Bipartisan legislation introduced in the Senate on Thursday would solve a key issue for the marijuana industry: Its lack of access to financial services.
While a growing number of states are moving to legalize cannabis for recreational or medical use, ongoing federal prohibition makes many banks wary of working with state-licensed operators. As a result, marijuana growers, processors and retailers are largely forced to operate on a cash-only basis, which can make them targets for robberies.
But under a new bill filed by Sens. Jeff Merkley (D-OR) and Cory Gardner (R-CO), along with 20 other cosponsors, banks would be shielded from being punished by federal regulators for maintaining accounts for state-approved cannabis businesses.
The introduction of the bill, the Secure And Fair Enforcement (SAFE) Banking Act, comes two weeks after similar legislation cleared the House Financial Services Committee in a bipartisan vote of 45 to 15. That House bill now has 160 cosponsors signed on—more than a third of the entire chamber.
On Tuesday, Treasury Secretary Steven Mnuchin indicated during a Capitol Hill hearing that he supports the move to increase banking access for marijuana businesses.
“If this is something that Congress wants to look at on a bipartisan basis, I’d encourage you to do this,” he said. “This is something where there is a conflict between federal and state law that we and the regulators have no way of dealing with.”
The movement on cannabis banking legislation comes amid growing support for broader marijuana law reforms.
Last week, for example, bipartisan groups of House and Senate members filed legislation to let states enact their own legalization laws without federal interference. That bill, the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act, wouldn’t change marijuana’s scheduling status, but would exempt state-legal activity from the Controlled Substances Act.
On Wednesday, Attorney General William Barr said that he would prefer the STATES Act’s approach instead of the current situation in which states are legalizing cannabis contrary to federal law.
“The situation that I think is intolerable and which I’m opposed to is the current situation we’re in, and I would prefer one of two approaches rather than where we are,” he said during a Senate hearing. “Personally, I would still favor one uniform federal rule against marijuana but, if there is not sufficient consensus to obtain that, then I think the way to go is to permit a more federal approach so states can make their own decisions within the framework of the federal law and so we’re not just ignoring the enforcement of federal law… I would much rather that approach—the approach taken by the STATES Act—than where we currently are.”
The Senate banking bill would block federal agencies from being able to “prohibit, penalize, or otherwise discourage a depository institution from providing financial services to a cannabis-related legitimate business or service provider or to a State, political subdivision of a State, or Indian Tribe that exercises jurisdiction over cannabis-related legitimate businesses.”
“Forcing legal businesses to operate in all-cash is dangerous for our communities,” Merkley said in a press release. “It’s absurd that cannabis business owners in Oregon have to shuttle around gym bags full of cash to take care of their taxes or pay their employees. Operating in cash is an invitation to robbery, money laundering, and organized crime. This is a public safety issue, and I hope that this will be the Congress when we build a bipartisan consensus to put this common-sense fix into law.”
“Conflicting federal and state marijuana laws make it difficult for legitimate businesses to use the basic financial services they need access to and this bipartisan legislation gives them that access they need,” Gardner added. “We must also take into account the risk to public safety as these businesses are being forced to carry around bags of money to pay for their employees and rent. Legal businesses should not be treated like this, and I’m glad that Republicans and Democrats are working together to address this issue.”
A previous version of the bill had garnered 20 cosponsors by the end of the 115th Congress.
The new Senate bill incorporates revisions made during the House markup of that chamber’s version last month, including amendments clarifying that its protections cover insurance companies as well as banks, and requiring the federal government to study diversity and inclusion in the cannabis industry.
Legalization advocates are urging Congress to pass the legislation soon.
“The problems caused by lack of access to financial services are a serious issue for the cannabis industry and any entity that interacts with it, and these problems will only continue to grow as more states regulate cannabis,” Morgan Fox, media relations director for the National Cannabis Industry Association, said. “Every day that Congress waits to pass this legislation prolongs unnecessary risks for everyone involved.”
“One of the biggest barriers to building a broad cannabis marketplace is the banking issue,” said Justin Strekal, political director for NORML. “No small business can operate safely or transparently without access to basic banking services, which means that the richest investors are able to dominate under the existing tension. This bill would be good for new entrepreneurs and the equity experiments now underway from Massachusetts to California, and ultimately good for consumers.”
The full House is expected to move its version of the marijuana banking bill to the floor in the coming weeks. The new Senate bill has not yet been scheduled for a committee hearing.
Along with Merkley and Gardner, the other initial cosponsors of the Senate legislation are Sens. Jacky Rosen (D-NV), Lisa Murkowski (R-AK), Michael Bennet (D-CO), Dan Sullivan (R-AK), Kamala Harris (D-CA), Rand Paul (R-KY), Catherine Cortez-Masto (D-NV), Kevin Cramer (R-ND), Tammy Duckworth (D-IL), Gary Peters (D-MI), Bob Menendez (D-NJ), Angus King (I-ME), Bernie Sanders (I-VT), Patty Murray (D-WA), Edward J. Markey (D-MA), Patrick Leahy (D-VT), Brian Schatz (D-HI), Ron Wyden (D-OR), Elizabeth Warren (D-MA) and Mazie Hirono (D-HI).
New Jersey Voters Will Decide On Marijuana Legalization Next Year, Senate Leaders Say
New Jersey lawmakers are giving up on plans to enact marijuana legalization through the legislature and are now seeking to put the question before voters on the 2020 ballot.
Senate President Steve Sweeney (D) and Senate Judiciary Committee Chairman Nicholas Scutari (D) announced on Monday that while they had “made further attempts to generate additional support in the Senate to get this done legislatively,” the “votes just aren’t there.” As a result, they filed a proposal that would allow residents to vote on legalization as a constitutional amendment.
“We are moving forward with a plan to seek voter approval to legalize adult use marijuana in New Jersey,” the leaders said in a press release. “We introduced legislation today to authorize a public referendum for a proposal that will lead to the creation of a system that allows adults to purchase and use marijuana for recreational purposes in a responsible way.”
— Brian Thompson (@brian4NY) November 18, 2019
“This initiative will bring cannabis out of the underground so that it can be controlled to ensure a safe product, strictly regulated to limit use to adults and have sales subjected to the sales tax,” they said.
The plan, which NJ.com first reported, is to have the legislature to approve the referendum proposal and get the ballot measure set for a vote in the general election next November. Sweeney and Scutari said they are “confident it will be approved by the Senate, the Assembly and the voters.”
“We will now move forward with a plan that helps correct social and legal injustices that have had a discriminatory impact on communities of color,” they said. “We can make real progress towards social justice at the same time that cannabis is made safe and legal.”
Gov. Phil Murphy (D) said he is “disappointed that we are not able to get this done legislatively and that our failed status quo—which sends roughly 600 people to jail a week for possession, the majority of them people of color—will continue.”
I am disappointed that we are not able to get this done legislatively and that our failed status quo – which sends roughly 600 people to jail a week for possession, the majority of them people of color — will continue.
— Governor Phil Murphy (@GovMurphy) November 18, 2019
“However, I have faith that the people of New Jersey will put us on the right side of history when they vote next November,” he said. “By approving this ballot measure before the end of this legislative session, New Jersey will move one step closer to righting a historical wrong and achieving what I have spent more than three years advocating for.”
By approving this ballot measure before the end of this legislative session, New Jersey will move one step closer to righting a historical wrong and achieving what I have spent more than three years advocating for.
— Governor Phil Murphy (@GovMurphy) November 18, 2019
After months of negotiation, it became apparent that that progress wasn’t going to happen legislatively in the short-term, with Sweeney indicating as early as May that legalization would likely have to be decided through a voter referendum.
Text of the resolution calling for a referendum doesn’t offer many details about what the proposed legal cannabis market would look like; rather it generally describes a system allowing adults 21 and older to use and purchase marijuana from authorized retail facilities. The state’s Cannabis Regulatory Commission would be responsible for regulating the program. And cannabis sales would be subject to the state sales tax, with no additional excise tax added.
As written, the draft ballot question is worded somewhat confusingly. Voters would be asked: “Do you approve amending the Constitution to legalize a controlled form of marijuana called ‘cannabis’?”
“Only adults at least 21 years of age could use cannabis,” it continues. “The State commission created to oversee the State’s medical cannabis program would also oversee the new, personal use cannabis market. Retail sales of cannabis products in this new market would be subject to the State’s sales tax, and no other form of tax.”
Assembly Speaker Craig Coughlin (D) said in a press release that his chamber “will vote on legislation to put an adult-use cannabis question before the voters.”
— NJAssemblyDemocrats (@njassemblydems) November 18, 2019
“We plan to pass the measure this year and next in order for New Jerseyans to have the opportunity to make the decision in November 2020 when we expect voter turnout to be high due to the presidential election,” he said.
Prohibitionist group Smart Approaches to Marijuana celebrated news of the legislature abandoning plans to pursue legalization legislatively this session and said it would invest resources into a campaign to dissuade voters from supporting the proposed ballot initiative.
BREAKING: New Jersey State Senate abandons push to legalize marijuana during 'lame duck' session.
The marijuana industry outspent SAM 86-1 in this effort.
Our statement: pic.twitter.com/MPtI2fNIzx
— SAM (@learnaboutsam) November 18, 2019
While adult-use legalization hasn’t panned out as advocates hoped, Murphy did sign a bill significantly expanding the state’s medical cannabis program in July. Sweeney had pointed to that reform move as one reason legalization negotiations stalled.
It’s not clear how the ballot approach is going to impact discussions about regionally coordinating legalization plans in the Northeast, which has been ongoing since New York Gov. Andrew Cuomo (D) and Connecticut Gov. Ned Lamont (D) met to talk about the issue over the summer.
During a joint meeting of governors from around the region last month, Murphy said that “doing things in an intelligent, coordinated, harmonious way is good for the entirety of not just our states but our residents” and emphasized the need for social justice components in a legal cannabis market.
Read the text of the New Jersey marijuana legalization referendum resolution below:
This story has been updated to include comments from the governor and assembly speaker.
Sanders Pledges Legal Marijuana ‘In Every State’ As Biden Faces ‘Gateway Drug’ Backlash
As former Vice President Joe Biden faces a backlash over his suggestion that marijuana could be a ‘gateway’ drug, rival presidential candidates such as Sens. Bernie Sanders (I-VT) and Kamala Harris (D-CA), as well as entrepreneur Andrew Yang, are touting their own support for cannabis reform proposals
One day after Biden said he doesn’t support national cannabis legalization because there’s “not nearly been enough evidence that has been acquired as to whether or not it is a gateway drug,” Sanders offered a competing vision, emphasizing in a speech that he wants to “make marijuana legal in every state in the country,” rather than allow prohibition to continue in certain states.
The senator also discussed other elements of a cannabis reform plan he released last month, including his pledge to “expunge the records of those arrested for possession of marijuana” and provide funding to promote participation in the legal industry by individuals from communities most impacted by the war on drugs.
“It sounds unfair that when we legalize marijuana, you end up having a handful of corporations controlling that industry,” Sanders said during the Sunday event in Las Vegas. “We have built into our criminal justice program an effort to provide many billions of dollars in help to people in the African-American community, Latino community, other communities, the people who have been hit the hardest by the war on drugs, to help them profit off a legal marijuana system.”
Watch Sanders’s marijuana comments, around 33:00 into the video below:
Sanders described his three-step plan to prevent large corporations from controlling the cannabis market during an interview on Showtime’s Desus & Mero last month.
Separately, he took to Twitter on Sunday to highlight new polling showing that a majority of Americans support legalizing marijuana.
The American people are united on issue after issue. We must legalize marijuana now—and expunge all past marijuana convictions as a matter of racial and economic justice. https://t.co/NQjp7WOko3
— Bernie Sanders (@SenSanders) November 17, 2019
Meanwhile, Harris also appeared to take a direct hit at Biden over his “gateway drug” comment, stating that the debate on that matter is already settled.
Let's be clear: marijuana isn't a gateway drug and should be legalized. Glad to see my bill with Rep. Nadler take the next step in the House this week. https://t.co/d6BcMFlpYT
— Kamala Harris (@KamalaHarris) November 18, 2019
“Let’s be clear: marijuana isn’t a gateway drug and should be legalized,” she tweeted, adding that she’s glad that a bill she and House Judiciary Chairman Jerrold Nadler (D-NY) filed earlier this year to federally deschedule cannabis is scheduled for a vote in the House this week.
Harris herself has faced pushback from reform advocates and challengers who point out that the senator was involved in criminalizing cannabis consumers, and opposed legalization, during her time as a prosecutor.
Yang, for his part, presented a visual contrast to Biden on Monday, sharing photos of him smiling, surrounded by dozens of trimmed marijuana plants in an undisclosed facility.
He also wrote in a tweet that cannabis “should be legal nationwide” and linked to a campaign site page laying out his reform plan.
Marijuana should be legal nationwide. It is already legal in several states, it reflects a safer approach to pain relief than opiates, and our administration of drug laws is deeply uneven and racist. https://t.co/0Uhl17MW98
— Andrew Yang🧢 (@AndrewYang) November 18, 2019
“It is already legal in several states, it reflects a safer approach to pain relief than opiates, and our administration of drug laws is deeply uneven and racist,” Yang said.
Biden has drawn criticism from lawmakers outside of the presidential race as well, with Rep. Earl Blumenauer (D-OR) calling him out on Monday.
Get with the program, @JoeBiden.
Not only do we have legislation that would solve the issue of research, the American people overwhelmingly support legalizing cannabis—period.
The war on drugs has ruined countless lives. It's past time we end this senseless prohibition.
— Earl Blumenauer (@repblumenauer) November 18, 2019
“Get with the program, @JoeBiden,” the congressman, who has spearheaded Capitol Hill efforts to end federal prohibition, said. “Not only do we have legislation that would solve the issue of research, the American people overwhelmingly support legalizing cannabis—period.”
“The war on drugs has ruined countless lives,” he said. “It’s past time we end this senseless prohibition.”
Photo courtesy of Facebook/Bernie Sanders.
AOC Calls For Decriminalizing The Use Of All Drugs
Rep. Alexandria Ocasio-Cortez (D-NY) voiced support for decriminalizing the use of all drugs on Sunday.
The freshman congresswoman tweeted that drug decriminalization, as well as marijuana legalization, are “matters of public health.”
Marijuana should be legalized, and drug consumption should be decriminalized.
These are matters of public health.
— Alexandria Ocasio-Cortez (@AOC) November 18, 2019
This marks a development in Ocasio-Cortez’s drug policy platform. Previously, she called for decriminalizing the use and research of psychedelics, emphasizing the therapeutic potential of the substances.
To that end, she introduced an amendment to a spending bill in June that would remove a rider that advocates argue has inhibited research into the potential therapeutic benefits of Schedule I drugs such as psilocybin and LSD. The House rejected that measure in a floor vote, however.
There’s a growing push to decriminalize the personal possession of drugs beyond cannabis. South Bend, Indiana Mayor Pete Buttigieg and Rep. Tulsi Gabbard (D-HI), both Democratic presidential candidates, are in favor of the policy. Entrepreneur Andrew Yang supports decriminalizing opioids as a means to combat the drug overdose crisis.
Ocasio-Cortez recently gave her endorsement to Sen. Bernie Sanders (I-VT). But while the senator was the first major presidential candidate to back marijuana legalization during his 2016 run, he said this year he’s “not there yet” on broader drug decriminalization. It’s not clear if the congresswoman’s role as a surrogate on his campaign will ultimately influence him to adopt the policy.
But as more candidates debate the best way forward on various drug reform proposals, with cannabis legalization being a given for almost all contenders, former Vice President Joe Biden remains several paces behind. He opposes adult-use legalization and said on Saturday that marijuana may be a gateway to other, more dangerous substances.
Photo courtesy of C-SPAN.