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.
Feds Warn More CBD Companies Over Health Claims
The Federal Trade Commission (FTC) sent letters on Tuesday ordering three companies to stop making unfounded health claims about their CBD products.
“It is illegal to advertise that a product can prevent, treat, or cure human disease without competent and reliable scientific evidence to support such claims,” FTC said in a press release about the action.
(Marijuana Moment’s editor provides some content to Forbes via a temporary exclusive publishing license arrangement.)
Photo by Kimzy Nanney.
Colorado Sold Twice As Much Recreational Marijuana As Medical Cannabis Last Year
The share of legal marijuana sales in Colorado that came from the recreational market in 2018 significantly outpaced those from the medical market, according to an annual government report released on Monday.
In fact, there were about two times as many adult-use sales of flower compared to medical cannabis purchases—a new milestone for the state.
Colorado’s Marijuana Enforcement Division (MED) said that 288,292 pounds of bud were sold last year for recreational purposes, while 147,863 pounds were sold to medical marijuana patients. For comparison, in 2017, recreational consumers purchased 238,149 pounds and 172,994 pounds were sold to patients.
That means the recreational-medical gap increased 73 percent in one year.
In part, the trend can be attributed to the ongoing expansion of Colorado’s adult-use cannabis market since the state’s first recreational shops opened in 2014. Medical cannabis sales were notably higher than recreational sales in that first year of implementation, with just 38,660 pounds coming from the adult-use market and 109,578 pounds being sold to medical patients.
Medical and adult-use sales were roughly even in 2016. But by 2017, recreational sales accounted for 58 percent of the market. And last year, they represented 66 percent of the market.
MED also found that licenses for recreational marijuana facilities increased by three percent (47 licenses) while medical business licenses declined by eight percent (77 licenses).
“Data collection continues to be a priority at the MED,” Jim Burack, director of the program, said in a press release. “This ongoing analysis and compilation of industry information helps inform the public and contributes to our outreach efforts to stakeholders.”
The report also showed that the adult-use market is the primary destination for individuals purchasing edibles. Eighty-six percent of edible sales came from recreational consumers. And from July-December 2018, 75 percent of cannabis plants were cultivated for adult use.
The market shift isn’t unique to Colorado. An Associated Press analysis from June detailed how states across the country that have established recreational marijuana programs are seeing the number of medical patients decline as more consumers transition to the adult-use market.
That may be partially explained by individuals who sought out medical cannabis recommendations choosing not to renew their registration after recreational marijuana shops became available. To that point, a recent study found that many customers at recreational dispensaries are consuming cannabis for the same reasons that registered patients do, such as to alleviate pain and sleep issues.
The concern for some advocates, however, is that adult-use legalization could drive up prices for patients, or leave them with fewer product options tailored to therapeutic use as demand for high-THC products increases.
“When states pass adult-use legalization we are seeing many patients leave the strict controls of the medical programs,” David Mangone, director of government affairs at Americans for Safe Access, told Marijuana Moment. “Patients must already pay out of pocket for cannabis, and any added cost like a registration fee for a medical card or renewal can make the process of obtaining medicine extremely burdensome and costly.”
“States like Colorado must continue to provide adequate benefits to patients to ensure the medical program remains robust,” he said.
Mangone added that “as states pass adult-use programs it is important that they continue to understand and appreciate the needs of patients.”
“A common frustration for many is not what happens in terms of access to cannabis, but rather what happens in terms of access to specific products. Products and flower with a high-THC content have a wider market appeal, but may not necessarily benefit the existing medical market.”
That said, one interesting finding from this latest MED report is that medical and recreational consumers alike seem increasingly interested in concentrates, with the units of such products sold to both nearly doubling from 2017 to 2018. Concentrates are sold at a much higher rate in the adult-use market, but the potent products evidently have growing appeal across the board.
Gov. Jared Polis (D) recently celebrated tax earnings from marijuana sales, touting the fact that the state has amassed more than $1 billion in cannabis revenue that has been allocated to various social programs.
And the marijuana market is continuing to evolve in state. Polis signed legislation in May allowing for home deliveries of cannabis products as well as social consumption sites.
The governor said last month at a conference with governors from around the country that the new delivery law could help mitigate impaired driving.
Photo courtesy of Kimberly Lawson.
Credit Unions Won’t Be Punished For Working With Marijuana Businesses, Federal Regulator Says
Regulators won’t punish credit unions simply for working with marijuana businesses that are operating in compliance with state laws, the head of the federal agency that oversees the financial services providers said in a new interview.
National Credit Union Administration (NCUA) Chairman Rodney Hood also suggested that Congress could entirely resolve banking issues in the cannabis industry by federally descheduling marijuana.
“It’s a business decision for the credit unions if they want to take the deposits,” Hood told Credit Union Times, adding that the financial institutions must follow existing federal guidance and ensure that the businesses they choose to service are not violating anti-money laundering laws or other rules.
“We don’t get involved with micro-managing credit unions,” he said.
While the comments don’t signify a new shift in policy, and don’t take into account the fact that the Justice Department still maintains authority to potentially prosecute credit unions that allegedly violate the law by banking marijuana proceeds, they are the latest indication of a growing consensus that federal action is needed to clarify the situation.
Uncertainty around banking in the state-legal marijuana market has been a hot topic in the 116th Congress.
Legislation that would shield banks and credit unions that take on cannabis clients from being penalized by federal regulators was approved by the House Financial Services Committee in March, and the Senate Banking Committee held a hearing on the bill last month. That panel’s chair, Sen. Mike Crapo (R-ID), said last week that he agrees a solution for the industry is necessary.
Though the NCUA head didn’t endorse specific legislation to give credit unions peace of mind when dealing with cannabis businesses, he did float the idea of descheduling marijuana as one way to provide unambiguous clarity for financial institutions.
“Hood said that Congress could remove all ambiguity if it enacted legislation to declassify marijuana,” the trade publication reported after its interview with the official.
Separately, the independent federal agency recently took one proactive step toward reforming policy partly in response to state-level legalization efforts. In a notice published in the Federal Register last week, NCUA proposed changing its rules so that individuals with prior low-level drug convictions would be allowed to work at credit unions.
Though bank and credit union representatives are calling for enhanced clarity when it comes to cannabis banking, more financial institutions do seem willing to take the risk anyway, with federal data showing a notable uptick in the number of marijuana-servicing banks in the last quarter.