A House panel in Rhode Island considered an adult-use marijuana legalization proposal from Gov. Daniel McKee (D) on Thursday along with three separate bills that would make significant reforms to the state’s current medical cannabis system.
While lawmakers did not act on any of the proposals, they asked detailed questions of the governor’s administration about how—not whether—to eventually legalize cannabis in the state.
Legislative leaders have repeatedly said that ending marijuana prohibition is “inevitable” in Rhode Island, but they’ve acknowledged that hammering out policies that can win broad backing might take some time. Reaching agreement on certain provisions, some lawmakers said this week, could prevent the policy change from happening this year, although others remain optimistic.
The chair of the House Finance Committee, Rep. Marvin L. Abney (D), stressed at the hearing that holding bills is routine and happens “if there’s work that needs to be done on the bill, which generally there is on almost all” pieces of legislation. “That is why we hold a bill for further study. We don’t hold it to kill it or anything like that,” he said.
The governor’s legalization plan, unveiled in March as part of his budget proposal, is one of two competing measures already introduced that would allow commercial cannabis sales to adults 21 and older. Senate leaders introduced their own legalization bill days before the governor’s announcement, but that measure wasn’t before the House panel this week.
On the Senate side, both measures were heard in a joint committee hearing in early April but were not voted on, and they’ve remained in a holding pattern since.
One of the most obvious differences between the two proposals, said Matt Santacroce, who heads the state Department of Business Regulation (DBR)’s Office of Cannabis Regulation, is how the new industry would be overseen. While the Senate bill would create a separate commission to regulate cannabis, the governor’s budget proposal would leave control to DBR, which currently runs the state’s medical marijuana system.
Santacroce offered the contrast in response to a question from Rep. Alex Marslakowski (D), who asked representatives of McKee’s administration who were present at the hearing “why we should choose one proposal over the other.”
“Sell me on it,” Marslakwowski said. “Why do you think theirs is better, theirs is worse?”
Santacroce told lawmakers that the department has had success working with medical marijuana licensees. The governor’s marijuana plan, Article 11 in his proposed budget, “aims to leverage that existing governance infrastructure, which is, you know, not creating anything new,” Santacroce said. Establishing an independent commission, as the Senate bill proposes, “takes both time and money.”
Santacruce added that the Senate leadership “clearly put a ton of work into this issue.”
“We’re very hopeful that we can get together and continue to have that conversation about where the shared areas agreement are and, to the extent there are differences, how to potentially reconcile those,” he said.
Beyond governance, the two proposals also differ on social equity and licensing provisions for people most impacted by the war on drugs, particularly communities of color, as well as taxes and other regulatory details. Some lawmakers said they were concerned the governor’s plan, which would add a 3 percent tax to medical marijuana cultivators, would raise the effective price on medical marijuana for patients.
So far no standalone legalization legislation has been introduced in the House of Representatives, although Rep. Scott Slater (D), the panel’s vice chair, has previously indicated he’s might bring such a bill.
Slater, who is traveling this week, told Marijuana Moment on Thursday that he is “trying to work on a legalization proposal” but that it “just gets so complicated because there are so many different interested parties.”
“I am hopeful that we can get a proposal in the budget,” he said. “I definitely see a path forward this year.”
As for his own proposal, Slater said it’s been difficult to craft specific policies that will win support among various stakeholders. “The real tough part is that there is already an existing medical community that wants to be included in a new market, and all the…advocates want licenses just dedicated to communities that have been harmed, which I understand.”
“What advocates in the industry do not understand is there [are] still a lot of people that think recreational cannabis is a bad idea,” he continued. “So I am trying my best but sometimes it feels like any legislation I put out will be ripped apart.”
Though lawmakers at Thursday’s hearing avoided outright debate about the governor’s proposal, Rep. Camille Vella-Wilkinson (D) asked a number of detailed questions about its provisions, probing legal liability around a lottery-based business licensing program and wondering about the accuracy and precision of roadside impairment tests for drivers. She also suggested possible incubator programs for small businesses and training programs at the University of Rhode Island to prepare young people to work in the newly legal industry.
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Rep. Deborah Ruggiero (D), meanwhile, noted that many local officials have complained about a provision in the measure that would require communities hold special elections in November if they want to opt out of allowing cannabis retailers. Local governments say those elections, especially on such short notice, would be burdensome. Communities that opt out would also receive a smaller cut of marijuana tax revenue.
During public testimony, the overwhelming majority of comments came in support of ending cannabis prohibition generally. But even some proponents of legalization urged lawmakers to reconsider certain provisions of the bill.
Social justice advocates, most notably, said the equity provisions in the governor’s proposal fall short of what’s needed to address the drug war’s disproportionate impact on communities of color. Many noted that the proposal lacks automatic expungement provisions.
Others criticized the governor’s proposed social equity licensing provisions, which specify that the first five cannabis business licenses of every type would go to qualifying minority-owned businesses, which includes women-owned businesses.
Yet other commenters urged lawmakers to adopt language allowing cooperative grow models among individuals rather than requiring consumers to buy products from for-profit businesses.
The House Finance Committee also took up three separate bills on Thursday that would make changes to the state’s existing medical marijuana program, which critics have said is too restrictive, especially with residents able to bypass the system by simply driving to nearby states that have legalized cannabis for all adults.
One, HB 5452, would require the state Department of Business Regulation to analyze the licensing system from a social equity and racial perspective and move to eliminate barriers to entry for people most impacted by prohibition to participate in the industry. Another, HB 5451, would earmark marijuana tax revenue for a “distressed communities relief fund,” as well as charitable organizations that legislative leaders would select each year.
Both measures were introduced by Rep. Anastasia Williams (D), who said the state’s existing medical marijuana system has perpetuated the status quo of white business owners profiting while people of color are largely cut out of the industry. As “has been a practice for eons,” she said, the state is “overlooking or dismissing the needs of the community of color, the urban core.”
“The truth hurts sometimes,” she added, “and people are so concerned about talking about reality.”
One of the panel’s Republican members, Rep. George A. Nardone, questioned HB 5451’s provision that would allow legislative leaders to earmark a portion of leftover cannabis revenue to unspecified nonprofit organizations. “It’s going to be giving unbridled power to both the speaker and the Senate president to spend it on the charity of their choice?” he asked.
Williams replied that it’s “not necessarily a charity of their choice,” but added that “I always like to respect my leadership, and that percentage would definitely be with them.”
“Trust me, and believe me, they may be in there, but trust me that the recommendations and suggestions are going to come from the people,” she said.
The third bill, HB 5453, would eliminate a series of existing regulations for the state’s medical cannabis program such as the plant-tagging system for patients and caregivers who want to cultivate marijuana. Annual dispensary license fees would be slashed from $500,000 to $5,000, and the cap on the number of shops that could operate would be removed and instead tied to the state’s population.
Further, the definition of who could qualify as a medical marijuana patient would be significantly expanded to include “any serious health condition a reasonable practitioner believes, based on their experience, knowledge, and reasonable judgment as a health care provider, could be alleviated or treated through the use of medical marijuana.” Nurse practitioners, and not merely doctors, would be allowed to recommend cannabis.
The bill’s sponsor, Slater, who is also considering introducing House legislation to legalize adult-use cannabis, has previously described the medical marijuana reform measure as establishing a “de facto recreational program.”
Both the governor and the Senate leaders’ adult-use legalization plans are notably different than the proposal that former Gov. Gina Raimondo (D) had included in her budget last year. Prior to leaving office to join the Biden administration as commerce secretary, she called for legalization through a state-run model.
Gov. McKee said in January that “it’s time that [legalization] happens” and signaled that he was “more leaning towards an entrepreneurial strategy there to let that roll that way.”
Late last year, the Senate Finance Committee began preliminary consideration of legalization in preparation for the 2021 session. “I certainly do think we’ll act on the issue, whether it’s more private or more state,” Sen. Ryan Pearson (D), who now serves as the panel’s chairman, said at the time.
The growing momentum in Rhode Island also comes as lawmakers in neighboring Connecticut are also moving toward legalizing marijuana this year. Gov. Ned Lamont (D) included a cannabis legalization plan in his budget request last month.
Lawmakers in New York passed legalization legislation in March that was promptly signed into law by Gov. Andrew Cuomo (D). Senate Majority Leader Andrea Stewart-Cousins (D) said the legislation “is a momentous first step in addressing the racial disparities caused by the war on drugs that has plagued our state for too long.”
Meanwhile, the Rhode Island Senate approved a bill last month that would allow safe consumption sites where people could use illicit drugs under medical supervision and receive resources to enter treatment. Harm reduction advocates say this would prevent overdose deaths and help de-stigmatize substance misuse.
The Senate Judiciary Committee also held a hearing last month on legislation that would end criminal penalties for possessing small amounts of drugs and replace them with a $100 fine.
Photo courtesy of Philip Steffan
Top IRS Official Says Marijuana Banking Reform Would Help Feds ‘Get Paid’
The Internal Revenue Service (IRS) would like to get paid—and it’d help if the marijuana industry had access to banks like companies in other legal markets, an official with the federal department said. She also talked about unique issues related to federal tax deductions for cannabis businesses.
At an event hosted by UCLA’s Annual Tax Controversy Institute on Thursday, IRS’s Cassidy Collins talked about the “special type of collection challenge” that the agency faces when it comes to working with cannabis businesses while the product remains federally illegal.
While IRS isn’t taking a stand on federal marijuana policy, Collins said that the status quo leaves many cannabis businesses operating on a cash-only basis, creating complications for the agency, in part by making it harder for banks to “pay us.”
“The reason why [the marijuana industry is] cash intensive is twofold,” she said. “Number one, a lot of customers don’t want a paper trail showing that they’re buying marijuana, and number two, the hesitancy of banks to allow marijuana businesses to even bank with them.”
Of course, the reason why many financial institutions remain hesitant to take on cannabis companies as clients is because the plant is a strictly controlled substance under federal law.
“There’s been a number of legislative bills that have been introduced—and I am definitely not expressing any opinion personally or on behalf of the IRS about any pending or proposed legislation,” Collins, who is a senior counsel in the IRS Office of Chief Counsel, said. “But it is interesting to note that, if the law changed so that the marijuana businesses could have banks, that would make the IRS’s job to collect [taxes] a lot easier. As part of collection, we want the money. That’s our end goal there.”
A major part of what makes cannabis businesses unique is that they don’t qualify for traditional tax credits under an IRS code known as 280E. That policy “prohibits them from claiming deductions for business expenses because they’re technically being involved in drug trafficking,” Collins explained at the event, from which small excerpts of her comments were reported by Bloomberg.
There are some options available to lessen the burden on marijuana firms, however. At the end of the day, “IRS will work with marijuana companies because, again, we want to get paid,” Collins said.
One of the ways the agency works with marijuana business operators is to have them visit designated IRS “tax assistance centers” that accept cash payments in excess of $50,000. But the official warned businesses to “be prepared to be there for a little while” as the center checks—and double checks—the amount of cash being submitted.
“Revenue officers will assist the marijuana companies in paying us,” she said.
IRS officials could also help cannabis firms by having officials accompany them “to the bank in order to try to help the taxpayer secure a cashier’s payment to pay the IRS, as well as using money orders,” she said, adding that “our revenue officers are are wanting to work with the marijuana companies to help assist them to pay us.”
“When the revenue officers are there in person with the taxpayer, that could potentially help increase the likelihood that the bank will cooperate and help the taxpayer transition into a cashier’s check,” she continued. “And that has been a trend since this first became legal [at the state level], that more and more banks are allowing cannabis companies to bank with them.”
In a report published earlier this year, congressional researchers examined tax policies and restrictions for the marijuana industry—and how those could change if any number of federal reform bills are enacted.
IRS, for its part, said last month that it expects the cannabis market to continue to grow, and it offered some tips to businesses on staying compliant with taxes while the plant remains federally prohibited.
As it stands, banks and credit unions are operating under 2014 guidance from the Financial Crimes Enforcement Network (FinCEN) that lays out reporting requirements for those that choose to service the marijuana industry.
Leaders in both chambers of Congress are working on legalization bills to end federal marijuana prohibition. But stakeholders are hopeful that, in the interim, legislators will enact modest marijuana banking reform. Legislation to protect financial institutions from being penalized for working with cannabis businesses passed the House for the fifth time last month.
Rodney Hood, a board member of the National Credit Union Administration, wrote in a Marijuana Moment op-ed this month that legalization is an inevitability—and it makes the most sense for government agencies to get ahead of the policy change to resolve banking complications.
IRS separately hosted a forum in August dedicated to tax policy for marijuana businesses and cryptocurrency.
Earlier this year, IRS Commissioner Charles Rettig told Congress that the agency would “prefer” for state-legal marijuana businesses to be able to pay taxes electronically, as the current largely cash-based system under federal cannabis prohibition is onerous and presents risks to workers.
Former Treasury Secretary Steven Mnuchin said in 2019 that he’d like to see Congress approve legislation resolving the cannabis banking issue and he pointed to the fact that IRS has had to build “cash rooms” to deposit taxes from those businesses as an example of the problem.
IRS released updated guidance on tax policy for the marijuana industry last year, including instructions on how cannabis businesses that don’t have access to bank accounts can pay their tax bills using large amounts of cash.
The update appears to be responsive to a Treasury Department internal watchdog report that was released earlier in the year. The department’s inspector general for tax administration had criticized IRS for failing to adequately advise taxpayers in the marijuana industry about compliance with federal tax laws. And it directed the agency to “develop and publicize guidance specific to the marijuana industry.”
Luxembourg Set To Become First European Country To Legalize Marijuana Following Government Recommendation
Luxembourg is poised to become the first European country to legalize marijuana, with key government agencies putting forward a plan to allow the possession and cultivation of cannabis for personal use.
The ministers of justice and homeland security on Friday unveiled the proposal, which will still require a vote in the Parliament but is expected to pass. It’s part of a broader package of reform measures the agencies are recommending.
Under the marijuana measure, adults 18 and older could grow up to four plants. However, under the non-commercial model that is being proposed, possessing more than three grams in public would still be a civil offense, carrying a fine of €25-500 ($29-581). Currently, the maximum fine for possession is €2,500 ($2,908).
In terms of access, adults would be able to buy and trade cannabis seeds for their home garden.
Justice Minister Sam Tamson said the government felt it “had to act” and characterized the home cultivation policy change as a first step, The Guardian reported.
👉🏻élaboration du projet de loi usage privé du #cannabis : jusqu’à 4 plantes à domicile & décorrectionnalisation <3g
👉🏻renforcement de la prévention & de l’accompagnement
👉🏻⬆️des moyens de la police
👉🏻élaboration d’un projet de production/vente #Luxembourg pic.twitter.com/8yre0Udt8J
— Sam Tanson (@SamTanson) October 22, 2021
“The idea is that a consumer is not in an illegal situation if he consumes cannabis and that we don’t support the whole illegal chain from production to transportation to selling where there is a lot of misery attached,” he said. “We want to do everything we can to get more and more away from the illegal black market.”
While limited in scope, the reform would make Luxembourg the first country in Europe to legalize the production and possession of marijuana for recreational use. Cannabis has been widely decriminalized in certain countries in the continent, but it has remained criminalized by statute.
Government sources in Luxembourg told The Guardian that plans are in the works to develop a program where the state regulates the production and distribution of marijuana. Tamson said they are working to resolve “international constraints” before taking that step, however, referring to United Nations treaty obligations that multiple U.S. states and other countries like Canada and Uruguay have openly flouted.
The measures include:
🟢 Regulation of cannabis use and cultivation: adults will be able to legally cultivate up to four cannabis plants for their own use, provided the cultivation is happening at their place of residence.
— European Greens (@europeangreens) October 22, 2021
For now, the country is focusing on legalization within a home setting. Parliament is expected to vote on the proposal in early 2022, and the ruling parties are friendly to the reform.
This has been a long time coming, as a coalition of major parties of Luxembourg agreed in 2018 to enact legislation allowing “the exemption from punishment or even legalization” of cannabis.
Meanwhile in the U.S., congressional lawmakers are working to advance legalization legislation. A key House committee recently approved a bill to end marijuana prohibition, and Senate leadership is finalizing a separate reform proposal.
In Mexico, a top Senator said this week that lawmakers could advance legislation to regulate marijuana in the coming weeks. The Supreme Court has already ruled that adults cannot be criminalized over possession or cultivation, but there’s currently no program in place to provide access.
Photo courtesy of Mike Latimer.
New Bipartisan Marijuana Research Bill In Congress Would Let Scientists Study Dispensary Products
A bipartisan group of federal lawmakers introduced a bill on Thursday to remove barriers to conducting research on marijuana, including by allowing scientists to access cannabis from state-legal dispensaries.
The Medical Marijuana Research Act, filed by the unlikely duo of pro-legalization Rep. Earl Blumenauer (D-OR) and prohibitionist Rep. Andy Harris (R-MD), would streamline the process for researchers to apply and get approved to study cannabis and set clear deadlines on federal agencies to act on their applications.
“Congress is hopelessly behind the American people on cannabis, and the quality of our research shows why that is an urgent problem,” Blumenauer told Marijuana Moment. “Despite the fact that 99 percent of Americans live in a state that has legalized some form of cannabis, federal law is still hamstringing researchers’ ability to study the full range of health benefits offered by cannabis, and to learn more about the products readily available to consumers.”
“It’s outrageous that we are outsourcing leadership in that research to Israel, the United Kingdom, Canada, and others. It’s time to change the system,” he said.
Late last year, the House approved an identical version of the cannabis science legislation. Days later, the Senate passed a similar bill but nothing ended up getting to the president’s desk by the end of the last Congress. Earlier this year, a bipartisan group of senators refiled their marijuana research measure for the current 117th Congress.
Meanwhile, lawmakers are also advancing a separate strategy to open up dispensary cannabis to researchers. Large-scale infrastructure legislation that has passed both chambers in differing forms and which is pending final action contains provisions aimed at allowing researchers to study the actual marijuana that consumers are purchasing from state-legal businesses instead of having to use only government-grown cannabis.
The new bill filed this week by Blumenauer and Harris, along with six other original cosponsors, would also make it easier for scientists to modify their research protocols without having to seek federal approval.
Marijuana Moment is already tracking more than 1,200 cannabis, psychedelics and drug policy bills in state legislatures and Congress this year. Patreon supporters pledging at least $25/month get access to our interactive maps, charts and hearing calendar so they don’t miss any developments.
Learn more about our marijuana bill tracker and become a supporter on Patreon to get access.
It would additionally mandate that the Drug Enforcement Administration (DEA) license more growers and make it so there would be no limit on the number of additional entities that can be registered to cultivate marijuana for research purposes. It would also require the U.S. Department of Health and Human Services (HHS) to submit a report to Congress within five years after enactment to overview the results of federal cannabis studies and recommend whether they warrant marijuana’s rescheduling under federal law.
“The cannabis laws in this country are broken, including our laws that govern cannabis research,” Blumenauer said in remarks in the Congressional Record. “Because cannabis is a Schedule I substance, researchers must jump through hoops and comply with onerous requirements just to do basic research on the medical potential of the plant.”
The new legislation will “both streamline the often-duplicative licensure process for researchers seeking to conduct cannabis research and facilitate access to an increased supply of higher quality medical grade cannabis for research purposes,” he said, adding that expanded studies will help make sure “Americans have adequate access to potentially transformative medicines and treatments.”
For half a century, researchers have only been able to study marijuana grown at a single federally approved facility at the University of Mississippi, but they have complained that it is difficult to obtain the product and that it is of low quality. Indeed, one study showed that the government cannabis is more similar to hemp than to the marijuana that consumers actually use in the real world.
There’s been bipartisan agreement that DEA has inhibited cannabis research by being slow to follow through on approving additional marijuana manufacturers beyond the Mississippi operation, despite earlier pledges to do so.
In May, the agency finally said it was ready to begin licensing new cannabis cultivators. Last week, DEA proposed a large increase in the amount of marijuana—and psychedelics such as psilocybin, LSD, MDMA and mescaline—that it wants produced in the U.S. for research purposes next year.
Under the new House bill, the agency would be forced to start approving additional cultivation applications for study purposes within one year of the legislation’s enactment.
HHS and the attorney general would be required under the bill to create a process for marijuana manufacturers and distributors to supply researchers with cannabis from dispensaries. They would have one year after enactment to develop that procedure, and would have to start meeting to work on it within 60 days of the bill’s passage.
In general, the legislation would also establish a simplified registration process for researchers interested in studying cannabis, in part by reducing approval wait times, minimizing costly security requirements and eliminating additional layers of protocol review.
Read the full text of the new marijuana research bill below: