The number of banks and credit unions that service the marijuana industry grew again in the third quarter of 2019, according to a federal report.
As of June 30, there were 553 banks and 162 credit unions that submitted documents indicating that they are providing financial services to state-legal cannabis businesses. That’s up from 493 and 140, respectively, in the previous quarter ending March 30.
While marijuana remains a federally controlled substance and accepting cannabis businesses as clients is largely viewed as risky within the financial sector, the increase reflects a growing willingness to take that chance as lawmakers work to resolve the marijuana banking issue.
Just before the end of the second quarter in March, the House Financial Services Committee approved the Secure and Fair Enforcement (SAFE) Banking Act, a bipartisan bill that would protect banks that service cannabis firms from being penalized by federal regulators. It’s possible that the development—along with expectations that the legislation would advance further—emboldened banks and credit unions to accommodate the industry.
The full House did vote in favor of the banking bill last month, sending it to the Senate. Rep. Ed Perlmutter (D-CO), sponsor of the legislation, has emphasized the need to provide these financial services to the industry in order to increase transparency and mitigate the risks associated with operating on a largely cash-only basis.
But Perlmutter is also focused on ensuring that hemp and CBD businesses have access to financial services. While the crop and its derivatives were federally legalized under the 2018 Farm Bill, there’s still some confusion that’s led banks to deny their services to the industry.
In an extension of remarks the congressman made on the House floor last month, he urged the Treasury Department to provide guidance for hemp and CBD businesses that are involved in lawful activities.
“While the SAFE Banking Act focuses on harmonizing federal and state banking laws regarding serving legitimate cannabis businesses and their service providers, there are still several issues where the federal government could provide more clarity,” Perlmutter said. “The Department of Treasury and its regulatory agencies should issue guidance on behalf of all federally licensed businesses engaging in, or considering engaging in, the legal cannabis trade, or hemp and CBD trade, with respect to their engagement in a legal business.”
The Financial Crimes Enforcement Network, or FinCEN, released this latest update on cannabis banking in August. The numbers are based on an analysis of suspicious activity reports, or SARS, that financial institutions are required to file in accordance with 2014 cannabis banking guidance issued under the Obama administration.
“As of 30 June 2019, FinCEN has received a total of 87,249 SARs using the key phrases associated with [marijuana related businesses],” FinCEN wrote.
The agency also broke down the types of SARs that banks and credit unions reported for cannabis businesses.
The overwhelming majority (68,378) were described as “marijuana limited,” which refers to marijuana firms that seem to be operating in compliance with state law, thus meeting the agency’s standard for being serviceable under existing federal guidelines.
About 6,900 fit the definition of “marijuana priority,” a term that means the business “may raise one or more of the red flags” under federal guidelines or they “may not be fully compliant with the appropriate state’s regulations” and so they’d be under investigation.
There were approximately 22,000 SARS marked as “marijuana termination,” defined as a cannabis business that has violated at least one federal enforcement priority or state regulation and so “the financial institution has decided to terminate its relationship with” the business.
Biden Says Marijuana Might Be A Gateway Drug
Former Vice President Joe Biden (D) said on Saturday that he’s not sure if marijuana is a gateway drug that leads to the use of other, more dangerous substances.
“The truth of the matter is, there’s not nearly been enough evidence that has been acquired as to whether or not it is a gateway drug,” the 2020 presidential candidate claimed at a town hall meeting in Las Vegas. “It’s a debate, and I want a lot more before I legalize it nationally. I want to make sure we know a lot more about the science behind it.”
(Marijuana Moment’s editor provides some content to Forbes via a temporary exclusive publishing license arrangement.)
Vote To Federally Legalize Marijuana Planned In Congress
A key congressional committee plans to hold a historic vote on a bill to end the federal prohibition of marijuana next week, two sources with knowledge of the soon-to-be-announced action said.
The legislation, sponsored by House Judiciary Committee Chairman Jerrold Nadler (D-NY), would remove cannabis from the Controlled Substances Act and set aside funding to begin repairing the damage of the war on drugs, which has been disproportionately waged against communities of color.
(Marijuana Moment’s editor provides some content to Forbes via a temporary exclusive publishing license arrangement.)
Image element courtesy of Tim Evanson.
Where Presidential Candidate Deval Patrick Stands On Marijuana
Former Massachusetts Gov. Deval Patrick (D) announced on November 14, 2019, that he is seeking the 2020 Democratic presidential nomination.
The latecomer to the race does not have an especially reform-friendly record on drug policy issues compared to many of his rival contenders, and questions remain about where he stands on legalization for adult-use—or even medical use for that matter.
During his time as governor, he voiced opposition to a marijuana decriminalization proposal and raised concerns about a medical cannabis legalization measure. After voters approved that latter initiative, he said he wished the state didn’t have the program, and his administration faced criticism over its implementation.
That said, Patrick, who also served as the U.S. assistant attorney general for the civil rights division, does not appear to have expressed hostility to marijuana reform in recent years and during his time in office did take action in support of modest proposals such as resentencing for people with non-violent drug convictions. Here’s where the former governor stands on cannabis:
Legislation And Policy Actions
Patrick’s administration said that despite a marijuana decriminalization policy going into effect following the passage of a 2008 ballot initiative, law enforcement should be able to continue to search people suspected of possession. However, his office declined to approve a request from prosecutors to delay the implementation of the voter-approved policy change.
After the decriminalization proposal passed, Patrick directed the Executive Office of Public Safety and Security (EOPSS) to develop an implementation plan.
“Our office will continue to work collaboratively with EOPSS and the district attorneys and law enforcement agencies on implementation,” a spokesperson said. “It’s an ongoing process.”
The then-governor said he would work to toughen up enforcement of fines levied against people possessing marijuana.
“The bottom line is the governor believes that if people are fined they should pay the fines,” a spokesperson for his administration said.
Following the passage of a 2012 medical cannabis initiative in Massachusetts, Patrick said simply that the “voters have voted,” and pledged that he wouldn’t seek to repeal the law.
But there were some complications that arose during his administration’s medical marijuana licensing approval process.
In February 2014, Patrick contradicted the state health department, which had recently announced that 20 business licenses had been accepted.
“No licenses have been given. No provisional licenses have been given. What we have is a multi-step process of screening out applicants,” he said. “Don’t get ahead of where we are. There was a balance struck here about trying to let the public in through transparency to the process even though the process was unfinished.”
When reports emerged that certain medical cannabis applicants had apparently provided false or misleading information in their application forms, Patrick said “[n]o good dead goes unpunished.”
“Rather than wait till the end when all that vetting and screening had been done, we’re going to do that first cut from 100 [applicants] down to 20, and we’re going to tell everybody,”
The next month, he dismissed requests for a review of the licensing process by applicants who the health department had rejected.
“I don’t think we gain anything by starting over,” he said. “We are in the middle of a process. Nobody has a license, no one is going to get a license until we meet the standards of the application process.”
Patrick was also criticized for failing to follow up with patient advocates who urged him to effectively implement the program.
“It appears the governor wants to skip out of office without addressing medical marijuana because he doesn’t want to talk about it and he doesn’t want to deal with it,” Massachusetts Patient Advocacy Alliance Executive Director Matthew Allen said in 2014.
Patrick’s successor, Gov. Charlie Baker (R), overhauled the his predecessor’s medical cannabis licensing process to create “a more streamlined, efficient, and transparent process that allows the Commonwealth to maintain the highest standards of both public safety and accessibility.”
Despite opposing marijuana decriminalization and expressing concerns about medical cannabis legalization, the governor did sign several drug policy reform bills during his time in office.
Patrick signed legislation in 2012 that reduced mandatory minimum sentences for people with non-violent drug convictions. He’d introduced a package of bills that included a call for the repeal of such mandatory minimums the previous year, earning praise from reform advocates.
“We need an effective and accountable re-entry program for those leaving the criminal justice system,” Patrick said in a statement. “Combining probation and parole, and requiring supervision after release, takes the best practices from other states to assure both public safety and cost savings.”
Another piece of legislation the then-governor proposed was to reduce the scope of “drug-free school zones,” where people charged with drug crimes would face mandatory minimum sentences. He recommended reducing the size of these zones from within 1,000 feet of a school to 100 feet.
Patrick signed off on a bill in 2014 to expand access to drug treatment.
“This bill creates some new rules and new tools for us to use together to turn to our brothers and sisters who are dealing with these illnesses and addiction and help them help themselves,” he said.
But in 2012, Patrick signed a bill prohibiting certain synthetic drugs called “bath salts.”
On The Campaign Trail
So far, Patrick has not made drug policy a center-stage issue in his campaign. However, his website says his agenda involves “making meaningful fixes to the big systems that consistently fail to meet modern needs.”
“This means a justice system that focuses less on warehousing people than on preparing them to re-enter responsible life,” the site says.
Previous Quotes And Social Media Posts
In 2007, a spokesperson for Patrick’s office said the governor would veto a proposed marijuana possession decriminalization bill. Patrick told the Associated Press that he had other priorities when asked whether he would sign the legislation.
He was listed as a supporter for a campaign that opposed the 2008 decriminalization ballot measure that voters later approved.
Oddly, two years earlier, Patrick was asked about a decriminalization proposal during a debate and said that while he’s “very comfortable with the idea of legalizing marijuana,” he doesn’t “think it ought to be our priority.” He went on to say that he would veto a proposed decriminalization measure in the legislature.
Massachusetts voters also approved a 2012 medical cannabis initiative while Patrick was in office—in spite of the fact that he declined to endorse the measure.
Asked about the proposal during a radio interview with WBZ, the then-governor first cited an argument in support of legalization made by conservative author William F. Buckley Jr., who said regulating drug sales would remove a profit motive for illicit dealers. Yet he went on to say that “I’m not endorsing” the initiative.
“I’m not expressing a point of view and I’m not dodging, it’s just I’ve got so much else I’m working on,” he said.
The host asked if Patrick would implement the law if voters approved it and he said “that’s, I think, what we’re supposed to do.”
In September 2012, he said that he doesn’t “have a lot of enthusiasm for the medical marijuana” measure, which was set to go before voters two months later.
“I mean I have heard the views on both sides and I’m respectful of the views of both sides, and I don’t have a lot of energy around that,” he said. “I think California’s experience has been mixed, and I’m sympathetic to the folks who are in chronic pain and looking for some form of relief.”
“I really have to defer to the medical views about this and individuals will get a chance to vote on this,” Patrick said in April 2012. “I haven’t been paying much attention to it.”
While his administration struggled to implement the program after voters had approved it, Patrick said in August 2014 that “I wish frankly we didn’t have medical marijuana.”
Responding to q abt medical marijuana dispensaries in westrn Mass @massgovernor says "Look, I wish frankly we didn't have medical marijuana"
— Sharman Sacchetti (@SharmanTV) August 20, 2014
Patrick doesn’t appear to have publicly weighed in during the Massachusetts campaign about legalizing marijuana for adult-use, which voters approved in 2016 after he had left office.
In 2012, Patrick said during a State of the State Address that Massachusetts should reevaluate how it treats people convicted of non-violent drug offenses.
“In these cases, we have to deal with the fact that simply warehousing non-violent offenders is a costly policy failure,” he said. “Our spending on prisons has grown 30 percent in the past decade, much of that because of longer sentences for first-time and nonviolent drug offenders. We have moved, at massive public expense, from treatment for drug offenders to indiscriminate prison sentences, and gained nothing in public safety.”
“We need more education and job training, and certainly more drug treatment, in prisons and we need mandatory supervision after release,” he said. “And we must make non-violent drug offenders eligible for parole sooner.”
He also said that the “biggest problem is that our approach to public safety has been to warehouse people,” and that the “answer is new policies, not bigger warehouses.”
“We’ve been warehousing people for whom what they really need is treatment and not just time,” he said during a town hall event in 2009.
Patrick voiced support in 2006 for a bill that would legalize the over-the-counter sale of needles in order to prevent the spread of disease.
“Deval Patrick supports this legislation because he believes it will reduce dangerous diseases in our state,” a campaign spokesperson said. “Studies in other states have shown that programs such as these decrease the rates of disease infection without increasing drug use.”
Patrick later criticized then-Gov. Mitt Romney (R) for vetoing the legislation, stating that the official “put misguided ideology before leadership in public health.”
Personal Experience With Marijuana
Patrick said in 2012 that he has never “experienced marijuana myself” but that during his school years there “was probably enough around me that there was a second-hand, a contact-high.”
Marijuana Under A Patrick Presidency
It is difficult to assess how Patrick would approach federal marijuana policy if elected president, but his vocal opposition to decriminalization in Massachusetts and his administration’s troubled implementation of medical cannabis legalization is likely to give advocates pause. While his current position on legalizing marijuana for adult-use is unclear, given that drug policy reform has become a mainstream issue that candidates are routinely pressed on, it is likely the former governor will be asked to weigh in on the campaign trail.
But for the time being, it appears that Patrick would not make marijuana reform a priority and, in fact, might prove more resistant to policy changes such as descheduling that the majority of candidates now embrace.