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Rhode Island Governor Proposes Legalizing Marijuana

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Bowing to pressure from nearby states that are moving to legalize marijuana, Rhode Island Gov. Gina Raimondo (D), who has long remained reluctant about the issue, says she will formally propose in her budget this week that the Ocean State end cannabis prohibition.

“Things have changed, mainly because all of our neighbors are moving forward,” she told the Providence Journal in an article published on Sunday. “We’re not an island, in fact. Like it or not, we’re going to be incurring public safety and public health expenses because it’s legal in Massachusetts… And I think it is time for us to put together our own regulatory and taxing framework.”

Newly inaugurated Connecticut Gov. Ned Lamont (D) has said that legalizing marijuana in his state will be among his “priorities” for the new legislative session.

Unlike most other states that have moved to enact legalization, however, Raimondo wants Rhode Island to prohibit home cultivation of cannabis. She also wants to ban high potency forms of marijuana products, such as dabs. Servings of edibles could contain no more than 5 milligrams of THC under her plan.

Sen. Josh Miller (D), who has sponsored legalization bills that allow home cultivation for the past several legislative sessions, said that he’s reserving judgement on governor’s proposal pending its specific language, but that he is optimistic about enacting reform this year even if it means needing to amend the law later.

“I want to see details, obviously,” he told Marijuana Moment. “I’m inclined to get it done, finally, and work on fixing the broken parts.”

Rep. Scott Slater (D), a longtime champion of legalization legislation in the House, agreed that changes could be made by the time a bill gets to Raimondo’s desk for her signature.

“I need time to read it over [and I’m] glad we have a placeholder in the budget,” he said. “It is early in the process.”

Raimondo said that she spoke with several other governors about marijuana policy at a conference last month.

“It’s going to be the strongest regulatory framework in the country,” she argued.

“We have seen the pitfalls of home cultivation in other states when it comes to how it threatens public health and public safety,”  Norman Birenbaum, the state’s top medical cannabis regulator and a key Raimondo advisor on the broader legalization plan, told the Journal. “How it promotes the illicit market. How it undercuts the regulated market, how it puts unsafe and untested and unregulated product out there for people. And how it also serves as cover for states that supposedly have adult use to be export states and export to the rest of the country. And we don’t think that we should have that mechanism here.”

Medical cannabis patients would still be allowed to grow their own medicine, he said.

Currently, Washington State is the only one of the ten legalized states that does not allow recreational marijuana consumers to grow their own product.

Birenbaum, who WPRI12 reported will give a “detailed briefing” on the specifics of his boss’s plan on Monday, suggested that the state’s three existing medical cannabis dispensaries would continue serving patients but would also likely add adult-use sales. About 20-40 additional retail outlets would be licensed as well, subject to municipal approval. Sales are expected to begin early next year.

Matthew Schweich, deputy director of the Marijuana Policy Project (MPP), called Raimondo’s endorsement of legalization “a major breakthrough.”

“We commend Governor Raimondo and her administration for adopting a pragmatic approach to this public policy issue,” he told Marijuana Moment. “However, we still need to see the details of this proposal. Access for the state’s medical marijuana patients must be protected. Furthermore, it is important that the recreational marijuana market is not controlled by a small number of businesses. We look forward to working with the Raimondo administration and legislative leaders to ensure that Rhode Island adopts a fair and responsible legalization law.”

With regard to the governor’s position that home cultivation of cannabis should be banned, Schweich said that while MPP “may not agree with everything in the governor’s proposal…we don’t want to make the perfect the enemy of the good.”

“We want to see adults have the right to cultivate some number of marijuana plants at home, just as they have the right to brew their own beer, but the governor’s plan does not include that,” he said. “However, laws can always be amended, and if home grow is not in the initial legislation, we will push the General Assembly to adopt that at some point in the future. Disagreement on one provision of the law does not mean we should pass up an opportunity to make substantial progress.”

In recent weeks, Raimondo and Rhode Island legislative leaders have begun to talk openly about the fact that legalization in neighboring states is increasing pressure to act.

“Given my druthers, if I could make all of these decisions in a vacuum, I’ve been favoring a wait-and-see approach,” the governor said late last year. “However, Connecticut is going to do it. The new governor-elect has been crystal clear, this is a priority. It’s happening. Massachusetts is already doing it. We’re a tiny state in between these two other states.”

House Speaker Nicholas Mattiello (D) has raised similar concerns.

“I think we have to study it and then decide what we want to do as a state, but I am mindful that Massachusetts has legalized it. I believe Connecticut is going to legalize it,” he said. “I think we’re probably going to end up with more social costs without the revenues and that would probably be the worst situation of all.”

New York Gov. Andrew Cuomo (D), who endorsed legalizing marijuana last month, has also characterized his own shift as being precipitated by the looming fall of prohibition in nearby states, such as New Jersey.

In Rhode Island, Raimondo is expected to formally release details of her legalization plan in her proposed budget, which will be submitted to the legislature on Thursday, though she may also discuss the issue in her State of the State speech on Tuesday.

It remains to be seen if lawmakers will agree with all of the finer points of the governor’s proposal.

In a statement on Sunday reacting to Raimondo’s plan, Mattiello said he has “mixed feelings” about legalization and that lawmakers “will collectively assess the governor’s proposal and come up with a consensus pathway forward.”

Senate President Dominick Ruggerio said he will “continue to keep an open mind on legalization of recreational marijuana as the state looks into the regulatory and workforce challenges that come along with it” but that he also has “significant concerns, particularly with regard to workforce issues, enforcement around edibles, and impact on children.”

Top Rhode Island Lawmakers Are Coming To Terms With Marijuana Legalization

This story was updated to include comment from Miller, Slater, Ruggerio, Mattiello and Schweich.

Photo elements courtesy of Kenneth C. Zirkel and Carlos Gracia.

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.

Tom Angell is the editor of Marijuana Moment. A 20-year veteran in the cannabis law reform movement, he covers the policy and politics of marijuana. Separately, he founded the nonprofit Marijuana Majority. Previously he reported for Marijuana.com and MassRoots, and handled media relations and campaigns for Law Enforcement Against Prohibition and Students for Sensible Drug Policy. (Organization citations are for identification only and do not constitute an endorsement or partnership.)

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GOP Senator Presses Treasury Secretary On Tax Credits For Marijuana Businesses

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A Republican senator recently pressed the head of the Treasury Department on whether marijuana businesses qualify for a federal tax benefit.

During a Senate Finance Committee hearing on Wednesday, Treasury Secretary Steven Mnuchin was asked about the “opportunity zone” tax credit, which is meant to encourage investments in “distressed,” low-income communities through benefits such as deferrals on capital gains taxes.

Sen. James Lankford (R-OK), whose state’s voters approved a medical marijuana ballot measure in 2018, told Mnuchin that businesses that derive more than five percent of their profits from things like alcohol sales are ineligible for the tax credit, but there’s “not a definition dealing with cannabis businesses.”

“Are they within that five percent amount or are they not at all because there’s a federal prohibition on cannabis sales?” the senator asked.

“I’m going to have to get back to you on the specifics,” Mnuchin replied.

“That’d be helpful to get clarity because there are cannabis businesses across the country that, if they fall in opportunity zones, they’ll need clarification on that,” Lankford said. “When you and I have spoken about it before—it’s difficult to give a federal tax benefit to something that’s against federal law.”

 

Lankford, who opposes legalization and appeared in a TV ad against his state’s medical cannabis ballot measure, has raised this issue with the Treasury secretary during at least two prior hearings. When he questioned whether cannabis businesses qualify for the program last year, he clarified that he personally does not believe they should.

While Mnuchin’s department has yet to issue guidance on the issue, he said in response to the earlier questioning that his understanding is that “it is not the intent of the opportunity zones that if there is this conflict [between state and federal marijuana laws] that has not been cleared that, for now, we should not have those businesses in the opportunity zones.”

Mnuchin has also been vocal about the need for Congress to address the lack of financial resources available to state-legal marijuana businesses. Because so many of these companies are forced to operate on a largely cash-only basis, he said the Internal Revenue Service has had to build “cash rooms” to store their tax deposits.

“There is not a Treasury solution to this. There is not a regulator solution to this,” he said during one hearing. “If this is something that Congress wants to look at on a bipartisan basis, I’d encourage you to do this. This is something where there is a conflict between federal and state law that we and the regulators have no way of dealing with.”

Last week’s Finance Committee hearing was centered around President Trump’s Fiscal Year 2021 budget request, which separately includes a provision calling for the elimination of an appropriations rider that prohibits the Justice Department from using its fund to interfere in the implementation of medical cannabis laws as well as a continued block on Washington, D.C. spending its own local tax dollars to legalize marijuana sales.

American Bar Association Wants Protections For Marijuana Banking And Lawyers Working With Cannabis Clients

Photo courtesy of C-SPAN.

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American Bar Association Wants Protections For Marijuana Banking And Lawyers Working With Cannabis Clients

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The American Bar Association (ABA) approved two marijuana-related resolutions during its midyear meeting on Monday.

The group’s House of Delegates voted in favor of proposals endorsing pending federal legislation to protect banks that service cannabis businesses and calling for a clarification of rules to ensure that lawyers will not be penalized for representing clients in cases concerning state-legal marijuana activity.

Under the banking resolution, ABA “urges Congress to enact legislation to clarify and ensure that it shall not constitute a federal crime for banking and financial institutions to provide services to businesses and individuals, including attorneys, who receive compensation from the sale of state-legalized cannabis or who provide services to cannabis-related legitimate business acting in accordance with state, territorial, and tribal laws.”

ABA added that “such legislation should clarify that the proceeds from a transaction involving activities of a legitimate cannabis-related business or service provider shall not be considered proceeds from an unlawful activity solely because the transaction involves proceeds from a legitimate cannabis-related business or service provider, or because the transaction involves proceeds from legitimate cannabis-related activities.”

A bill that would accomplish this goal was approved by the House of Representatives last year, but it’s currently stalled in the Senate, where it awaits action in the Banking Committee. That panel’s chair, Sen. Mike Crapo (R-ID) is under pressure from industry stakeholders to advance the legislation, but he’s also heard from anti-legalization lawmakers who’ve thanked him for delaying the bill.

“Passage of the [Secure and Fair Enforcement] Banking Act or similar legislation will provide security for lawyers and firms acting to advise companies in the industry against having their accounts closed or deposits seized,” a report attached to the ABA resolution states. “This will also foster the rule of law by ensuring that those working in the state-legalized legitimate cannabis industry can seek counsel and help prevent money laundering and other crimes associated with off-the-books cash transactions.”

“Currently, the threat of criminal prosecution prevents most depository institutions from banking clients, including lawyers, who are in the stream of commerce of state-legalized marijuana. This Resolution is necessary to clarify that such provision of legal and other services in compliance with state law should not constitute unlawful activity pursuant to federal law.”

The second marijuana-related resolution ABA adopted on Monday asks Congress to allow attorneys to serve clients in cannabis cases without facing federal punishment.

Text of the measure states that the association “urges Congress to enact legislation to clarify and explicitly ensure that it does not constitute a violation of federal law for lawyers, acting in accord with state, territorial, and tribal ethical rules on lawyers’ professional conduct, to provide legal advice and services to clients regarding matters involving marijuana-related activities that are in compliance with state, territorial, and tribal law.”

Such a change would provide needed clarity for lawyers as more states legalize cannabis for adult use. ABA’s own rules of conduct have been a source of conflict for attorneys, as it stipulates that they “shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent.” Federal law continues to regard marijuana as an illegal, strictly controlled substance.

An ABA report released last year made the case that there’s flexibility within that rule, however, as “it is unreasonable to prohibit a lawyer from providing advice and counsel to clients and to assist clients regarding activities permitted by relevant state or local law, including laws that allow the production, distribution, sale, and use of marijuana for medical or recreational purposes so long as the lawyer also advises the client that some such activities may violate existing federal law.”

A new report attached to the resolution states that “statutory guidance is needed that explicitly ensures that attorneys who adhere to their state ethics rules do not risk federal criminal prosecution simply for providing legal counsel to clients operating marijuana businesses in compliance with their state law.”

“This Resolution accomplishes this elegantly by harmonizing federal criminal liability with States’ ethical rules regarding the provision of advice and legal services relating to marijuana business. If a state has legalized some form of marijuana activity and explicitly permitted lawyers to provide advice and legal services relating to such state-authorized marijuana activity, such provision of advice and legal services shall not be unlawful under the Controlled Substances Act or any other federal law.”

Last year, ABA adopted another cannabis resolution—arguing that states should be allowed to set their own marijuana policies.

Border Patrol Union Head Admits Legalizing Marijuana Forces Cartels Out Of The Market

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Border Patrol Union Head Admits Legalizing Marijuana Forces Cartels Out Of The Market

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The head of the labor union that represents U.S. Border Patrol agents acknowledged on Friday that states that legalize marijuana are disrupting cartel activity.

While National Border Patrol Council President Brandon Judd was attempting to downplay the impact of legalization, he seemed to inadvertently make a case for the regulation all illicit drugs by arguing that cartels move away from smuggling cannabis and on to other substances when states legalize.

Judd made the remarks during an appearance on C-SPAN’s Washington Journal, where a caller said that “the states that have legalized marijuana have done more damage to the cartels than the [Drug Enforcement Administration] could ever think about doing.”

“As far as drugs go, all we do is we enforce the laws. We don’t determine what those laws are,” Judd, who is scheduled to meet with President Trump on Friday, replied. “If Congress determines that marijuana is going to be legal, then we’re not going to seize marijuana.”

“But what I will tell you is when he points out that certain states have legalized marijuana, all the cartels do is they just transition to another drug that creates more profit,” he said. “Even if you legalize marijuana, it doesn’t mean that drugs are going to stop. They’re just going to go and start smuggling the opioids, the fentanyl.”

One potential solution that Judd didn’t raise would be to legalize those other drugs to continue to remove the profit motive for cartels. Former presidential candidate Andrew Yang made a similar argument in December.

Federal data on Border Patrol drug seizures seems to substantiate the idea that cannabis legalization at the state level has reduced demand for the product from the illicit market. According to a 2018 report from the Cato Institute, these substantial declines are attributable to state-level cannabis reform efforts, which “has significantly undercut marijuana smuggling.”

Additionally, legalization seems to be helping to reduce federal marijuana trafficking prosecutions, with reports showing decreases of such cases year over year since states regulated markets have come online.

In his annual report last year, Supreme Court Chief Justice John Roberts also noted reduced federal marijuana prosecutions—another indication that the market for illegally sourced marijuana is drying up as more adults consumers are able to buy the product in legal stores.

Top Mexican Senator Says Marijuana Legalization Bill Will Be Approved This Month

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