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Number Of Banks Reporting Cannabis Business Clients Dips After Hemp Rules Change

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The number of accounts that banks and credit unions informed federal regulators they are maintaining for cannabis businesses dipped slightly at the end of the last quarter, according to new data. But that seems to be primarily related to revised reporting requirements for financial institutions servicing hemp-specific businesses following that crop’s federal legalization, rather than a decline in the number of marijuana companies with bank accounts.

Under guidance issued by the Obama administration in 2014 that remains in effect, banks and credit unions are required to submit suspicious activity reports, or SARs, if they elect to provide financial services to marijuana businesses. As more states have legalized marijuana, the number of cannabis-related SARs filed has consistently increased, though it began to level off late last year, a federal report released this week shows.

The Financial Crimes Enforcement Network (FinCEN) reported that SARs for marijuana businesses declined from 747 as of November 2019 to 739 by the end of the following month.

Via FinCEN.

While the overall number is higher than was reported in the previously quarterly data (723), the recent dip appears to coincide with updated guidance to financial institutions that FinCEN and other federal regulators issued at the beginning of December.

Those memos clarified that because the 2018 Farm Bill removed hemp from the Controlled Substances Act, banks are no longer required to automatically submit SARs for businesses that produce, process or sell the crop and products derived from it.

Some in the industry expected to see a sizable spike in the number of banks that work with marijuana firms after the House of Representatives passed a bill last year that would protect financial institutions from being penalized for doing so by federal regulators. Even though the legislation has stalled in the Senate and has not yet been enacted into law, the bipartisan margin of support it got in the House has ben seen as a signal that formal federal changes are likely on the way.

While the new data doesn’t show that expected big increase, that could be partially explained by the change in hemp’s legal status.

Of the 739 depository institutions servicing marijuana businesses, 203 “indicated that they were providing banking services to hemp-related businesses,” the agency said. Based on the language of the SARs, FinCEN said it was likely that 61 financial institutions provide services to companies that exclusively market hemp and not marijuana.

Via FinCEN.

As more banks and credit unions become aware of the updated guidance on hemp reporting standards, it’s possible that fewer institutions will issue SARs for what FinCEN defines as a “marijuana-related business.”

The agency also said that short-term declines in overall numbers “may be explained by filers exceeding the 90 day follow-on Suspicious Activity Report (SAR) filing requirement.”

All that said, if Congress passes the Secure and Fair Enforcement (SAFE) Banking Act, the number of financial institutions working with marijuana firms will likely increase substantially, as banks would then have the security of a codified law to protect them against adverse actions.

“Hemp-related reductions in filings aside, I think these latest FinCEN numbers continue to show that most banks are extremely hesitant to work with cannabis businesses in the absence of clarifying legislation,” Morgan Fox, media relations director for the National Cannabis Industry Association, told Marijuana Moment. “I would imagine that this problem still exists for hemp producers given the relatively small drop in banks filings SARS that is attributed to changes in filing requirements for hemp-related activity.”

“This level of banking access does not come close to fulfilling the needs of regulated cannabis businesses or their employees, and ensures that issues we are seeing with public safety and lack of access to capital for small businesses will continue,” he said. “The Senate must act now to remedy these problems, and it can start by holding a markup on the House-approved version of the SAFE Banking Act in the Senate Banking Committee as soon as possible.”

Sen. Cory Gardner (R-CO), a lead sponsor of the bill, said last week that he expects the Senate to take it up within months and revealed that lawmakers are “close” to reaching a compromise with Banking Committee Chairman Mike Crapo (R-ID), who has proposed several restrictive changes to the House-passed legislation.

Deal On Marijuana Banking Bill Is ‘Close,’ GOP Senator Says

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Arizona Marijuana Tax Revenue Exceeds $20 Million In August, State Reports

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Arizona collected more than $20 million in medical and adult-use marijuana tax revenue in August, data released by the state this week shows.

Medical cannabis taxes were slightly higher at $6,388,816 last month, compared to $4,542,166 collected from the recreational market, according to the Department of Revenue. The state also took in an additional $9,515,016 from the marijuana excise tax.

However, these figures are preliminary and may change, as some businesses could need additional time to send in data.

July’s cannabis tax revenue was slightly higher compared to August, with the state taking in about $400,000 more in the prior month.

While medical cannabis taxes are still outpacing those from the adult-use market, that gap has been generally been narrowing in the months since recreational sales first launched in January. That’s a trend that’s been observed across numerous states after adult-use marijuana is legalized.

However, Arizona’s medical marijuana market is well-established, and some industry experts don’t necessarily expect recreational sales to overtake the medical program for some time.

Overall cannabis tax revenue from January through August totaled $115,701,426, according to the data the Department of Revenue is reporting so far.

Other states are also seeing a windfall in marijuana tax dollars as more markets mature and sales continue to increase.

For example, Maine recreational marijuana sales broke another record in August, exceeding $10 million for the first time since the adult-use market launched in October 2020.

Adult-use cannabis sales in Illinois exceeded $120 million in August, state officials recently reported. It’s the second highest sales record since the state’s recreational market launched last year and the sixth month in a row that sales surpassed $100 million.

Massachusetts marijuana sales have topped $2 billion since the state’s adult-use market launched in late 2018, the Cannabis Control Commission reported last week.

California collected about $817 million in adult-use marijuana tax revenue during the 2020-2021 fiscal year, state officials estimated last month. That’s 55 percent more cannabis earnings for state coffers than was generated in the prior fiscal year.

A recent scientific analysis of sales data in Alaska, Colorado, Oregon and Washington State found that marijuana purchases “have increased more during the COVID-19 pandemic than in the previous two years.”

In July alone, at least three states saw record-breaking sales for recreational cannabis. The same goes for Missouri’s medical marijuana program.

Michigan marijuana sales broke another record in July with more than $171 million in cannabis transactions, according to data from the state’s regulatory body. There were $128 million in adult-use sales and $43 million in medical cannabis purchases.

Throughout the pandemic, many states allowed cannabis retailers to remain open—with governors and regulators in several markets declaring marijuana businesses to be essential services—and some jurisdictions issued emergency rules allowing curbside pickup, delivery services or other more relaxed policies in order to facilitate social distancing.

California Smokable Hemp Bill Heads To Governor, While Measure On Cannabis Use In Hospitals Advances

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Maine Marijuana Sales Broke Another Record In August, Exceeding $10 Million For First Time

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Maine recreational marijuana sales broke another record in August, exceeding $10 million for the first time since the adult-use market launched in October 2020.

The state’s Office of Marijuana Policy reported that the state’s 53 adult-use cannabis shops brought in about $10.2 million in marijuana purchases last month. And that translates into about $1 million in tax revenue for the state, which has a population of just 1.3 million.

By comparison, Maine cannabis sales for recreational consumers amounted to just $1.1 million during the first month of retail sales less than a year ago. That record has been broken each subsequent month.

While August proved to be a record-breaking month for marijuana purchases—with 133,969 sales transactions—it’s only slightly higher compared to July, when the state saw about $9.4 million in adult-use purchases. Those figures don’e include medical cannabis sales, which are tracked separately.

Via Maine Office of Marijuana Policy.

According to the Portland Press Herald, regulators have credited summer tourism for the sales spike.

But in general, states across the U.S. have seen similar trends over recent years. And marijuana sales records have been consistently broken over the past year despite the coronavirus pandemic.

Adult-use cannabis sales in Illinois exceeded $120 million in August, state officials recently reported. It’s the second highest sales record since the state’s recreational market launched last year and the sixth month in a row that sales surpassed $100 million.

Arizona brought in about $21 million in medical and adult-use marijuana tax revenue in July, state officials recently reported on a new webpage that enables people to more easily track how the industry is evolving.

California collected about $817 million in adult-use marijuana tax revenue during the 2020-2021 fiscal year, state officials estimated last month. That’s 55 percent more cannabis earnings for state coffers than was generated in the prior fiscal year.

A recent scientific analysis of sales data in Alaska, Colorado, Oregon and Washington State found that marijuana purchases “have increased more during the COVID-19 pandemic than in the previous two years.”

In July alone, at least three states saw record-breaking sales for recreational cannabis. The same goes for Missouri’s medical marijuana program.

Michigan marijuana sales broke another record in July with more than $171 million in cannabis transactions, according to data from the state’s regulatory body. There were $128 million in adult-use sales and $43 million in medical cannabis purchases.

Throughout the pandemic, many states allowed cannabis retailers to remain open—with governors and regulators in several markets declaring marijuana businesses to be essential services—and some jurisdictions issued emergency rules allowing curbside pickup, delivery services or other more relaxed policies in order to facilitate social distancing.

Marijuana Legalization Doesn’t Lead To Increased Youth Use, American Medical Association Study Finds

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Firm Led By Formerly Anti-Drug GOP Senator Will Lobby For Marijuana Businesses In New York

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A New York-based lobbying firm that’s headed by a former Republican U.S. senator announced on Tuesday that it is entering the marijuana space after the newly inaugurated governor took key steps toward implementing legalization in the state.

Former Sen. Alfonse D’Amato (R-NY) founded Park Strategies in 1999, just after leaving the Senate with an established record of supporting the war on drugs. Now, his firm is getting into the cannabis business, offering services to influence regulations for both marijuana companies and ancillary markets.

“With Governor Kathy Hochul’s prioritizing the cannabis law by making appointments to the cannabis office and governing board so quickly after having taken office tells us New York is serious about growing the cannabis industry in the state, and we are happy to be making our own investment to assure that success,” D’Amato said in a press release.

Joseph Rossi, who is heading the firm’s Cannabis Practice Group, said Park Strategies “has deep roots in the cannabis space,” noting work on state cannabis legislation over the years.

Hochul’s move to make the marijuana regulatory appointments so quickly after replacing former Gov. Andrew Cuomo (D) has been welcome news for advocates and industry stakeholders. Cuomo, who resigned amid a sexual harassment scandal, faced criticism for slow-walking the appointments after signing legalization into law this year.

And evidently, excitement about the cannabis developments in New York isn’t reserved to traditional advocates.

D’Amato wasn’t particularly bullish about marijuana reform during his time in Congress. For example, he introduced a bill and amendment in 1990 that would’ve allowed taxpayers to designate overpayments to fund drug war enforcement.

He also cosponsored an array of anti-drug legislation, including resolutions condemning Mexico over its “failure” to cooperate with the U.S. in “controlling the transport of illegal drugs and controlled substances” and promoting the Reagan-era Red Ribbon Week.

D’Amato also signed onto Sen. Strom Thurmond’s (R-SC) Violent Crime and Drug Enforcement Improvements Act, which would have expanded federal asset forfeiture authorities, made it so juveniles could be transferred to adult court for certain violent or drug-related crimes and established a new office to “plan and coordinate drug enforcement efforts” for the federal government.

At one point in 1986, D’Amato teamed up with then-New York City Mayor Rudy Giuliani for a stunt where they went “undercover” and posed as people attempting to purchase crack cocaine to illustrate the ease of the transaction in the city.

Notably, however, D’Amato was not one of the 35 senators who signed onto a 1998 resolution that expressed support for the federal system of determining “the safety and efficacy of drugs” and criticized “efforts to circumvent this process by legalizing marijuana, and other Schedule I drugs, for medicinal use without valid scientific evidence and the approval of the Food and Drug Administration.”

And his position on cannabis policy has shifted significantly in the years since he left the Senate.

In 2017, D’Amato actually became a senior policy advisor for the pro-legalization Marijuana Policy Project’s New York affiliate.

“Nobody was more anti-drugs than I was,” the former senator wrote in an op-ed for The New York Daily News at the time. “However, as I have learned more about marijuana, particularly medical marijuana, over the last several years, my views—like the views of most Americans—have changed.”

He explained his evolution on the topic in an earlier piece for The Long Island Herald in 2014.

“I know it’s a tough pill to swallow, and if you asked me five years ago if I would ever consider supporting legalizing medical marijuana, I would’ve say, ‘Not a chance,'” he wrote. “But times are changing, and marijuana has become a viable form of alternative medicine for those suffering from many debilitating diseases such as ALS, multiple sclerosis, cancer and others. When traditional medicines fail to offer relief, why not give patients alternatives?”

The overlap between the marijuana industry and politics has become pronounced in recent years as more states have moved to end prohibition.

President Joe Biden’s pick to head up federal drug policy worked for a major marijuana business last year, according to his financial disclosure reports.

Tom Price, the former U.S. Department of Health and Human Services (HHS) head under President Trump is also serving as a member of the board of directors for a medical marijuana business in Georgia. Like D’Amato, he similarly resisted reform during his time in Congress.

Perhaps the most well-known GOP lawmaker-turned-marijuana executive is former House Speaker John Boehner (R-OH), who has faced criticism from activists over his previous opposition to legalization while in office before joining the board of marijuana company Acreage Holdings.

Marijuana Legalization Doesn’t Lead To Increased Youth Use, American Medical Association Study Finds

Photo courtesy of Philip Steffan.

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.
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