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Senate Bill Would Let Marijuana Businesses Store Profits In Banks

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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).

This piece was first published by Forbes.

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.)

Politics

Colorado Governor Grants Thousands Of Marijuana Pardons With New Clemency Powers

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The governor of Colorado on Thursday signed an executive order granting nearly 3,000 pardons for people convicted of possession one ounce of less of marijuana.

Pursuant to a new law that he signed in June, Gov. Jared Polis (D) made the pardons on the first day the policy took effect. While the law gives him authority to grant clemency for cases of possession of up to two ounces, his office explained that he limited it to one ounce because that’s the legal possession limit under Colorado’s cannabis program.

“We are finally cleaning up some of the inequities of the past by pardoning 2,732 convictions for Coloradans who simply had an ounce of marijuana or less,” Polis said in a press release. “It’s ridiculous how being written up for smoking a joint in the 1970’s has followed some Coloradans throughout their lives and gotten in the way of their success.”

Convictions impacted by the governor’s action range from those that took place in 1978 though 2012.

“Too many Coloradans have been followed their entire lives by a conviction for something that is no longer a crime, and these convictions have impacted their job status, housing, and countless other areas of their lives,” he added. “Today we are taking this step toward creating a more just system and breaking down barriers to help transform people’s lives as well as coming to terms with one aspect of the past, failed policy of marijuana prohibition.”

The new law allows the governor to use his clemency power for cannabis offenses without consulting with prosecutors and judges involved in the cases, as is typically required under statute.

“For the individuals pardoned in this Executive Order, all rights of citizenship associated with the pardoned conviction are restored in full without condition,” the order states. “All civil disabilities and public sufferings associated with the pardoned conviction are removed.”

People who are eligible for the pardons don’t have to do anything to clear their own records; it’s automated, and individuals can check a website to see if they’ve been processed.

Those who have municipal marijuana convictions, or who were arrested or given a summons, don’t qualify for the pardon. The action only applies to state-level convictions.

A frequently asked questions document states that while Polis has declined for now to use the full extend of his pardon power by applying it to people with convictions of up one to two ounces, the “administration will continue to evaluate” cases that could receive clemency. A representative from the governor’s office did not immediately respond to a question from Marijuana Moment about whether plans are imminent to expand the pardon pool.

The governor’s action also calls on the state Department of Public Health to “develop a process to indicate on criminal background checks which individuals’ convictions have been pardoned pursuant to this Executive Order.”

Colorado isn’t alone in pursuing opportunities to enact marijuana-focused restorative justice policies.

In June, more than 15,000 people who were convicted for low-level marijuana possession in Nevada were automatically pardoned under a resolution from the governor.

The governors of Washington State and Illinois have both issued pardons for cannabis offenses since their states legalized the plant.

Polis told Westword that beyond the practical benefits of having these records cleared, the move is “also symbolically important, because it shows that as a state and nation, we’re coming to terms with the incorrect discriminatory laws of the past that penalized people for possession of small amounts of marijuana.”

Marijuana Arrests Decline Nationally For First Time In Four Years, FBI Data Shows

Photo courtesy of Martin Alonso.

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Marijuana Arrests Decline Nationally For First Time In Four Years, FBI Data Shows

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Marijuana arrests in the U.S. declined in 2019 for the first time in four years, a new federal report shows.

While many expected the state-level legalization movement to reduce cannabis arrests as more markets went online, that wasn’t the case in 2016, 2017 or 2018, which each saw slight upticks in marijuana busts year-over-year. But last year there was a notable dip, the data published this week shows.

There were a total of 545,601 marijuana arrests in 2019—representing 35 percent of all drug arrests—according to FBI’s Uniform Crime Reporting program. That’s down from 663,367 the prior year and 659,700 in 2017.

Via FBI.

Put another way, police across the country made a cannabis bust every 58 seconds on average last year. Of those arrests, 500,394 (92 percent) were for possession alone.

“A decline in cannabis related arrests is better than seeing an increase for a fourth year in a row, but the amount of these arrests is still abhorrent,” Marijuana Policy Project Executive Director Steve Hawkins told Marijuana Moment. “There is no reason to continue punishing adults for consuming a substance that is less harmful than alcohol. Arresting adult cannabis consumers has a dramatically disproportionate impact on communities of color, is a massive waste of law enforcement officials’ time and resources and does nothing to improve public health or safety.”

Overall, arrests for drug sales, manufacturing and possession amounted to 1,558,862 for the year—approximately 15 percent of all busts reported to FBI from local and state law enforcement agencies. That’s one new drug case every 20 seconds.

Before 2016, the country had seen a consistent decline in marijuana arrests for roughly a decade. It should be noted, however, that not all local police participate in the federal agency’s program, so these figures are not holistic.

Nonetheless, this data shows that American law enforcement carried out more arrests for marijuana alone than for murder, rape, robbery, burglary, fraud and embezzlement combined.

“At a time when a super-majority of Americans support marijuana legalization, law enforcement continues to harass otherwise law abiding citizens at an alarming rate,” NORML Political Director Justin Strekal told Marijuana Moment. “Now is the time for the public to collectively demand that enough is enough: end prohibition and expunge the criminal records to no longer hold people back from achieving their potential.”

While there’s no solitary factor that can explain the recent downward trend in cannabis cases, there are one-off trends that could inform the data. For example, marijuana possession arrests fell almost 30 percent in Texas from 2018 to 2019, and that seems to be connected to the legalization of hemp and resulting difficulties police have had in differentiating the still-illegal version of the cannabis crop from its newly legal non-intoxicating cousin.

At the federal level, prosecutions for marijuana trafficking declined in 2019, and drug possession cases overall saw an even more dramatic decline, according to a report published by the U.S. Sentencing Commission in March.

Federal prosecutions of drug-related crimes increased in 2019, but cases involving marijuana dropped by more than a quarter, according to an end-of-year report released by Supreme Court Chief Justice John Roberts in December.

A study released by the Cato Institute in 2018 found that “state-level marijuana legalization has significantly undercut marijuana smuggling.

Mixed Arizona Marijuana Polls Raise Questions About Legalization Ballot Measure’s Prospects

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California Governor Approves Changes To Marijuana Banking And Labeling Laws

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California Gov. Gavin Newsom (D) signed a handful of marijuana bills into law on Tuesday, making a series of small adjustments to the nation’s largest legal cannabis system. More sweeping proposals such as overhauling the state’s marijuana regulatory structure will have to wait until next year, the governor said.

Among the biggest of the new changes are revisions to banking and advertising laws. With many legal marijuana businesses are still unable to access financial services, Newsom signed a bill (AB 1525) to remove state penalties against banks that work with cannabis clients.

“This bill has the potential to increase the provisions of financial services to the legal cannabis industry,” Newsom wrote in a signing statement, “and for that reason, I support it.”

Democrats in Congress, meanwhile, have been working for months to remove obstacles to these businesses’ access to financial services at the federal level. A coronavirus relief bill released by House Democratic leaders on Monday is the latest piece of legislation to include marijuana banking protections. Past efforts to include such provisions have been scuttled by Senate Republicans.

In his signing statement on the banking bill, Newsom directed state cannabis regulators to establish rules meant to protect the privacy of marijuana businesses that seek financial services, urging that data be kept confidential and is used only “for the provision of financial services to support licensees.”

Another bill (SB 67) the governor signed on Tuesday will finally establish a cannabis appellation program, meant to indicate where marijuana is grown and how that might influence its character. The system is similar to how wine regions are regulated.

Under the new law, growers and processors under the new law will be forbidden from using the name of a city or other designated region in product marketing unless all of that product’s cannabis is grown in that region. Similar protections already apply at the county level.

For outdoor growers, the new law recognizes the importance of terrior—the unique combination of soil, sun and other environmental factors that can influence the character of a cannabis plant. For indoor growers, it provides a way to represent a hometown or cash in on regional cachet.

Most of the other new changes that the governor signed into law are relatively minor and will likely go unnoticed by consumers. One, for example, builds in more wiggle room on the amount of THC in edibles (AB 1458), while another would allow state-licensed cannabis testing labs to provide services to law enforcement (SB 1244).

The bills were approved by state lawmakers earlier this month, as the state’s legislative session drew to a close.

Other pieces of cannabis legislation passed by the legislature this session were met with the governor’s veto. On Tuesday, Newsom rejected a proposal (AB 1470) that would have allowed processors to submit unpackaged products to testing labs, which industry lobbyists said would reduce costs. Currently products must be submitted in their final form, complete with retail packaging. Newsom said the proposal “conflicts with current regulations…that prevent contaminated and unsafe products from entering the retail market.”

“While I support reducing packaging waste, allowing products to be tested not in their final form could result in consumer harm and have a disproportionate impact on small operators,” Newsom said in a veto statement.

Those changes to testing procedures should instead be considered next year, Newsom said, as part of a pending plan to streamline California’s cannabis licensing and regulatory agencies.

“I have directed my administration to consolidate the state regulatory agencies that currently enforce cannabis health and safety standards to pursue all appropriate measures to ease costs and reduce unnecessary packaging,” he wrote. “This proposal should be considered as part of that process.”

Newsom also last week vetoed a bill (AB 545) that would have begun to dissolve the state Bureau of Cannabis Control, which oversees the legal industry. In a statement, the governor called that legislation “premature” given his plans for broader reform.

“My Administration has proposed consolidating the regulatory authority currently divided between three state entities into one single department,” Newsom wrote, “which we hope to achieve next year in partnership with the Legislature.”

Earlier this month, the governor signed into law one of the industry’s top priorities for the year—a measure (AB 1872) that freezes state cannabis cultivation and excise taxes for the entirety of 2021. The law is intended to provide financial stability for cannabis businesses in California, where taxes on marijuana are among the highest in the nation.

The state’s leading marijuana trade group, the California Cannabis Industry Association (CCIA), applauded the governor’s moves. All the bills approved by Newsom this week had the industry group’s support.

“We thank Governor Newsom for prioritizing these bills, which seek to reduce regulatory burdens, improve enforcement, expand financial services and enhance the state’s cannabis appellation’s program,” CCIA Executive Director Lindsay Robinson said in a message to supporters on Wednesday. “Like so many, the cannabis industry has faced a series of unexpected challenges and setbacks in 2020. We look forward to continuing to work with the Newsom Administration, and the Legislature, as we pursue a robust policy agenda in 2021.”

New Jersey Governor Works To Get Out The Vote For Marijuana Legalization Referendum

Image element courtesy of Gage Skidmore

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