Republican congressional leadership is blocking consideration of a measure to allow marijuana businesses to deposit their profits in banks.
Many financial institutions are currently afraid to serve cannabis businesses that are legal in a growing number of states because of ongoing federal prohibition and the associated risk of running afoul of money laundering and drug laws.
As a result, many marijuana growing, processing and retail operations carry out business on a cash-only basis, making them targets for robberies.
Congressman Ed Perlmutter (D-CO) wants to solve this problem. Last Wednesday, at a meeting of the House Financial Services Committee, he offered an amendment that would have prevented federal authorities for punishing banks just for working with legal marijuana businesses.
“The regulatory confusion around marijuana and banking needs to be resolved,” Perlmutter said during the markup. “Prohibition is over. This committee has a responsibility to align the laws of the United States with those of the states so that there isn’t confusion. Public safety is at risk.”
Perlmutter referred to the case of an Iraq War veteran who was killed during a robbery while working as a security guard at a marijuana retail operation in Colorado.
“This is a real issue that this committee must deal with and confront and cannot overlook any more,” he said.
“I don’t think there’s a single person on this committee that is in a state that doesn’t allow some level of marijuana use,” Perlmutter noted, referring to the 46 states that either have comprehensive medical cannabis laws or allow limited uses of low-THC marijuana extracts.
Nonetheless, Republicans on the committee used procedural moves to block the banking measure from even being voted on.
Congressman Blaine Luetkemeyer (R-MO) reserved a point of order against the measure, claiming it was not germane to the overall bill on stress testing for financial institutions. (As an aside, the GOP lawmaker did mention that his daughter resides in Colorado and that they talk about marijuana issues “a lot”).
Committee Chairman Jeb Hensarling (R-TX) ruled to uphold Luetkemeyer’s point or order. Perlmutter then made a motion to appeal the ruling of the chair, but Luetkemeyer motioned to table consideration of Perlmutter’s move.
Congresswoman Maxine Waters (D-CA) spoke in support of Perlmutter’s amendment.
“Someday we will realize that this is a federal issue that must be dealt with,” she said.
Congressman David Scott (D-GA) also argued that the panel needs to address the cannabis banking issue at some point.
“If…his amendment is not germane, I still believe that this whole burgeoning issue certainly falls in the bosom of the Financial Services Committee as we move forward,” he said.
But the vote on Luetkemeyer’s motion was approved on a strictly party-line vote of 28 to 14, effectively blocking the cannabis banking measure from being considered.
This week, I tried yet again to offer a solution to the marijuana banking crisis. Unfortunately, my amendment was not included in the final bill. This is an issue of public safety and I will continue to press the issue at every opportunity.https://t.co/0xUJB1srDy
— Rep. Ed Perlmutter (@RepPerlmutter) November 18, 2017
In 2014, the Obama administration released guidance intended to give banks some comfort in working with the marijuana industry. But, because the memos provided no permanent or assured protection from continuing federal prohibition laws that remain on the books, many financial services providers have remained wary.
Also in 2014, the U.S. House voted 231 to 192 in favor of an amendment to prevent federal authorities from punishing banks for working with the legal marijuana industry. But the language was not included in the final version of annual appropriations legislation that year and was not enacted into law. GOP leaders have since blocked similar measures from even being considered for attachment to subsequent spending bills.
The new banking measure’s fate marks the second time in recent days that House Republican leaders have prevented cannabis-related financial measures from even being voted on.
Also last week, GOP leaders blocked consideration of amendments concerning taxation of marijuana businesses that supporters wanted to attached a broader GOP tax reform plan moving through Congress.
Over the course of the past year, congressional leaders have consistently prevented marijuana measures from coming to the House floor. Aside from banking and tax amendments, proposals to protect state laws from federal interference, allow industrial hemp and increase military veterans’ access to medical cannabis have all been shut down by the House Rules Committee.
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.