can send prewritten letters to their state lawmakers that describe the move an “obvious win-win opportunity for a bedrock industry of New York’s Main Street economies and the future of our state.”
The effort to shape how legalization could roll out comes as the administration of Gov. Andrew Cuomo (D) is taking steps to bring about the end of marijuana prohibition.
Earlier this year, Cuomo directed the state Health Department to study legalizing marijuana, a move that led to a report that found that doing so would have more benefits than risks.
State officials are conducting a series of listening sessions around the state on the topic, and the governor created a task force to draft legalization legislation that lawmakers can consider in 2019.
Meanwhile, lawmakers are already holding hearings on ways to end cannabis prohibition.
Photo courtesy of Marilyn Acosta.
John Boehner Is Now Selling Marijuana Stock Tips
John Boehner, who just a few years ago was two heartbeats away from becoming president of the United States, is now “all in on the cannabis industry,” which he promises can “quite possibly” be worth as much as “$1 trillion” in the near future.
And the Republican former speaker of the House of Representatives wants you to join him on this gravy train. All you need to do is buy the very exclusive stock tips that Boehner is now selling.
Marijuana stocks have been in a free fall over the past few days, with formerly blue-chip Canadian companies—which saw their shares swell in value in the run up to nationwide legalization so quickly it caught the eye of Mad Money’s Jim Cramer—suffering double-digit losses as amateur investors lose their nerve.
If Boehner shares their concern, he did not show it on Tuesday, when the erstwhile anti-marijuana lawmaker provided the star power for the launch of the National Institute of Cannabis Investors.
“This is the time,” Boehner solemnly said, “to go all in on cannabis.”
Boehner made waves earlier this year when he joined the board of advisors of Acreage Holdings, a New York City-based firm that says it runs medical marijuana dispensary and cultivation operations in 13 states. The company is now preparing to go public via a reverse takeover, plus plenty of internet hype.
That will presumably be very good news for John Boehner. In the meantime, the former speaker says he has other extremely good marijuana stock-related news to share with you—provided you pony up an untold sum of money for membership in the cannabis investors’ network.
Exactly which companies Boehner suggests you invest in in order to build “the kind of wealth that lasts for generations,” he did not say during Tuesday’s nearly hourlong “American Cannabis Summit,” an extended infomercial for the investors’ network, though he and his co-presenters—veteran stock-tip salesman Mike Ward and Danny Brody, who helped take public a Canadian marijuana company that recorded $0 in sales in fiscal year 2018 and had zero kilograms of product in their inventory as of July, according to Seeking Alpha—did drop some clues.
One company manufactures the plastic containers in which retail marijuana is packaged. Another makes legal CBD oil—because, as Boehner said, he’d “think twice” before offering someone medical cannabis with more than 0.15 percent THC. Yet another could “help end our devastating opioid epidemic,” Tuesday’s presentation promised.
One of these companies could be “38 times bigger than GW Pharmaceuticals,” the UK drug manufacturer with an FDA-approved cannabis-derived epilepsy medication. That’s a bold claim, but such is Boehner’s confidence. (It’s also backed by “not one, but two 100 percent money-back guarantees,” Ward said. So there is that.)
Other highlights from Tuesday’s tease:
There is “nobody in cannabis more connected in Washington” than Boehner, whose post-retirement preparation for the cannabis industry involved playing lots of golf, smoking cigarettes and ripping in-power Republicans, including the president.
Boehner knows exactly how President Donald Trump feels about marijuana legalization but won’t say, because “if I tell you about our private conversations, I won’t have any more of them.”
He does feel that federal legalization could happen within the next five years. “It’s not a matter of if, but a matter of when,” he said.
Because when has John Boehner ever been wrong about anything?
Photo courtesy of Gage Skidmore.