Federal authorities would no longer be able to punish banks that work with businesses that grow, process and sell hemp products under an amendment up for consideration in the U.S. Senate this week.
The measure, submitted on Tuesday by Sen. Rand Paul (R-KY), seeks to include the protections for hemp banking in the large-scale Farm Bill, which is currently on the Senate floor. The legislation, as currently drafted, already includes provisions that would legalize the cultivation of the non-psychoactive marijuana cousin.
Paul’s fellow home-state senator, Majority Leader Mitch McConnell, has been the leading force for hemp legalization in Congress this year.
“American consumers are buying hemp but thanks to heavy-handed regulation, the only option at scale is importing hemp from foreign producers,” he said in a Senate floor speech on Wednesday. “Enough is enough.”
It is unclear if Paul’s amendment will receive a floor vote.
See the full text of the new hemp banking amendment below:
______ SA 3198. Mr. PAUL submitted an amendment intended to be proposed by him to the bill H.R. 2, to provide for the reform and continuation of agricultural and other programs of the Department of Agriculture through fiscal year 2023, and for other purposes; which was ordered to lie on the table; as follows: At the end of subtitle F of title XI, add the following: SEC. 11618. SECURE AND FAIR BANKING ENFORCEMENT. (a) Safe Harbor for Depository Institutions.--A Federal banking regulator may not-- (1) terminate or limit the deposit insurance or share insurance of a depository institution under the Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) or the Federal Credit Union Act (12 U.S.C. 1751 et seq.) solely because the depository institution provides or has provided financial services to a hemp-related legitimate business; (2) prohibit, penalize, or otherwise discourage a depository institution from providing financial services to a hemp-related legitimate business or to a State or Indian tribe that exercises jurisdiction over hemp-related legitimate businesses; (3) recommend, incentivize, or encourage a depository institution not to offer financial services to the owner, operator, or an individual that is an account holder of a hemp-related legitimate business, or downgrade or cancel financial services offered to an account holder of a hemp- related legitimate business solely because-- (A) the account holder later becomes a hemp-related legitimate business; or (B) the depository institution was not aware that the account holder is the owner or operator of a hemp-related legitimate business; and (4) take any adverse or corrective supervisory action on a loan to an owner or operator of-- (A) a hemp-related legitimate business solely because the business owner or operator is a hemp-related business without express statutory authority, as in effect on the day before the date of enactment of this Act; or (B) real estate or equipment that is leased or sold to a hemp-related legitimate business solely because the owner or operator of the real estate or equipment leased or sold the equipment or real estate to a hemp-related legitimate business. (b) Protections Under Federal Law.-- (1) In general.--In a State, political subdivision of a State, or Indian country that allows the cultivation, production, manufacturing, transportation, display, dispensing, distribution, sale, or purchase of hemp pursuant to a law (including regulations) of the State, political subdivision of the State, or the Indian tribe that has jurisdiction over the Indian country, as applicable, a depository institution and the officers, director, and employees of the depository institution that provides financial services to a hemp-related legitimate business may not be held liable pursuant to any Federal law (including regulations)-- (A) solely for providing the financial services pursuant to the law (including regulations) of the State, political subdivision of the State, or Indian tribe; or (B) for further investing any income derived from the financial services. (2) Forfeiture.--A depository institution that has a legal interest in the collateral for a loan made to an owner or operator of a hemp-related legitimate business, or to an owner or operator of real estate or equipment that is leased or sold to a hemp-related legitimate business, shall not be subject to criminal, civil, or administrative forfeiture of that legal interest pursuant to any Federal law for providing the loan or other financial services solely because the collateral is owned by a hemp-related business. (c) Rule of Construction.--Nothing in this section shall require a depository institution to provide financial services to a hemp-related legitimate business. (d) Requirements for Filing Suspicious Activity Reports.-- Section 5318(g) of title 31, United States Code, is amended by adding at the end the following: ``(5) Requirements for hemp-related businesses.-- ``(A) Definitions.--In this paragraph-- ``(i) the term `financial service' means a financial product or service, as defined in section 1002 of the Dodd- Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5481); ``(ii) the term `hemp' has the meaning given the term in section 10111 of the Agriculture and Nutrition Act of 2018; ``(iii) the term `hemp-related legitimate business' has the meaning given the term in section 11618(e) of the Agriculture and Nutrition Act of 2018; ``(iv) the term `Indian country' has the meaning given the term in section 1151 of title 18; and ``(v) the term `Indian tribe' has the meaning given the term in section 102 of the Federally Recognized Indian Tribe List Act of 1994 (25 U.S.C. 479a). ``(B) Reporting of suspicious transactions.--A financial institution or any director, officer, employee, or agent of a financial institution that reports a suspicious activity related to a transaction by a hemp-related legitimate business shall comply with appropriate guidance issued by the Financial Crimes Enforcement Network. The Secretary shall ensure that the guidance is consistent with the purpose and intent of this paragraph and does not inhibit the provision of financial services to a hemp-related legitimate business in a State, political subdivision of a State, or Indian country that has allowed the cultivation, production, manufacturing, transportation, display, dispensing, distribution, sale, or purchase of hemp, or any other conduct relating to hemp, pursuant to law or regulation of the State, the political subdivision of the State, or Indian tribe that has jurisdiction over the Indian country.''. (e) Definitions.--In this section: (1) Company.--The term ``company'' means a partnership, corporation, association, (incorporated or unincorporated), trust, estate, cooperative organization, State, or any other entity. (2) Depository institution.--The term ``depository institution'' means-- (A) a depository institution as defined in section 3(c) of the Federal Deposit Insurance Act (12 U.S.C. 1813(c)); (B) a Federal credit union as defined in section 101 of the Federal Credit Union Act (12 U.S.C. 1752); or (C) a State credit union as defined in section 101 of the Federal Credit Union Act (12 U.S.C. 1752). (3) Federal banking regulator.--The term ``Federal banking regulator'' means each of the Board of Governors of the Federal Reserve System, the Bureau of Consumer Financial Protection, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the National Credit Union Administration, or any Federal agency or department that regulates banking or financial services, as determined by the Secretary of the Treasury. (4) Financial service.--The term ``financial service'' means a financial product or service, as defined in section 1002 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5481). (5) Hemp.--The term ``hemp'' has the meaning given the term in section 10111. (6) Hemp product.--The term ``hemp product'' means any article which contains hemp, including an article which is a concentrate, an edible, a tincture, a hemp-infused product, or a topical. (7) Hemp-related legitimate business.--The term ``hemp- related legitimate business'' means a manufacturer, producer, or any person or company that-- (A) engages in any activity described in subparagraph (B) pursuant to a law established by a State or a political subdivision of a State; and (B)(i) participates in any business or organized activity that involves handling hemp or hemp products, including cultivating, producing, manufacturing, selling, transporting, displaying, dispensing, distributing, or purchasing hemp or hemp products; or (ii) provides-- (I) any financial service, including retirement plans or exchange traded funds, relating to hemp; or (II) any business services, including the sale or lease of real or any other property, legal or other licensed services, or any other ancillary service, relating to hemp. (8) Indian country.--The term ``Indian country'' has the meaning given the term in section 1151 of title 18, United States Code. (9) Indian tribe.--The term ``Indian tribe'' has the meaning given the term in section 102 of the Federally Recognized Indian Tribe List Act of 1994 (25 U.S.C. 479a). (10) Manufacturer.--The term ``manufacturer'' means a person or company who manufactures, compounds, converts, processes, prepares, or packages hemp or hemp products. (11) Producer.--The term ``producer'' means a person or company who plants, cultivates, harvests, or in any way facilitates the natural growth of hemp. (12) State.--The term ``State'' means each of the several States, the District of Columbia, Puerto Rico, any territory or possession of the United States. ______
Marijuana Trade Group Demands Action Against Unlicensed Los Angeles Dispensaries
Unlicensed marijuana dispensaries abound in Los Angeles, and a major cannabis trade association is calling on the local prosecutor to step up enforcement efforts.
In a letter sent to City Attorney Mike Feuer, the United Cannabis Business Association (UCBA) says it is concerned that “illegal retail cannabis operations are continuing to flourish and proliferate” and that existing medical marijuana dispensaries “are struggling financially in the face of competition from illegal dispensaries.”
The group, which represents licensed medical cannabis dispensaries throughout the city, requested information about how the local government is handling the situation.
“The UCBA is looking for answers and actions from City Attorney Feuer to ensure safety for workers and residents across the city and to protect the city’s much needed revenue,” UCBA executive director Ruben Honig said in a press release this week. “We are greatly concerned that illegal cannabis dispensaries continue to operate and proliferate in Los Angeles and urge him to crack down on rampant illegal cannabis operations.”
Of course, cracking down on the hundreds of unlicensed dispensaries operating in the city is easier said than done. And the city attorney’s office has moved to enforce local marijuana ordinances in waves this year. In September, for example, the office announced that more than 500 people were charged for running 105 illicit dispensaries.
It’s not quite as simple as shutting down unlicensed marijuana shops, though. Cannabis laws are constantly evolving in Los Angeles, and keeping up with the latest regulatory policies has proved challenging for many previously licensed dispensaries.
The National Cannabis Industry Association (NCIA) said it agrees that the city attorney’s office should “enforce the law and the new regulatory structure,” but that enforcement “should be transparent, and should focus initially on the traditional criminal element more than on currently unlicensed businesses that have been operating for years without incident in compliance with the old system.”
“This is a perfect example of the problem with arbitrary license caps,” NCIA media relations director Morgan Fox wrote to Marijuana Moment in an email. “I’m not extremely familiar with the LA licensing scheme regarding existing businesses, but I’ve heard that it was very restrictive, very limited and resulted in the exclusion of many smaller and/or minority-owned companies.”
Marijuana Moment reached out to Feuer’s office for comment, but a representative was not immediately available.
Photo courtesy of Chris Wallis // Side Pocket Images.
Nearby Marijuana Shops Make Homes And Rentals More Valuable, Studies Show
When a shop selling marijuana opens (or closes), there’s a direct impact on housing and rental prices in the surrounding area, according to a pair of recent studies.
Housing prices for new homes increase by 7.7 percent on average if they’re located within a quarter mile of a new dispensary.
A study published in the journal Contemporary Economic Policy evaluated how the price of new homes in Denver, Colorado, changes when a cannabis dispensary opens up nearby. Researchers compared the prices of homes before and after a dispensary opened within .25 miles, .25-.5 miles and .5-.75 miles.
When new dispensaries opened within .25 miles, housing prices jumped 7.7 percent on average. There was still a 4.7 percent increase for homes located within .5 miles, but the effect “disappears entirely” for houses that are further than .5 miles from a new dispensary. The researchers also found that the effect was slightly more pronounced if the dispensary was the first to the area.
“Our results suggest that despite potential costs, legalization is capitalized as a net benefit in housing prices,” the researchers wrote.
Interestingly, new dispensaries seem to have about the same impact on housing prices as new grocery stores, the study found. But the “mechanisms through which grocery stores affect housing prices are more obvious than dispensaries.”
“If public sentiment surrounding marijuana is positive, homebuyers may also prefer to select into neighborhoods with more dispensaries for convenience. Ultimately however, our data do not allow us to directly determine the underlying mechanisms driving this result, so these potential explanations should be considered speculative.”
Losing a marijuana coffeeshop causes a three percent decrease in Airbnb rental prices.
Amsterdam’s famous cannabis coffeeshops are known tourist attractions, but what happens when one shuts down? For his master’s dissertation, doctoral student Igor Goncalves Koehne de Castro identified at least one collateral effect: Rental costs on Airbnb drop by about three percent on average if the closure was within 250 meters of the lodging.
If the coffeeshop was further than 250 meters, rental prices didn’t change significantly.
There were plenty of examples for de Castro to study, which spanned from 2014 to 2017, because several coffeeshops have closed in response to new laws in recent years, including one in Amsterdam that prohibits the shops from operating within 250 meters of a school.
After controlling for other possible factors, de Castro developed a series of models based on Airbnb data on rental prices over time and their proximity to recently closed coffeeshops. The study revealed that these shops “present a positive impact” on rental prices for lodgings close to the shops—presumably because people who rent through Airbnb are “tourists” who are “sensitive to distances.”
“The findings of this study suggest that, for the city of Amsterdam, the de facto legalization of cannabis actually has a positive externality,” de Castro wrote. “This result puts new evidence to the debate of drug laws and policies, a matter that still lacks data and research.”
Photo courtesy of WeedPornDaily.
Major Alcohol Association Briefs Congress On Marijuana Legalization
One of the nation’s leading alcohol industry associations held a briefing on Capitol Hill on Friday to tell lawmakers and congressional staffers about its position on marijuana legalization.
The Wine & Spirits Wholesalers of America (WSWA) became the first major alcohol association to call for the end of federal cannabis prohibition in July. At last week’s briefing, the group reaffirmed that stance, emphasizing that the federal government should allow states to legalize marijuana without interference.
A representative from the group also suggested that the cannabis market could take lessons from the current regulatory approach to alcohol, including when it comes to distribution and quality control testing, one person who attended the event told Marijuana Moment. There was also a conversation about developing technologies to detect active impairment from marijuana on the roads.
In a one-sheet overview distributed at the briefing, WSWA wrote that the industry’s regulatory structure “should ensure product safety, discourage underage access, create an effective tax collection regime and encourage innovation and choice for consumers, while at the same time eliminating diversion of cannabis to other states.”
WSWA then outlines a series of recommendations—from implementing impaired driving standards to testing product formulas.
Read WSWA’s full list of marijuana policy recommendations below:
For the most part, the recommendations align with existing regulatory models in legal states. Where the alcohol and marijuana industries might have disagreements, though, is with WSWA’s opposition to vertical integration, under which one company manages more than one area of production and distribution that could otherwise be delegated to other businesses.
The alcohol industry generally operates under a three-tier system in the U.S., through which separate operators handle production, wholesaling and retail sales. Some have suggested that the alcohol industry wants the cannabis market to adopt its approach so that existing businesses like beer, wind and liquor distributors can profit from legal marijuana as well. But Dawson Hobbs, WSWA senior vice president of government relations, denied as much when the association made its initial announcement earlier this year.
“No, what we’re talking about is just creating a pathway for states to have federal recognition of legalization by enacting appropriate regulation that creates a safe and reliable marketplace,” Hobbs said at the time.
Photo courtesy of Chris Wallis // Side Pocket Images.