The House initially rejected the Senate’s changes to the cannabis legislation but later reconsidered, meaning there’ll be another floor debate on Tuesday.
By Arren Kimbel-Sannit, Daily Montanan
A high-wire act to pass massive legislation implementing recreational marijuana in Montana before the expected end of the legislative session later this week has hit a snag: the state House voted down substantial amendments from the Senate to House Bill 701 that found a compromise on some of the cannabis industry’s key concerns, before passing a motion to reconsider that vote, meaning they’ll repeat the debate Tuesday.
The Senate amendments, drafted earlier in the month in a special select committee with notable input from Sen. Jason Ellsworth, R-Hamilton, and Democrats including Sen. Tom Jacobson, D-Great Falls, failed a House vote Monday 47-53. With some exceptions, such as House Speaker Wylie Galt, R-Martinsdale, and HB701 sponsor Rep. Mike Hopkins, R-Missoula, Republicans marshaled against the Senate amendments, which brought the bill closer to language in I-190, the ballot initiative voters passed last year to legalize adult-use marijuana.
Hopkins, as the day’s debate neared its end, made a successful motion to reconsider the vote, buying more time to convince reluctant Republicans and avoid sending the bill to a conference committee where the two chambers would hash out their differences. Hopkins said he did a “pretty bad job describing some parts of the situation and would like to attempt to clarify some things.”
The motion passed 56-43, and could save the Legislature some extra work late in the session if lawmakers change their tune tomorrow.
“This is a bill that needs a couple of days’ more work,” said Rep. Bill Mercer, R-Billings, one of the Republicans who voted against the Senate amendments.
The House passed three bills to implement recreational marijuana to the Senate. Two, HB707 and HB670, came from lawmakers on the more conservative wing of the GOP, and taxed cannabis at a lower rate and avoided the investment in government programs that’s in both HB701 (in the form of the HEART Fund, a substance abuse prevention proposal from Gov. Greg Gianforte) and I-190 (conservation easements among other environmental and recreational purposes). The Senate’s task, at least as the House saw it, was to scrap those two bills and put elements from each into HB701, which has the backing of Gianforte’s office.
But this, Republicans in the lower chamber said, did not come to pass.
“One of the reasons we sent three bills to the Senate was to meld them together,” said Rep. Brad Tschida, R-Missoula. “We’ve seen none of that.”
Senate lawmakers introduced dozens of amendments, some of which erased changes made by the House, while others found some common ground. One, for example, restored the ability of municipal governments to levy a local-option excise tax on weed sales, an opportunity available in the first version of the bill but removed in the House. The amendment had the caveat that voters needed to approve the tax, and capped it at 3 percent as oppose to the 5 percent in the original bill.
The Senate also restored language allowing monies in the HEART Fund to be used to draw down federal Medicaid matching dollars, brokered an agreement on the issue of a local option—whether a county that voted against I-190 should by default have to have legal recreational marijuana in their borders, and vice versa—allowed for restricted home grow and grandfathered in existing outdoor grow operations that would otherwise be banned under the bill.
Perhaps most significantly, environmental groups, several key backers of the original initiative and their various legislative allies clawed back some funding for Habitat Montana and other conservation programs that was in I-190 but largely not found in HB701. Lawmakers have criticized the initiative and its supporters for seemingly dictating how to appropriate funds, the sole purview of the Legislature—a court case on the constitutionality of that language is in process.
But all that, with the House’s vote, hangs in the balance until the vote on reconsideration later this week.
“There was no compromise on this bill,” said Tschida. “While I think the fix is in, and we know it’s going to happen, I want everyone to look at this right now and think about the consequences of your decision.”
House Republicans balked on the revival of the local option tax and the 20 percent tax rate on recreational marijuana in general, warning that it could create a black market and enable intrusions from a world atlas’ worth of different international cartels. Home-grows, they said, are too difficult to regulate, and edibles are too attractive to children. High-grade hash, Tschida suggested, has effects comparable to methamphetamines.
And they took issue with the HEART Fund spending and the boost for environmental programs. What appealed to them about House Bill 670, for example, was that it taxed marijuana at a lower rate, used some of the proceeds to pay down pension obligations and put the rest in a trust fund meant to address the downstream effects of legalization. HB701, on the other hand, plants “acorns” that will cost the state later, to quote Rep. Mark Noland, R-Bigfork.
“The purpose of the tax is not exclusively to deal with the economic and social cost of marijuana—the expenditures are going to be made on a number of different accounts…that don’t pertain to those things at all,” said Mercer.
The House’s vote also threatens certain amendments in the Senate that lawmakers Monday didn’t specifically object to will also go, such as one added provision that creates a special drug court to handle expungement and resentencing appeals from those who had been convicted on marijuana-related charges in the past.
In other words, the Legislature still has work left to do on marijuana. Every compromise made with I-190 and Democrats in the Senate seemed only to alienate Republicans in the House. So, the bill could very well go to conference committee this week. If they do nothing, I-190, which is already in statute, remains law, though how the litigation around its revenue allocations will proceed remains to be seen.
Hopkins’ big pitch to his skeptical party-mates was essentially that his bill was in essence the best way to make sure that didn’t happen.
“I appreciate the discussion — but I feel like most of those objections are to I-190,” he said. “If you don’t like home grow, this is the bill that has some restrictions on it.
“When we walked into this session, the question was not should I-190 be law.”
Top IRS Official Says Marijuana Banking Reform Would Help Feds ‘Get Paid’
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
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.
👉🏻élaboration du projet de loi usage privé du #cannabis : jusqu’à 4 plantes à domicile & décorrectionnalisation <3g
👉🏻renforcement de la prévention & de l’accompagnement
👉🏻⬆️des moyens de la police
👉🏻élaboration d’un projet de production/vente #Luxembourg pic.twitter.com/8yre0Udt8J
— Sam Tanson (@SamTanson) October 22, 2021
“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.
The measures include:
🟢 Regulation of cannabis use and cultivation: adults will be able to legally cultivate up to four cannabis plants for their own use, provided the cultivation is happening at their place of residence.
— European Greens (@europeangreens) October 22, 2021
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.
Photo courtesy of Mike Latimer.
New Bipartisan Marijuana Research Bill In Congress Would Let Scientists Study Dispensary Products
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.
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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: