A bipartisan bill that would address banking issues in the marijuana industry was officially filed on Thursday.
The legislation—led by by Reps. Ed Perlmutter (D-CO), Denny Heck (D-WA), Steve Stivers (R-O) and Warren Davidson (R-OH)—would shield financial institutions from being penalized by federal regulators for servicing cannabis and cannabis-adjacent businesses.
The bill, titled the Secure and Fair Enforcement (SAFE) Banking Act, explicitly stipulates that proceeds from transactions conducted by marijuana companies “shall not be considered as proceeds from an unlawful activity solely because the transaction was conducted by a cannabis-related legitimate business or service provider.”
Nearly a quarter of the House, 108 members, has signed onto the bill as initial cosponsors, a spokesperson for Perlmutter told Marijuana Moment, and that includes nine Republicans. The last version, introduced in 2017, ended the 115th Congress with 95 cosponsors.
After the first-ever congressional hearing on #cannabis banking, I'm reintroducing the bipartisan #SAFEBanking Act to allow marijuana-related businesses access to the banking system. Congress needs to act to reduce risks for employees, businesses & communities across the country.
— Rep. Ed Perlmutter (@RepPerlmutter) March 7, 2019
Draft text of the bill was circulated last month ahead of the first marijuana hearing of the 116th Congress, which focused on how providing banking access to the cannabis industry can improve transparency and public safety.
Marijuana Moment supporters on Patreon can read the full text of the new bill as filed below:
While the prior version of the Secure and Fair Enforcement (SAFE) Banking Act didn’t advance to votes in the last Congress, advocates are optimistic about the prospect of actually passing the reform legislation this session.
“If Congress fails to act, we are discouraging responsible, regulated markets and allowing a serious public safety threat to go unaddressed,” Heck told Politico, which first reported on the bill’s formal reintroduction.
The congressman put the situation in starker terms during last month’s hearing before a House financial subcommittee, saying that the body has the power “to prevent murders and armed robberies,” referring to the fact that current policy forces many cannabis businesses to operate on a cash-only basis, which can make them targets.
“We must use it and we must use it now because we are already late,” he said.
“The SAFE Banking Act is an answer to the very real problem facing these businesses as they are forced to operate exclusively with cash. It makes them prime targets for violent robberies and money laundering schemes,” Stivers said in a press release. “This isn’t about condoning marijuana businesses, it’s about creating an auditable trail and keeping our neighborhoods safe.”
Today I introduced the SAFE Banking Act to allow the cannabis industry access to banking. The current system must be fixed to end this public safety issue. Add your name in support of the bill! https://t.co/khmr3Vjf9X
— Ed Perlmutter (@Ed4Colorado) March 8, 2019
“Government Regulators have deemed cannabis business owners to have certain reputational risks. From a civil liberties standpoint, I believe this is something we need to move away from,” Davidson added. “There are reputational risks associated with any small business, and barring legally recognized small businesses from our financial institutions threatens the very pillars of liberty and freedom our country was founded on.”
Passing marijuana banking reform could be the first in a series of more modest cannabis legislation that Congress will take up this session, with the ultimate goal of ending federal marijuana prohibition. Rep. Earl Blumenauer (D-OR) outlined a congressional blueprint to legalization last year.
Square Quietly Launches Program For CBD Cannabis Company Credit Card Processing
Companies that sell cannabis products—even those consisting of CBD derived from hemp, which was legalized in the U.S. through the Farm Bill late last year—are continuing to have trouble accessing basic financial services that are available to businesses in other sectors. That includes being able to maintain bank accounts and process their customers’ credit cards.
The latter problem could be solved under a new pilot program that has quietly been launched by the payment processing service Square.
(Marijuana Moment’s editor provides some content to Forbes via a temporary exclusive publishing license arrangement.)
Facebook Uses Marijuana And Broccoli To Show Off Its AI Tech
Marijuana buds and tempura broccoli can look oddly similar out of context, but Facebook’s artificial intelligence (AI) technology can tell the difference.
At its annual developers conference on Wednesday, Facebook CTO Mike Schroepfer discussed how the social media giant is able to leverage visual AI to spot “policy-violating content,” including advertisements to sell cannabis on the platform. He explained the process by comparing images of the fried vegetable next to marijuana buds, which he described as the “most benign possible example” of prohibited content he could find.
— Queenie Wong (@QWongSJ) May 1, 2019
Five years ago, the company relied on “behavioral signals” to catch people advertising cannabis—things like whether the advertiser has been “caught for doing bad stuff before” or whether they used “obvious words” like “marijuana” or “drugs” in the post. But as AI advanced, Facebook developed a system that could visually distinguish cannabis from other miscellaneous items.
To drive the point home, Schroepfer put both images on the screen and challenged the audience to differentiate them.
— Tom Simonite (@tsimonite) May 1, 2019
A few people thought the tempura broccoli was marijuana, but most seemed to get it right. The visual algorithm was 94 percent sure that the marijuana was, in fact, marijuana, and 88 percent sure that the other image was the broccoli.
— john colucci (@johncolucci) May 1, 2019
For Facebook, the technology offers a convenient way to streamline its policy enforcement efforts. But for many cannabis reform groups and media companies that run Facebook accounts, the presentation is a window into an ongoing frustration.
The ban on content promoting the sale of federally illicit drugs has had collateral consequences for pages that post noncommercial marijuana material such as news outlets like Marijuana Moment and state regulatory bodies like the Massachusetts Cannabis Control Commission. These pages have at times been hidden from search results (a technique referred to as “shadowbanning”) because the algorithm isn’t able to accurately differentiate commercial advertisements from cannabis-related news articles, for example.
Marijuana influencers and state-legal cannabis businesses have long complained about having their accounts on the Facebook-owned Instagram platform temporarily disabled or permanently blocked for depicting cannabis or advertising their services.
A policy change may be on the horizon, as the company said in March that it wants “to consider whether we can loosen this restriction, especially in relation to medical marijuana, legal marijuana and brick and mortar stores.” But for the time being, Facebook will continue to enforce the policy, and it hasn’t provided a status update on that front at the conference so far.
“It’s against our policies because it’s against U.S. federal law, so you can’t advertise marijuana on Facebook,” Schroepfer said.
Photo courtesy of Facebook.
FDA Sends Warnings To Three Companies Selling CBD Products
At the same time that the Food and Drug Administration (FDA) is working to create a regulatory framework for hemp-derived CBD, it’s also cracking down on companies that are in its view irresponsibly marketing CBD products and making unsanctioned claims about their medical benefits.
FDA announced on Tuesday that it and the Federal Trade Commission sent warning letters to three such companies last month: PotNetwork Holdings in Florida, Nutra Pure in Washington state and Advanced Spine and Pain in New Jersey. The letters were sent “in response to their making unsubstantiated claims related to more than a dozen different products and spanning multiple product webpages, online stores and social media websites,” FDA Commissioner Scott Gottlieb said in a press release.
In a Twitter thread, the commissioner added that he was “concerned to hear recently that several national pharmacy chains and other major retailers have begun to sell or will soon begin to sell” CBD products and that the agency will “be contacting them to remind them of #FDA obligations and our commitment to protect consumers against products that can put them at risk.”
CVS and Walgreens both recently announced they will begin selling CBD-infused products.
We’ll be contacting them to remind them of #FDA obligations and our commitment to protect consumers against products that can put them at risk.
— Scott Gottlieb, M.D. (@SGottliebFDA) April 2, 2019
In the press release about the warning letters his agency has already sent to CBD companies, Gottlieb asserted that they used their websites to “make unfounded, egregious claims about their products’ ability to limit, treat or cure cancer, neurodegenerative conditions, autoimmune diseases, opioid use disorder, and other serious diseases, without sufficient evidence and the legally required FDA approval.”
At the same time, the warning letters announced today make clear that #FDA has and will continue to monitor the marketplace and use our authorities to take action against companies illegally selling these types of products when they are putting consumers at risk
— Scott Gottlieb, M.D. (@SGottliebFDA) April 2, 2019
FDA is hustling to provide manufacturers guidelines on marketing cannabidiol following the federal legalization of hemp last last year, but the process is complicated by the fact that CBD is the active ingredient in an FDA-approved drug, Epidiolex, and remains the subject of intensive clinical testing. Gottlieb has indicated that it will take years to develop a regulatory plan for CBD without further congressional action.
In the meantime, companies that continue to choose to engage in CBD commerce should be wary about making health claims about their products. The commissioner said FDA has “limited resources” for enforcement operations, but it would take action against companies that make “over-the-line” statements.
In the press announcement, FDA listed some of the unauthorized claims that the three companies made. For example, the products were touted as being able to treat cervical cancer, Alzheimer’s disease and substance use disorder.
“I believe these are egregious, over-the-line claims and we won’t tolerate this kind of deceptive marketing to vulnerable patients,” Gottlieb said. “The FDA continues to be concerned about the proliferation of egregious medical claims being made about products asserting to contain CBD that haven’t been approved by the FDA, such as the products and companies receiving warning letters today.”
“Selling unapproved products with unsubstantiated therapeutic claims can put patients and consumers at risk,” he said. “These products have not been shown to be safe or effective, and deceptive marketing of unproven treatments may keep some patients from accessing appropriate, recognized therapies to treat serious and even fatal diseases.”
Questions about what constitutes an unauthorized claim that would put a company at risk of enforcement action will likely come up at the agency’s just-announced public hearing CBD issues on May 31. Stakeholders are invited to submit information about the public safety impacts of CBD and how to manufacture and market products that contain the cannabis compound.
This piece was updated to include Gottlieb’s tweets about national pharmacy chains.
Photo courtesy of Nicholas C. Morton.