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. ______
Feds Send Warning Letter To Another CBD Company Over Medical Claims
The Food and Drug Administration (FDA) and Federal Trade Commission (FTC) sent a warning letter to a Florida-based CBD company on Tuesday, alleging that the business made several unsanctioned claims about the therapeutic benefits of their products.
The federal agencies accused Rooted Apothecary of unlawfully asserting that their cannabidiol products could treat symptoms of conditions such as ADHD, Parkinson’s disease, ear aches, ADHD and autism. Those claims appeared on the company’s website and social media accounts, they said.
Certain products appeared to be marketed as dietary supplements, which FDA currently prohibits as it works to develop an alternative regulatory scheme for CBD.
“Cannabis and cannabis-derived compounds are subject to the same laws and requirements as FDA-regulated products that contain any other substance,” Acting FDA Commissioner Ned Sharpless said in a press release. “We are working to protect Americans from companies marketing products with unsubstantiated claims that they prevent, diagnose, treat, or cure a number of diseases or conditions.”
FDA and FTC have issued a joint warning letter to a company marketing unapproved cannabidiol products with unsubstantiated claims to treat teething and ear pain in infants, autism, ADHD, Parkinson’s and Alzheimer’s disease, among other conditions/diseases. https://t.co/tsn4SBiGzH pic.twitter.com/sG3wyURMDS
— Dr. Ned Sharpless (@FDACommissioner) October 22, 2019
We’ve sent numerous warning letters that focus on matters of significant public health concern to CBD companies, and these actions should send a message to the broader market about complying with FDA requirements.
— Dr. Ned Sharpless (@FDACommissioner) October 22, 2019
“We’ve sent numerous warning letters that focus on matters of significant public health concern to CBD companies, and these actions should send a message to the broader market about complying with FDA requirements,” he said. “As we examine potential regulatory pathways for the lawful marketing of cannabis products, protecting and promoting public health through sound, science-based decision-making remains our top priority.”
FTC’s complaint with the company is that it violated a law that requires businesses that advertise medical claims about their products to have “competent and reliable scientific evidence” to back them up, which could include human clinical trials. Making or exaggerating such claims through “a product name, website name, metatags, or other means” without proper evidence is also prohibited.
FTC and @US_FDA warn Florida company marketing CBD products about claims related to treating autism, ADHD, Parkinson’s, Alzheimer’s, and other medical conditions: https://t.co/cAbxPPcxk8 pic.twitter.com/GdlttyBgxv
— FTC (@FTC) October 22, 2019
Rooted Apothecary must respond to the agencies within 15 working days to explain what steps it’s taking to resolve the issues. If the company fails to do so, it is subject to legal action, including the possible seizure of its products or an injunction. It may also have to compensate customers.
FDA emphasized that CBD products—other than the prescription medication Epidiolex, for the treatment of intractable epilepsy—are not currently allowed. But it also reiterated that the agency is in the process of developing rules that could allow for the lawful marketing of the compound.
In April, FDA sent warning letters to three other CBD companies that it said was making unauthorized claims about the medical benefits of their products. FTC also submitted warning letters to three separate CBD companies for allegedly advertising misleading statements about their products last month.
These letters are examples of the agency’s use of enforcement discretion. Former FDA Commissioner Scott Gottlieb, who recently suggested that the federal government should be involved in regulating state marijuana programs, clarified in March that the agency is only going after companies that make especially misleading claims about their products.
Senate Majority Leader Mitch McConnell (R-KY), who championed a provision of the 2018 Farm Bill federally legalizing hemp and its derivatives, has urged FDA to clear a path for the lawful marketing of CBD products by using enforcement discretion while it develops an interim final rule. A bipartisan group of lawmakers made a similar request in a letter sent to the agency last month.
“The FDA is working quickly to further clarify our regulatory approach for products containing cannabis and cannabis-derived compounds like CBD while using all available resources to monitor the marketplace and protect public health by taking action as needed against companies,” FDA Principal Deputy Commissioner Amy Abernethy said.
FDA’s working quickly to further clarify our regulatory approach for products with cannabis/cannabis-derivatives like CBD while using all available resources to monitor the marketplace & protect public health by taking action as needed against companies. https://t.co/HB9IhG2qud
— Dr. Amy Abernethy (@DrAbernethyFDA) October 22, 2019
We are committed to advancing our regulation of these products through an approach that, in line with our mission, prioritizes public health, fosters innovation and promotes consumer confidence. We plan to provide an update on our progress in this area in the near future.
— Dr. Amy Abernethy (@DrAbernethyFDA) October 22, 2019
“We recognize that there is significant public interest in cannabis and cannabis-derived compounds; however, we must work together to fill in the knowledge gaps about the science, safety and quality of many of these products,” she said. “We are committed to advancing our regulation of these products through an approach that, in line with our mission, prioritizes public health, fosters innovation and promotes consumer confidence.”
Photo courtesy of Kimzy Nanney.
California Governor Signs Marijuana Tax Fairness Bill But Vetoes Cannabis In Hospitals
California Gov. Gavin Newsom (D) announced on Saturday that he signed several marijuana-related bills into law—including one that will let legal businesses take advantage of more tax deductions—but also vetoed another measure that would have allowed some patients to use medical cannabis in health care facilities.
Under a section of current federal law known as 280E, marijuana growers, processors and sellers are unable to deduct expenses from their taxes that businesses in any other sector would be able to write off. Until now, California policy simply mirrored the federal approach.
But under AB 37, the state tax code will depart from Internal Revenue Service policy when it comes to 280E, allowing licensed state cannabis firms to take deductions just like other business.
Newsom, who campaigned for the state’s successful marijuana legalization measure that voters approved in 2016, also signed SB 34, which allows businesses to provide free medical cannabis to low-income patients, and exempts those products from state taxes.
Gov. @GavinNewsom signed #SB34, our legislation to ensure #cannabis compassion programs – which provide free medical cannabis to low income patients – can survive. These programs are critical to the health of many with #HIV, cancer, PTSD & other conditions. Thank you Governor!
— Scott Wiener (@Scott_Wiener) October 13, 2019
Another bill signed by the governor, SB 153, directs state officials to develop and submit to the U.S. Department of Agriculture an industrial hemp program plan in accordance with the provisions of the 2018 Farm Bill, which federally legalized the crop and its derivatives—including CBD.
“The California hemp industry looks to become a significant force nationally thanks to” the bill, Eric Steenstra, president of Vote Hemp, said in a press release.
But Newsom “begrudgingly” vetoed legislation, SB 305, that would have required certain health care facilities to allow terminally ill patients to use medical cannabis on site.
“This bill would create significant conflicts between federal and state laws that cannot be taken lightly,” the governor wrote in a veto message that suggested facilities would be at risk of losing Medicare and Medicaid funds if they allowed use of federally illegal cannabis.
“It is inconceivable that the federal government continues to regard cannabis as having no medicinal value,” Newsom said, adding that its “ludicrous stance puts patients and those who care for them in an unconscionable position.”
California NORML Director Dale Gieringer said in an email that the group is “disappointed” with the governor’s veto, noting that the legislation had already been watered down from an initial version that covered more than just terminal patients.
“The bill even allowed exemptions in the case that federal agencies ruled or notified the facilities that they were violating the law,” he said.
Other legislation Newsom signed includes measures on marijuana testing laboratories, vape cartridge labeling, appellations and marketing, cultivation canopy sizes, industry labor peace agreements and equity license applicants.
He also signed the appropriately numbered AB 420, which expands cannabis-focused research.
Last week, Newsom signed a bill to allow parents to administer medical cannabis to students at schools.
Photo courtesy of Carlos Gracia.
Former Congressman Who Fought Marijuana Legalization Joins Cannabis Company Board
A former GOP congressman with a long track record of opposing marijuana legalization efforts is now cashing in on the legal cannabis industry.
FSD Pharma, a Canadian company that is a licensed producer of “pharmaceutical grade cannabis” through its subsidiary FV Pharma and researches cannabinoid-based therapies, announced on Friday that former Rep. Steve Buyer (R-IN) joined its board of directors. Missing from the press release is mention of his legislative history that includes repeated actions to oppose federal protections for state-level marijuana reforms.
From 1998 to 2000, Buyer cosponsored two resolutions and one bill aimed at condemning legalization and upholding federal prohibition. His opposition extended to limited medical cannabis reforms, too, voting five times from 2003 to 2007 against an amendment to protect state laws and the patients and providers complying with them from federal prosecution.
One of the anti-marijuana resolutions he signed onto passed the House but did not advance in the Senate. As introduced, it characterized cannabis as “both dangerous and addictive” and stated that “Congress is unequivocally opposed to legalizing marijuana for medicinal use, and urges the defeat of State initiatives that would seek to legalize marijuana for medicinal use.”
The version that passed, which Buyer voted for, expressed concerns that “ambiguous cultural messages about marijuana use are contributing to a growing acceptance of marijuana use among children and teenagers” and noting that federal authorities can enforce prohibition “through seizure and other civil action, as well as through criminal penalties.”
The separate bill he cosponsored sought to declare state laws that allow cannabis use as “null and void.”
“[I]t is the intent of the Congress to supersede any and all laws of the States and units of local government insofar as they may now or hereafter effectively permit or purport to authorize the use, growing, manufacture, distribution, or importation by an individual or group of marijuana or any controlled substance which differs from the provisions of the Controlled Substances Act and the Controlled Substances Import and Export Act or regulations issued pursuant thereto,” it read.
It’s not quite clear what changed for Buyer, but his appointment to the board of a major marijuana company that has benefitted from the successful reform movement he opposed is sure to raise questions.
In response to Marijuana Moment’s query about what accounted for the former congressman’s evolution on the issue, FSD Pharma President Zeeshan Saeed simply replied, “3M options as all other Directors and $40k cash comp.”
Hours later, Saeed clarified that he intended to send that reply to another journalist.
Raza Bokhari, executive co-chairman and CEO of FSD Pharma, said in a subsequent email that he’s known Buyer for years and believes that while he “remains opposed to recreational use of cannabis,” he “has come to recognize the potential of cannabinoid molecule in drug development targeting auto-immune diseases, especially the role of synthetic cannabinoids and other cannabinoids targeting the endocannibinoid system of the human body.”
The former congressman has been on “a very personal journey, with his wife being plagued with an auto-immune disease that has no cure and others in her family also that suffer from auto-immune diseases,” Bokhari said.
He added that Buyer has personally invested a quarter of a million dollars in the company and compared him to former House Speaker John Boehner (R-OH), who also joined the marijuana industry after opposing cannabis reform while serving in Congress.
In a press release announcing the appointment, Buyer said the “opportunity to participate in FSD’s growth at this stage is exciting” and that he’s “attracted by FSD’s medical research to tame and define the unknown by challenging the edges of medical science to provide relief to people suffering from fibromyalgia and other serious illnesses.”
In welcoming Steve Buyer to the FSD Pharma Board of Directors and announcing a share consolidation, the Company has made an immense positive stride forward https://t.co/aAP9cM2kAi
— FSD Pharma (@FsdPharma) October 11, 2019
One industry that the former congressman’s actions did assist while in office and later went on to work for as a lobbyist is Big Tobacco. Buyer raised eyebrows in 2009 when he opposed legislation to regulate the tobacco industry and argued in a House floor speech that a person is just as likely to experience the health consequences of cigarettes if they were to smoke dried lettuce or grass. He insisted that it’s “smoke that kills, not the nicotine.”
Shortly after retiring, Buyer joined tobacco company Reynolds American as a lobbyist and paid consultant.
There have been several reports that noted Buyer’s decision not to run for reelection in 2010 came amid controversy over a foundation he founded. The Frontier Foundation was supposed to provide educational funding for students, but while it raked in tens of thousands from pharmaceutical interests such as Ely Lilly and PhRMA over a three-year period, it reportedly hadn’t distributed a single scholarship.
His retirement came months after USA Today and the Indianapolis Star reported on the foundation’s activities.
But now, Buyer is entering the cannabis space, and the company described his experience in the pharmaceutical industry and Congress as an asset.
“In welcoming Steve Buyer to the FSD Pharma Board of Directors and announcing a share consolidation, the Company has made an immense positive stride forward” FSD Pharma CEO Raza Bokhari said. “Steve’s addition has further strengthened the independence and profile of the FSD Pharma Board of Directors; his broad leadership experience and pharmaceutical industry relationships will help enhance our visibility, especially among U.S. Institutional investors and on U.S. Capitol Hill.”
Buyer also previously served as a special assistant U.S. attorney and an Indiana deputy attorney general.
This story has been updated to include additional comment from FSD Pharma’s CEO.
Photo courtesy of Philip Steffan.