Missouri activists are gearing up for a push to put marijuana legalization on the state’s November ballot.
A proposed constitutional amendment to legalize for adult use, which was submitted last year, has been cleared for signature gathering by the secretary of state, which certified the ballot title last month.
The initiative, which the campaign Missourians for a New Approach is backing and the national New Approach PAC is funding, would allow adults 21 and older to possess and purchase up to one ounce of cannabis from licensed retailers. Individuals would also be able to cultivate up to three plants for personal use.
A 15 percent excise tax would be imposed on recreational marijuana sales, with revenue going toward veterans’ services, infrastructure and substance misuse treatment. According to a fiscal analysis, Missouri stands to bring in $86 million to $155 million in revenue annually by 2025.
The costs of implementation is estimated to be about $21 million initially, then decreasing to $6 million annually.
The proposal would also allow individuals with prior cannabis convictions to apply for resentencing or expungements.
“Missourians for a New Approach, in collaboration with New Approach PAC, is exploring the initiative petition process right now to determine the feasibility of allowing Missourians to vote on this important issue this year,” campaign manager John Payne told the St. Louis Post-Dispatch.
“There is widespread support among Missouri voters to regulate, tax and legalize marijuana,” he said. “The status quo has allowed an unsafe and unregulated black market to thrive in Missouri, while wasting law enforcement resources that would be better spent fighting serious and violent crimes.”
The campaign will face a challenge if they ultimately begin signature gathering, as organizers must deliver about 160,000 signatures by mid-May.
Under the proposal, the state’s Department of Health and Senior Services would be responsible for regulating the market and issuing licenses for cultivation facilities, retailers, testing laboratories and social consumption sites.
Marijuana products that are sold must be manufactured in Missouri, but text of the initiative also contains provisions stating that if federal laws change, regulators can change the rules to allow for cannabis imports and exports, provided any products that come into the state are subject to testing requirements.
The initiative also contains a series of restrictions, including banning billboard advertising in certain areas and selling marijuana edibles that appeal to children, prohibiting shops from publicly displaying their products and disallowing individuals with disqualifying felony convictions on their records from owning cannabis businesses (except for marijuana offenses or non-violent offenses that didn’t result in incarceration and are at least five years old).
Local governments would be able to temporarily prohibit recreational cannabis businesses from operating in their jurisdictions up until the next general election following Election Day 2020. After that point, local governments could only impose a ban through voter approval of ballot measures.
Missouri voters approved a medical cannabis ballot measure in 2018 by a two-to-one margin. It was one of three medical legalization initiatives to make it on the ballot that year—a situation that could repeat itself this November, as there’s a separate adult-use legalization proposal that was submitted to the secretary of state on Thursday that’s available for public comment.
The state Department of Health and Senior Services would have to approve at least as many recreational cultivation facilities and retailers as there are medical cannabis operations in the state. If the number of applications exceeds the department’s licensing cap, it would have to develop a grading system to score and select the winners.
Microbusiness licensees would be allowed to be vertically integrated, and owners could cultivate up to 150 flowering plants at a time. In order to qualify for a microbusiness license, the majority owner or owners would have to be economically disadvantaged or disabled veterans.
For the first year following implementation, licenses could only be approved for individuals who’ve lived in Missouri for at least a year prior to submitting an application.
The regulating agency would have to provide applications for licenses within nine months of the law’s effective date, which would be December 3, 2020 if voters approve the ballot question. Applications would have to be accepted within one year, and the department would have six months to either approve or reject the submissions.
The proposal also includes provisions concerning the state’s existing medical cannabis program. It stipulates that documents obtained from medical cannabis businesses licensees or applications are subject to state transparency laws. Additionally, the state’s medical marijuana law would be amended to extend the amount of time that cannabis patient recommendations are valid and due for renewal from one to three years.
If the campaign is successful, Missouri would join a growing number of states where cannabis reform will go before voters in November. Already, a medical marijuana initiative has qualified in Mississippi, South Dakota voters will see both medical cannabis and adult-use legalization on the ballot and the New Jersey legislature approved a resolution to let voters decide on recreational legalization.
Read the full Missouri marijuana legalization initiative below:
Photo courtesy of WeedPornDaily.
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.