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Maryland Lawmakers Hold First Committee Hearing On Marijuana Legalization

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The issue of legalizing marijuana in Maryland had its first committee hearing on Tuesday, with lawmakers considering a bill to regulate adult-use cannabis and earmark large portions of industry tax revenue for programs aimed at communities disproportionately harmed by the drug war.

“This bill ends Maryland’s failed policy of cannabis prohibition and replaces it with a system to test and regulate cannabis for adults 21 and older,” Del. Jazz Lewis (D), the sponsor of HB 32, said at the House Judiciary Committee hearing.

The measure “takes marijuana production and sales off the streets and ensures regulated, labeled, lab-tested products while creating thousands of new good jobs, businesses and hundreds of millions of dollars in annual tax revenue to serve the community,” Lewis said.

The House panel heard more than two hours of testimony and debate on the bill at Tuesday’s hearing but ultimately did not vote on whether to advance the measure.

HB 32 is one of two marijuana legalization measures before Maryland lawmakers this year. The other is SB 708, introduced by Senate Finance Committee Vice Chair Brian Feldman (D) and cosponsored by top Senate Democrats including the body’s president and majority leader. That measure is scheduled to be heard by a Senate committee on March 4.

Lewis said when he filed the bill in December that he introduced the legislation “because we have the data and popular opinion on our side to end prohibition.”

At Tuesday’s hearing, Lewis announced amendments meant to harmonize his proposal with the Senate legislation. Among the biggest changes, are decreased taxes and cutting the maximum number of marijuana retail licenses in half, from 200 to 100.

The biggest remaining difference between the two chambers’ bills, Lewis said, is that HB 32 would allow state regulators to issue an unlimited number of microbusiness licenses despite limits on medium and large business licenses. “That’s something that’s critically important to the independent dispensaries in order to survive competing with the vertically aligned businesses,” he said.

With the proposed changes, the bill would legalize possession of up to four ounces of marijuana—up from two in order to match the Senate bill—as well as home cultivation for personal use. Individuals with past convictions for low-level cannabis activity would see those records expunged, and people currently incarcerated for cannabis crimes would be resentenced or released.

Revenue from the newly legal industry is expected to bring in hundreds of millions of dollars during the program’s early years and continue growing as the market matures. Nearly two-thirds of that revenue, 63 percent, will go to a community reinvestment fund, which would support programs to address the effects of poverty, mass incarceration and racism.

Additional money would go to the Maryland’s general fund, the state’s Black colleges and universities (HBCUs), substance abuse treatment, cannabis research and educational outreach, especially to encourage youth not to use the drug.

The bill would also allow existing medical marijuana businesses to enter the adult-use market early, although they would have to pay hundreds of thousands of dollars in registration fees. That money would establish a social equity startup fund, which would provide capital and other resources to equity applicants looking to enter the industry.

“Let’s be clear: 30 percent of Maryland is Black,” Lewis said at Tuesday’s hearing. “We need to put our money where our mouth is.”

A number of lawmakers on the committee, as well as advocates who spoke in favor of HB 32, praised the measure’s strong focus equity, both in terms of criminal justice and when it comes to building a diverse legal industry.

“I personally would not support anything that did not have some protections for Black people being able to participate in this industry,” said committee Vice Chair Vanessa Atterbeary (D).

Ben Jealous, the former head of the NAACP and the Democratic candidate for Maryland governor in 2018, told the panel that “it is rare that you all have an opportunity to create an industry and, in the process, right past wrongs and create a more inclusive economy.”

Others who testified in support of the measure applauded its equity goals but suggested amendments to strengthen protections for small and minority-owned businesses. Hope Wiseman, CEO of Mary and Main, one of the state’s only Black-owned medical marijuana dispensaries, suggested that registration fees be adjusted to reflect that some type of businesses are more lucrative than others. Wiseman suggested a system with “growers paying the most, then processors, then dispensaries, as this is based on the amount of revenue that each license type generally makes.”

Skeptical lawmakers on the House panel pressed supporters on an array of typical legalization concerns, such as public consumption (which would remain illegal under the bill), driving under the influence of cannabis (also already illegal) and whether state-level legalization would interfere with employers screening workers for drug use (it wouldn’t).

Del. Mike Griffith (R), worried that legalizing THC-infused edibles would lead to increased use among youth. “My six year old would see an edible candy bar, wouldn’t know the difference, and would go to town,” he said.

Olivia Naugle, legislative analyst for the advocacy group Marijuana Policy Project (MPP), replied that evidence from the first few U.S. states that legalized marijuana indicates youth use has actually fallen. “Colorado and Washington have both conducted large-scale surveys with thousands of high-school students since both states legalized cannabis in 2012, and those results have actually shown modest decreases in rates of youth cannabis use.” Naugle said. “I think regulating cannabis really sends a message to youth that marijuana is for adults, and for adults to use responsibly.”

Del. Ron Watson (D), who indicated he supports the bill, asked why its expungement provisions wouldn’t apply to people convicted of selling small amounts of marijuana. “It seems like everybody’s taken care of except the sales guy or gal,” he said.

Lewis replied that “I would gladly clear it all” but acknowledged that there would likely be disagreement over where to draw the line: “I imagine there may be some difference of opinion as to, you know, at what level someone moves from being a corner boy to being something more.”

Other lawmakers quizzed Lewis on how “equity” would be defined and who specifically would benefit under the proposal. “What if you’re just Black and live in the suburbs?” Atterbeary asked.

Lewis said three groups currently would qualify for equity benefits under the current bill: people formerly incarcerated on a cannabis-related charge or their family members, people who live in areas where data shows disproportionate policing of laws against cannabis and/or people who are racial minorities in the state.

He added that supporters have written to the state attorney general’s office to make sure those rules—specifically around race-based eligibility—are constitutional. “We’re waiting for that to come back right now,” Lewis said.

The bill would also reserve control of certain ancillary businesses, such as security and delivery services, exclusively for equity applicants.

Rajani Gudlavalleti, a member of the executive leadership team at the Baltimore Harm Control Coalition, told the panel that legalization and social equity measures are essential to undo drug-war harms and build healthy communities.

“Our vision for a healthier world requires a model of cannabis legalization that includes strategies for repair from the impacts of the drug war in communities of color,” Gudlavelleti said, “and so that is why Baltimore Harm Reduction Coalition supports HB 32.”

The legalization bill would leave the state’s medical marijuana system unchanged, creating a separate agency to oversee the adult-use market. William Tilburg, executive director of the state’s Medical Cannabis Commission, which has not taken a position on the legislation, said that approach “quite literally doubles administrative costs to the state” and urged the two systems be overseen by a common regulator.

At one point in the hearing, Lewis announced that the Maryland Department of Health had endorsed the legalization plan, but he later told Marijuana Moment the claim was the result of miscommunication from a staffer at the department, who initially indicated in a text message to the lawmaker that it would “testify in support of” the bill.

A representative for the Department of Health told Marijuana Moment that the agency signed up as an “information” witness and took no position on the bill itself.

Maryland legalized medical marijuana through an act of the legislature in 2012. Two years later, a decriminalization law took effect that replaced criminal penalties for possession of less than 10 grams with a civil fine of $100 to $500. Since then, however, a number of efforts to further marijuana reform have fallen short.

A bill last year to expand the decriminalization possession threshold to an ounce passed the House last year but was never taken up in the Senate.

In May, Gov. Larry Hogan (R) vetoed a bill that would have shielded people with low-level cannabis convictions from having their records publicized on a state database. In a veto statement, he said it was because lawmakers failed to pass a separate, non-cannabis measure aimed at addressing violent crime.

Hogan has hesitated to take a strong stand on marijuana in the past, though he’s more recently signaled openness to the idea. In 2017, he declined to respond to a question about whether voters should be able to decide the issue, but by mid-2018 he had signed a bill to expand the state’s medical marijuana system and said full legalization was worth considering: “At this point, I think it’s worth taking a look at,” he said at the time.

As for Maryland lawmakers, a House committee in 2019 held hearings on two bills that would have legalized marijuana. While those proposals didn’t pass, they encouraged many hesitant lawmakers to begin seriously considering the change.

Atterbeary, who was also at Tuesday’s hearing, said at the prior hearings that she had been “fundamentally opposed” to legalization in previous years but was increasingly “in the mindset that it’s been growing on me.”

In a statement to Marijuana Moment after Tuesday’s hearing, Naugle at MPP applauded Lewis for his leadership on HB 32. Passing the measure “would save thousands of Marylanders—disproportionately Black Marylanders—from arrests and criminal convictions.”

“There are now 15 states that have ended cannabis prohibition,” she added, noting that conservative states such as Montana and South Dakota have also passed legalization laws. “Maryland should follow suit by passing HB 32 this session. This is a just, equitable cannabis policy that Maryland could be proud of and be a leader to other states.”

Lawmakers And Advocates Urge Biden To Grant Marijuana Clemency In Presidents Day Push

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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.

Ben Adlin is a Seattle-based writer and editor. He has covered cannabis as a journalist since 2011, most recently as a senior news editor for Leafly.

Politics

Top IRS Official Says Marijuana Banking Reform Would Help Feds ‘Get Paid’

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The Internal Revenue Service (IRS) would like to get paid—and it’d help if the marijuana industry had access to banks like companies in other legal markets, an official with the federal department said. She also talked about unique issues related to federal tax deductions for cannabis businesses.

At an event hosted by UCLA’s Annual Tax Controversy Institute on Thursday, IRS’s Cassidy Collins talked about the “special type of collection challenge” that the agency faces when it comes to working with cannabis businesses while the product remains federally illegal.

While IRS isn’t taking a stand on federal marijuana policy, Collins said that the status quo leaves many cannabis businesses operating on a cash-only basis, creating complications for the agency, in part by making it harder for banks to “pay us.”

“The reason why [the marijuana industry is] cash intensive is twofold,” she said. “Number one, a lot of customers don’t want a paper trail showing that they’re buying marijuana, and number two, the hesitancy of banks to allow marijuana businesses to even bank with them.”

Of course, the reason why many financial institutions remain hesitant to take on cannabis companies as clients is because the plant is a strictly controlled substance under federal law.

“There’s been a number of legislative bills that have been introduced—and I am definitely not expressing any opinion personally or on behalf of the IRS about any pending or proposed legislation,” Collins, who is a senior counsel in the IRS Office of Chief Counsel, said. “But it is interesting to note that, if the law changed so that the marijuana businesses could have banks, that would make the IRS’s job to collect [taxes] a lot easier. As part of collection, we want the money. That’s our end goal there.”

A major part of what makes cannabis businesses unique is that they don’t qualify for traditional tax credits under an IRS code known as 280E. That policy “prohibits them from claiming deductions for business expenses because they’re technically being involved in drug trafficking,” Collins explained at the event, from which small excerpts of her comments were reported by Bloomberg.

There are some options available to lessen the burden on marijuana firms, however. At the end of the day, “IRS will work with marijuana companies because, again, we want to get paid,” Collins said.

One of the ways the agency works with marijuana business operators is to have them visit designated IRS “tax assistance centers” that accept cash payments in excess of $50,000. But the official warned businesses to “be prepared to be there for a little while” as the center checks—and double checks—the amount of cash being submitted.

“Revenue officers will assist the marijuana companies in paying us,” she said.

IRS officials could also help cannabis firms by having officials accompany them “to the bank in order to try to help the taxpayer secure a cashier’s payment to pay the IRS, as well as using money orders,” she said, adding that “our revenue officers are are wanting to work with the marijuana companies to help assist them to pay us.”

“When the revenue officers are there in person with the taxpayer, that could potentially help increase the likelihood that the bank will cooperate and help the taxpayer transition into a cashier’s check,” she continued. “And that has been a trend since this first became legal [at the state level], that more and more banks are allowing cannabis companies to bank with them.”

In a report published earlier this year, congressional researchers examined tax policies and restrictions for the marijuana industry—and how those could change if any number of federal reform bills are enacted.

IRS, for its part, said last month that it expects the cannabis market to continue to grow, and it offered some tips to businesses on staying compliant with taxes while the plant remains federally prohibited.

As it stands, banks and credit unions are operating under 2014 guidance from the Financial Crimes Enforcement Network (FinCEN) that lays out reporting requirements for those that choose to service the marijuana industry.

Leaders in both chambers of Congress are working on legalization bills to end federal marijuana prohibition. But stakeholders are hopeful that, in the interim, legislators will enact modest marijuana banking reform. Legislation to protect financial institutions from being penalized for working with cannabis businesses passed the House for the fifth time last month.

Rodney Hood, a board member of the National Credit Union Administration, wrote in a Marijuana Moment op-ed this month that legalization is an inevitability—and it makes the most sense for government agencies to get ahead of the policy change to resolve banking complications.

IRS separately hosted a forum in August dedicated to tax policy for marijuana businesses and cryptocurrency.

Earlier this year, IRS Commissioner Charles Rettig told Congress that the agency would “prefer” for state-legal marijuana businesses to be able to pay taxes electronically, as the current largely cash-based system under federal cannabis prohibition is onerous and presents risks to workers.

Former Treasury Secretary Steven Mnuchin said in 2019 that he’d like to see Congress approve legislation resolving the cannabis banking issue and he pointed to the fact that IRS has had to build “cash rooms” to deposit taxes from those businesses as an example of the problem.

IRS released updated guidance on tax policy for the marijuana industry last year, including instructions on how cannabis businesses that don’t have access to bank accounts can pay their tax bills using large amounts of cash.

The update appears to be responsive to a Treasury Department internal watchdog report that was released earlier in the year. The department’s inspector general for tax administration had criticized IRS for failing to adequately advise taxpayers in the marijuana industry about compliance with federal tax laws. And it directed the agency to “develop and publicize guidance specific to the marijuana industry.”

Luxembourg Set To Become First European Country To Legalize Marijuana Following Government Recommendation

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Luxembourg Set To Become First European Country To Legalize Marijuana Following Government Recommendation

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Luxembourg is poised to become the first European country to legalize marijuana, with key government agencies putting forward a plan to allow the possession and cultivation of cannabis for personal use.

The ministers of justice and homeland security on Friday unveiled the proposal, which will still require a vote in the Parliament but is expected to pass. It’s part of a broader package of reform measures the agencies are recommending.

Under the marijuana measure, adults 18 and older could grow up to four plants. However, under the non-commercial model that is being proposed, possessing more than three grams in public would still be a civil offense, carrying a fine of €25-500 ($29-581). Currently, the maximum fine for possession is €2,500 ($2,908).

In terms of access, adults would be able to buy and trade cannabis seeds for their home garden.

Justice Minister Sam Tamson said the government felt it “had to act” and characterized the home cultivation policy change as a first step, The Guardian reported.

“The idea is that a consumer is not in an illegal situation if he consumes cannabis and that we don’t support the whole illegal chain from production to transportation to selling where there is a lot of misery attached,” he said. “We want to do everything we can to get more and more away from the illegal black market.”

While limited in scope, the reform would make Luxembourg the first country in Europe to legalize the production and possession of marijuana for recreational use. Cannabis has been widely decriminalized in certain countries in the continent, but it has remained criminalized by statute.

Government sources in Luxembourg told The Guardian that plans are in the works to develop a program where the state regulates the production and distribution of marijuana. Tamson said they are working to resolve “international constraints” before taking that step, however, referring to United Nations treaty obligations that multiple U.S. states and other countries like Canada and Uruguay have openly flouted.

For now, the country is focusing on legalization within a home setting. Parliament is expected to vote on the proposal in early 2022, and the ruling parties are friendly to the reform.

This has been a long time coming, as a coalition of major parties of Luxembourg agreed in 2018 to enact legislation allowing “the exemption from punishment or even legalization” of cannabis.

Meanwhile in the U.S., congressional lawmakers are working to advance legalization legislation. A key House committee recently approved a bill to end marijuana prohibition, and Senate leadership is finalizing a separate reform proposal.

In Mexico, a top Senator said this week that lawmakers could advance legislation to regulate marijuana in the coming weeks. The Supreme Court has already ruled that adults cannot be criminalized over possession or cultivation, but there’s currently no program in place to provide access.

New Bipartisan Marijuana Research Bill In Congress Would Let Scientists Study Dispensary Products

Photo courtesy of Mike Latimer.

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New Bipartisan Marijuana Research Bill In Congress Would Let Scientists Study Dispensary Products

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A bipartisan group of federal lawmakers introduced a bill on Thursday to remove barriers to conducting research on marijuana, including by allowing scientists to access cannabis from state-legal dispensaries.

The Medical Marijuana Research Act, filed by the unlikely duo of pro-legalization Rep. Earl Blumenauer (D-OR) and prohibitionist Rep. Andy Harris (R-MD), would streamline the process for researchers to apply and get approved to study cannabis and set clear deadlines on federal agencies to act on their applications.

“Congress is hopelessly behind the American people on cannabis, and the quality of our research shows why that is an urgent problem,” Blumenauer told Marijuana Moment. “Despite the fact that 99 percent of Americans live in a state that has legalized some form of cannabis, federal law is still hamstringing researchers’ ability to study the full range of health benefits offered by cannabis, and to learn more about the products readily available to consumers.”

“It’s outrageous that we are outsourcing leadership in that research to Israel, the United Kingdom, Canada, and others. It’s time to change the system,” he said.

Late last year, the House approved an identical version of the cannabis science legislation. Days later, the Senate passed a similar bill but nothing ended up getting to the president’s desk by the end of the last Congress. Earlier this year, a bipartisan group of senators refiled their marijuana research measure for the current 117th Congress.

Meanwhile, lawmakers are also advancing a separate strategy to open up dispensary cannabis to researchers. Large-scale infrastructure legislation that has passed both chambers in differing forms and which is pending final action contains provisions aimed at allowing researchers to study the actual marijuana that consumers are purchasing from state-legal businesses instead of having to use only government-grown cannabis.

The new bill filed this week by Blumenauer and Harris, along with six other original cosponsors, would also make it easier for scientists to modify their research protocols without having to seek federal approval.


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.

It would additionally mandate that the Drug Enforcement Administration (DEA) license more growers and make it so there would be no limit on the number of additional entities that can be registered to cultivate marijuana for research purposes. It would also require the U.S. Department of Health and Human Services (HHS) to submit a report to Congress within five years after enactment to overview the results of federal cannabis studies and recommend whether they warrant marijuana’s rescheduling under federal law.

“The cannabis laws in this country are broken, including our laws that govern cannabis research,” Blumenauer said in remarks in the Congressional Record. “Because cannabis is a Schedule I substance, researchers must jump through hoops and comply with onerous requirements just to do basic research on the medical potential of the plant.”

The new legislation will “both streamline the often-duplicative licensure process for researchers seeking to conduct cannabis research and facilitate access to an increased supply of higher quality medical grade cannabis for research purposes,” he said, adding that expanded studies will help make sure “Americans have adequate access to potentially transformative medicines and treatments.”

For half a century, researchers have only been able to study marijuana grown at a single federally approved facility at the University of Mississippi, but they have complained that it is difficult to obtain the product and that it is of low quality. Indeed, one study showed that the government cannabis is more similar to hemp than to the marijuana that consumers actually use in the real world.

There’s been bipartisan agreement that DEA has inhibited cannabis research by being slow to follow through on approving additional marijuana manufacturers beyond the Mississippi operation, despite earlier pledges to do so.

In May, the agency finally said it was ready to begin licensing new cannabis cultivators. Last week, DEA proposed a large increase in the amount of marijuana—and psychedelics such as psilocybin, LSD, MDMA and mescaline—that it wants produced in the U.S. for research purposes next year.

Under the new House bill, the agency would be forced to start approving additional cultivation applications for study purposes within one year of the legislation’s enactment.

HHS and the attorney general would be required under the bill to create a process for marijuana manufacturers and distributors to supply researchers with cannabis from dispensaries. They would have one year after enactment to develop that procedure, and would have to start meeting to work on it within 60 days of the bill’s passage.

In general, the legislation would also establish a simplified registration process for researchers interested in studying cannabis, in part by reducing approval wait times, minimizing costly security requirements and eliminating additional layers of protocol review.

Read the full text of the new marijuana research bill below:

Click to access medical-marijuana-research-act-hr-5657-text.pdf

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