When Connecticut’s legislature convenes for its 2020 session next month, top lawmakers say marijuana legalization will be a priority.
While legislation to legalize cannabis for adult use in the state advanced in several committees last year, disagreements about certain provisions such as how to allocating revenue ultimately derailed those efforts.
This time around, however, the General Assembly is positioned to build on those bills and craft a passable measure. That’s according to Senate President Pro-Tem Martin Looney (D).
“We are revisiting legalizing recreational cannabis because we see that most of our neighboring states have already done it or want to do it this year,” Looney told CT Insider earlier this month. “We had three very detailed bills on this last year, so I think we’re well prepared to do that when the time comes. We clearly need additional revenue and anecdotally we hear about people who travel to Massachusetts to purchase it.”
“We’re very well prepared to enact the legalization bill because we have the statutory framework already drafted,” he said in a separate interview. “It’s absolutely essential, I think, that we move on this front. We need the revenue.”
Leaders of key committees met last week to discuss what a legalization push could look like this year, and the Senate Democratic caucus is expected to outline the contours of a new proposal on Thursday, according to the Hartford Courant.
There were some who felt the legislature was only positioned to put the question of legalization to voters in the form of a proposed constitutional amendment on the ballot—a process that would mean legal sales wouldn’t go online until 2024. “At least a constitutional amendment would be forward movement,” Rep. Josh Elliott (D) told CT News Junkie.
But Gov. Ned Lamont (D), who’s been having ongoing conversations with the governors of neighboring states about coordinating a regional legalization model, isn’t supportive of that process, with a spokesperson stating that the “administration doesn’t believe the Connecticut Constitution is the proper venue for these kinds of policy decisions.”
“Making changes in statute is the best venue for the path to the legalization of marijuana for adult use,” the spokesperson said.
Lamont is instead pushing the legislature to pursue the policy change directly in the coming three-month session, and he’s stressing the importance of regulating cannabis to disrupt the illicit market.
“I think the idea that we’d be isolated by ourselves and the idea that you hand this over to the black market is dangerous,” the governor said in a recent TV appearance. “You have no idea what they’re doing, you want a carefully regulated market. How fast this happens in Connecticut—look, I’ve got to bring people along, I’ve got to talk to families, I’ve got to let them know that we’re going to do this in a very careful and thoughtful way.”
Connecticut can learn from Colorado’s example, the governor argued.
“They got rid of the black market. They got rid of a lot of the most dangerous substances that the black market was trying to sell. I think their vaping-related illnesses are down,” he said. “They’ve raised some real revenue from this—some of which is going to opioid addiction and treatment and other things.”
“Look, we didn’t have to be the first out of the box with this, but you’re right, we’ve got 20 percent of the states in this country now are legalizing or are about to legalize it, and Colorado is a place where you have a long history you can look at,” he told Fox 61.
Watch Lamont’s marijuana remarks, around 15:30 into the video below:
House Speaker Joe Aresimowicz (D) said that “if a flat-out ‘should we legalize?’ bill goes up in the House that it would pass,” but the “problem is when you’re talking about resources and dollars coming in from it, that’s where the disagreement is.” Lawmakers still have to settle issues such as the number of allowable cannabis shops, the tax rate, what the licensing scheme should look like and how to address expungements for prior marijuana convictions.
“The reality is we have marijuana here in the state of Connecticut,” Aresimowicz said. “It’s here and we have no ability to limit the amount of THC, we have no ability to decide what products are available, and obviously we’re not benefiting from it.”
Rep. Steve Stafstrom (D), co-chair of the Judiciary Committee, said “is not a matter of if, it’s a matter of when” the state legalizes cannabis.
“I think the Connecticut public is fairly clear on this issue,” he said. “The polling data from around the state has been fairly uniform that there is an overwhelming majority of state residents that would like to see us legalize.”
Social equity is likely to be a primary focus of discussion around legalization legislation this year. To that end, Rep. Mike D’Agostino (D) has pledged to create a commission designed to ensure that communities most harmed under prohibition stand to benefit from the policy change by being prioritized for licensing and receiving revenue from legal sales, for example.
Jason Ortiz, the Connecticut-based president of the Minority Cannabis Business Association, told Marijuana Moment that he’s “excited to hear Rep. Dagastino will be making equity a priority for this session, because without it no bill would pass.”
“It shows that some of our Connecticut legislators are listening and do understand just how important doing right by communities of color really is,” he said. “Now it’s time for us to have this conversation with the governor so he fully understands the complexity of cannabis legalization, and the economic potential of getting it right.”
Kebra Smith-Bolden, president of the advocacy group CT United for Reform and Equity, told Marijuana Moment, that she “applaud[s] State Representative D’Agostino for recognizing the importance of restorative justice in regard to cannabis legalization for adult use in Connecticut.”
“Having tax revenue from cannabis sales go directly to the communities most affected by destructive and discriminatory drug policies, masked by the term ‘War on Drugs’ is the first step to addressing those wrongs, and affords communities the funds to began to repair the damage that was done,” Smith-Bolden said.
The Northeast is set to be a major player in the reform space this year. New York Gov. Andrew Cuomo (D) renewed his call for reform in his State of the State address and included legalization language in a budget proposal to lawmakers this week. Rhode Island Gov. Gina Raimondo (D) included a proposal to legalize though a state-run model in her budget plan. New Hampshire lawmakers will pursue legislation for non-commercial cannabis legalization. New Jersey voters will decide on the issue in November’s election. And Vermont Gov. Phil Scott (R) seems more open to adding a regulated sales component to his state’s noncommercial legal marijuana law.
Photo courtesy of Mike Latimer.
GOP Senator Presses Treasury Secretary On Tax Credits For Marijuana Businesses
A Republican senator recently pressed the head of the Treasury Department on whether marijuana businesses qualify for a federal tax benefit.
During a Senate Finance Committee hearing on Wednesday, Treasury Secretary Steven Mnuchin was asked about the “opportunity zone” tax credit, which is meant to encourage investments in “distressed,” low-income communities through benefits such as deferrals on capital gains taxes.
Sen. James Lankford (R-OK), whose state’s voters approved a medical marijuana ballot measure in 2018, told Mnuchin that businesses that derive more than five percent of their profits from things like alcohol sales are ineligible for the tax credit, but there’s “not a definition dealing with cannabis businesses.”
“Are they within that five percent amount or are they not at all because there’s a federal prohibition on cannabis sales?” the senator asked.
“I’m going to have to get back to you on the specifics,” Mnuchin replied.
“That’d be helpful to get clarity because there are cannabis businesses across the country that, if they fall in opportunity zones, they’ll need clarification on that,” Lankford said. “When you and I have spoken about it before—it’s difficult to give a federal tax benefit to something that’s against federal law.”
Lankford, who opposes legalization and appeared in a TV ad against his state’s medical cannabis ballot measure, has raised this issue with the Treasury secretary during at least two prior hearings. When he questioned whether cannabis businesses qualify for the program last year, he clarified that he personally does not believe they should.
While Mnuchin’s department has yet to issue guidance on the issue, he said in response to the earlier questioning that his understanding is that “it is not the intent of the opportunity zones that if there is this conflict [between state and federal marijuana laws] that has not been cleared that, for now, we should not have those businesses in the opportunity zones.”
Mnuchin has also been vocal about the need for Congress to address the lack of financial resources available to state-legal marijuana businesses. Because so many of these companies are forced to operate on a largely cash-only basis, he said the Internal Revenue Service has had to build “cash rooms” to store their tax deposits.
“There is not a Treasury solution to this. There is not a regulator solution to this,” he said during one hearing. “If this is something that Congress wants to look at on a bipartisan basis, I’d encourage you to do this. This is something where there is a conflict between federal and state law that we and the regulators have no way of dealing with.”
Last week’s Finance Committee hearing was centered around President Trump’s Fiscal Year 2021 budget request, which separately includes a provision calling for the elimination of an appropriations rider that prohibits the Justice Department from using its fund to interfere in the implementation of medical cannabis laws as well as a continued block on Washington, D.C. spending its own local tax dollars to legalize marijuana sales.
Photo courtesy of C-SPAN.
American Bar Association Wants Protections For Marijuana Banking And Lawyers Working With Cannabis Clients
The American Bar Association (ABA) approved two marijuana-related resolutions during its midyear meeting on Monday.
The group’s House of Delegates voted in favor of proposals endorsing pending federal legislation to protect banks that service cannabis businesses and calling for a clarification of rules to ensure that lawyers will not be penalized for representing clients in cases concerning state-legal marijuana activity.
Under the banking resolution, ABA “urges Congress to enact legislation to clarify and ensure that it shall not constitute a federal crime for banking and financial institutions to provide services to businesses and individuals, including attorneys, who receive compensation from the sale of state-legalized cannabis or who provide services to cannabis-related legitimate business acting in accordance with state, territorial, and tribal laws.”
HOD Res 103D: Adopted. Urges enactment of laws to ensure that it shall not constitute a federal crime for banks and financial institutions to provide cannabis-related services. #ABAMidyear
— American Bar Association (@ABAesq) February 17, 2020
ABA added that “such legislation should clarify that the proceeds from a transaction involving activities of a legitimate cannabis-related business or service provider shall not be considered proceeds from an unlawful activity solely because the transaction involves proceeds from a legitimate cannabis-related business or service provider, or because the transaction involves proceeds from legitimate cannabis-related activities.”
A bill that would accomplish this goal was approved by the House of Representatives last year, but it’s currently stalled in the Senate, where it awaits action in the Banking Committee. That panel’s chair, Sen. Mike Crapo (R-ID) is under pressure from industry stakeholders to advance the legislation, but he’s also heard from anti-legalization lawmakers who’ve thanked him for delaying the bill.
“Passage of the [Secure and Fair Enforcement] Banking Act or similar legislation will provide security for lawyers and firms acting to advise companies in the industry against having their accounts closed or deposits seized,” a report attached to the ABA resolution states. “This will also foster the rule of law by ensuring that those working in the state-legalized legitimate cannabis industry can seek counsel and help prevent money laundering and other crimes associated with off-the-books cash transactions.”
“Currently, the threat of criminal prosecution prevents most depository institutions from banking clients, including lawyers, who are in the stream of commerce of state-legalized marijuana. This Resolution is necessary to clarify that such provision of legal and other services in compliance with state law should not constitute unlawful activity pursuant to federal law.”
The second marijuana-related resolution ABA adopted on Monday asks Congress to allow attorneys to serve clients in cannabis cases without facing federal punishment.
Text of the measure states that the association “urges Congress to enact legislation to clarify and explicitly ensure that it does not constitute a violation of federal law for lawyers, acting in accord with state, territorial, and tribal ethical rules on lawyers’ professional conduct, to provide legal advice and services to clients regarding matters involving marijuana-related activities that are in compliance with state, territorial, and tribal law.”
HOD Res 103B: Adopted as revised. Urges enactment of laws to ensure lawyers can provide legal advice and services for clients' legal marijuana-related activities. #ABAMidyear
— American Bar Association (@ABAesq) February 17, 2020
Such a change would provide needed clarity for lawyers as more states legalize cannabis for adult use. ABA’s own rules of conduct have been a source of conflict for attorneys, as it stipulates that they “shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent.” Federal law continues to regard marijuana as an illegal, strictly controlled substance.
An ABA report released last year made the case that there’s flexibility within that rule, however, as “it is unreasonable to prohibit a lawyer from providing advice and counsel to clients and to assist clients regarding activities permitted by relevant state or local law, including laws that allow the production, distribution, sale, and use of marijuana for medical or recreational purposes so long as the lawyer also advises the client that some such activities may violate existing federal law.”
A new report attached to the resolution states that “statutory guidance is needed that explicitly ensures that attorneys who adhere to their state ethics rules do not risk federal criminal prosecution simply for providing legal counsel to clients operating marijuana businesses in compliance with their state law.”
“This Resolution accomplishes this elegantly by harmonizing federal criminal liability with States’ ethical rules regarding the provision of advice and legal services relating to marijuana business. If a state has legalized some form of marijuana activity and explicitly permitted lawyers to provide advice and legal services relating to such state-authorized marijuana activity, such provision of advice and legal services shall not be unlawful under the Controlled Substances Act or any other federal law.”
Last year, ABA adopted another cannabis resolution—arguing that states should be allowed to set their own marijuana policies.
Border Patrol Union Head Admits Legalizing Marijuana Forces Cartels Out Of The Market
The head of the labor union that represents U.S. Border Patrol agents acknowledged on Friday that states that legalize marijuana are disrupting cartel activity.
While National Border Patrol Council President Brandon Judd was attempting to downplay the impact of legalization, he seemed to inadvertently make a case for the regulation all illicit drugs by arguing that cartels move away from smuggling cannabis and on to other substances when states legalize.
Judd made the remarks during an appearance on C-SPAN’s Washington Journal, where a caller said that “the states that have legalized marijuana have done more damage to the cartels than the [Drug Enforcement Administration] could ever think about doing.”
“As far as drugs go, all we do is we enforce the laws. We don’t determine what those laws are,” Judd, who is scheduled to meet with President Trump on Friday, replied. “If Congress determines that marijuana is going to be legal, then we’re not going to seize marijuana.”
“But what I will tell you is when he points out that certain states have legalized marijuana, all the cartels do is they just transition to another drug that creates more profit,” he said. “Even if you legalize marijuana, it doesn’t mean that drugs are going to stop. They’re just going to go and start smuggling the opioids, the fentanyl.”
One potential solution that Judd didn’t raise would be to legalize those other drugs to continue to remove the profit motive for cartels. Former presidential candidate Andrew Yang made a similar argument in December.
Federal data on Border Patrol drug seizures seems to substantiate the idea that cannabis legalization at the state level has reduced demand for the product from the illicit market. According to a 2018 report from the Cato Institute, these substantial declines are attributable to state-level cannabis reform efforts, which “has significantly undercut marijuana smuggling.”
Additionally, legalization seems to be helping to reduce federal marijuana trafficking prosecutions, with reports showing decreases of such cases year over year since states regulated markets have come online.
In his annual report last year, Supreme Court Chief Justice John Roberts also noted reduced federal marijuana prosecutions—another indication that the market for illegally sourced marijuana is drying up as more adults consumers are able to buy the product in legal stores.