A bipartisan group of senators is stepping up the push to let marijuana businesses store their profits in banks, with a possible vote coming as soon as this week.
Under the current federal prohibition of cannabis, many banks refuse to do businesses with marijuana growers, processors and sellers that operate legally in accordance with a growing number of state laws. As a result, many cultivators and dispensaries operate on a cash-only basis, which makes them targets for robberies.
That could soon change under a proposal that ten U.S. senators filed on Wednesday.
The measure, led by Sens. Jeff Merkley (D-OR) and Lisa Murkowski (R-AK), would prevent federal officials from punishing a financial service provider “solely because the depository institution provides or has provided financial services to a cannabis-related legitimate business.”
It is an amendment to a larger bill being considered on the Senate floor this week that would remove some restrictions that were enacted on financial institutions as part of the 2010 Dodd-Frank Act.
Despite a U.S. Department of Justice move in January to undo protections for state marijuana laws, a top Trump administration official has repeatedly indicated he wants to solve cannabis businesses’ banking access problems.
During a separate House hearing last month, Mnuchin indicated he wants cannabis businesses to be able to store their profits in banks.
“I assure you that we don’t want bags of cash,” he said. “We do want to find a solution to make sure that businesses that have large access to cash have a way to get them into a depository institution for it to be safe.”
Prior to being confirmed by the Senate last year, Mnuchin said in response to written questions from a senator that marijuana businesses’ banking and tax issues are “very important.”
In 2014, under the Obama administration, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) published a memo outlining how banks can open accounts for cannabis businesses without triggering federal enforcement actions. But because the document did not change overarching federal laws, many banks have remained reluctant to work with marijuana providers.
In January, U.S. Attorney General Jeff Sessions rescinded a broader Obama-era policy that had generally allowed states to implement their own marijuana laws without Justice Department interference. That decision spurred concern that the Trump administration will delete the banking memo too.
Late in January, a Treasury official wrote in a letter to lawmakers that the department is “consulting with law enforcement” about whether to keep the cannabis guidance for depository institutions.
The policy remains in effect for now, a Mnuchin deputy testified at a Senate hearing.
Along with Merkley and Murkowski, the other cosponsors of the new cannabis banking amendment are Sens. Patty Murray (D-WA), Ron Wyden (D-OR), Rand Paul (R-KY), Michael Bennet (D-CO), Edward Markey (D-MA), Elizabeth Warren (D-MA), Bernie Sanders (I-VT) and Kamala Harris (D-CA).
It is currently unknown if the measure will receive a floor vote as part of the consideration of the broader banking reform bill.
Documents released by FinCEN late last year showed that the number of banks willing to work with the marijuana industry has steadily grown over time, but that data was compiled prior to the revocation of the Justice Department guidance on state cannabis laws.
Read the full text of the bipartisan marijuana banking amendment below:
SA 2107. Mr. MERKLEY (for himself, Ms. Murkowski, Mrs. Murray, Mr. Wyden, Mr.Paul, Mr. Bennet, Mr. Markey, Ms. Warren, Mr. Sanders, and Ms. Harris) submitted an amendment intended to be proposed by him to the bill S. 2155, to promote economic growth, provide tailored regulatory relief, and enhance consumer protections, and for other purposes; which was ordered to lie on the table; as follows:
At the appropriate place, insert the following:
SEC. ___. SECURE AND FAIR ENFORCEMENT BANKING.
(a) Short Title.–This section may be cited as the “Secure and Fair Enforcement Banking Act” or the “SAFE Banking Act”.
(b) Safe Harbor for Depository Institutions.–A Federal banking regulator may not–
(1) terminate or limit the deposit insurance or share insurance of a depository institution under the Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) or the Federal Credit Union Act (12 U.S.C. 1751 et seq.) solely because the depository institution provides or has provided financial services to a cannabis-related legitimate business;
(2) prohibit, penalize, or otherwise discourage a depository institution from providing financial services to a cannabis-related legitimate business or to a State or Indian tribe that exercises jurisdiction over cannabis-related legitimate businesses;
(3) recommend, incentivize, or encourage a depository institution not to offer financial services to the owner, operator, or an individual that is an account holder of a cannabis-related legitimate business, or downgrade or cancel financial services offered to an account holder of a cannabis-related legitimate business solely because–
(A) the account holder later becomes a cannabis-related legitimate business; or
(B) the depository institution was not aware that the account holder is the owner or operator of a cannabis-related legitimate business; and
(4) take any adverse or corrective supervisory action on a loan to an owner or operator of–
(A) a cannabis-related legitimate business solely because the business owner or operator is a cannabis-related business without express statutory authority, as in effect on the day before the date of enactment of this Act; or
(B) real estate or equipment that is leased or sold to a cannabis-related legitimate business solely because the owner or operator of the real estate or equipment leased or sold the equipment or real estate to a cannabis-related legitimate business.
(c) Protections Under Federal Law.–
(1) In general.–In a State, political subdivision of a State, or Indian country that allows the cultivation, production, manufacturing, transportation, display, dispensing, distribution, sale, or purchase of cannabis pursuant to a law (including regulations) of the State, political subdivision of the State, or the Indian tribe that has jurisdiction over the Indian country, as applicable, a depository institution and the officers, director, and employees of the depository institution that provides financial services to a cannabis-related legitimate business may not be held liable pursuant to any Federal law (including regulations)–
(A) solely for providing the financial services pursuant to the law (including regulations) of the State, political subdivision of the State, or Indian tribe; or
(B) for further investing any income derived from the financial services.
(2) Forfeiture.–A depository institution that has a legal interest in the collateral for a loan made to an owner or operator of a cannabis-related legitimate business, or to an owner or operator of real estate or equipment that is leased or sold to a cannabis-related legitimate business, shall not be subject to criminal, civil, or administrative forfeiture of that legal interest pursuant to any Federal law for providing the loan or other financial services solely because the collateral is owned by a cannabis-related business.
(d) Rule of Construction.–Nothing in this section shall require a depository institution to provide financial services to a cannabis-related legitimate business.
(e) Requirements for Filing Suspicious Activity Reports.–Section 5318(g) of title 31, United States Code, is amended by adding at the end the following:
“(5) Requirements for cannabis-related businesses.–
“(A) Definitions.–In this paragraph–
“(i) the term `cannabis’ has the meaning given the term `marihuana’ in section 102 of the Controlled Substances Act (21 U.S.C. 802);
“(ii) the term `cannabis-related legitimate business’ has the meaning given the term in section 6 of the SAFE Banking Act;
“(iii) the term `financial service’ means a financial product or service, as defined in section 1002 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5481);
“(iv) the term `Indian country’ has the meaning given the term in section 1151 of title 18; and
“(v) the term `Indian tribe’ has the meaning given the term in section 102 of the Federally Recognized Indian Tribe List Act of 1994 (25 U.S.C. 479a).
“(B) Reporting of suspicious transactions.–A financial institution or any director, officer, employee, or agent of a financial institution that reports a suspicious activity related to a transaction by a cannabis-related legitimate business shall comply with appropriate guidance issued by the Financial Crimes Enforcement Network. The Secretary shall ensure that the guidance is consistent with the purpose and intent of the SAFE Banking Act and does not inhibit the provision of financial services to a cannabis-related legitimate business in a State, political subdivision of a State, or Indian country that has allowed the cultivation, production, manufacturing, transportation, display, dispensing, distribution, sale, or purchase of cannabis, or any other conduct relating to cannabis, pursuant to law or regulation of the State, the political subdivision of the State, or Indian tribe that has jurisdiction over the Indian country.”.
(f) Definitions.–In this section:
(1) Cannabis.–The term “cannabis” has the meaning given the term “marihuana” in section 102 of the Controlled Substances Act (21 U.S.C. 802).
(2) Cannabis product.–The term “cannabis product” means any article which contains cannabis, including an article which is a concentrate, an edible, a tincture, a cannabis-infused product, or a topical.
(3) Cannabis-related legitimate business.–The term “cannabis-related legitimate business” means a manufacturer, producer, or any person or company that–
(A) engages in any activity described in subparagraph (B) pursuant to a law established by a State or a political subdivision of a State; and
(B)(i) participates in any business or organized activity that involves handling cannabis or cannabis products, including cultivating, producing, manufacturing, selling, transporting, displaying, dispensing, distributing, or purchasing cannabis or cannabis products; or
(I) any financial service, including retirement plans or exchange traded funds, relating to cannabis; or
(II) any business services, including the sale or lease of real or any other property, legal or other licensed services, or any other ancillary service, relating to cannabis.
(4) Company.–The term “company” means a partnership, corporation, association, (incorporated or unincorporated), trust, estate, cooperative organization, State, or any other entity.
(5) Depository institution.–The term “depository institution” means–
(A) a depository institution as defined in section 3(c) of the Federal Deposit Insurance Act (12 U.S.C. 1813(c));
(B) a Federal credit union as defined in section 101 of the Federal Credit Union Act (12 U.S.C. 1752); or
(C) a State credit union as defined in section 101 of the Federal Credit Union Act (12 U.S.C. 1752).
(6) Federal banking regulator.–The term “Federal banking regulator” means each of the Board of Governors of the Federal Reserve System, the Bureau of Consumer Financial Protection, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the National Credit Union Administration, or any Federal agency or department that regulates banking or financial services, as determined by the Secretary of the Treasury.
(7) Financial service.–The term “financial service” means a financial product or service, as defined in section 1002 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5481).
(8) Indian country.–The term “Indian country” has the meaning given the term in section 1151 of title 18, United States Code.
(9) Indian tribe.–The term “Indian tribe” has the meaning given the term in section 102 of the Federally Recognized Indian Tribe List Act of 1994 (25 U.S.C. 479a).
(10) Manufacturer.–The term “manufacturer” means a person or company who manufactures, compounds, converts, processes, prepares, or packages cannabis or cannabis products.
(11) Producer.–The term “producer” means a person or company who plants, cultivates, harvests, or in any way facilitates the natural growth of cannabis.
(12) State.–The term “State” means each of the several States, the District of Columbia, Puerto Rico, any territory or possession of the United States.
Sen. Chuck Schumer Welcomes Major Cannabis Company To New York’s Hemp Industry
Canadian marijuana giant Canopy Growth Corporation will enter the nascent U.S. hemp industry by building a massive farming and production center in southern New York, U.S. Senate Minority Leader Chuck Schumer (D-NY) announced on Monday.
Canopy has yet to finalize its plans for an exact location—a contract could be signed as soon as Monday, Schumer said—but the company could eventually support “up to 400 jobs” in hemp cultivation, processing and product manufacturing at what would be a “first of its kind” center for the just-legalized U.S. hemp industry, the senator said.
Once a key American crop—George Washington famously grew hemp at Mount Vernon, and there was a stand of hemp plants in northern Virginia where the Pentagon now stands—the U.S. now lags far behind other countries in hemp production, a result of the country’s broad outlawing of cannabis decades ago.
Eventually, Canopy plans to invest “between $100-$150 million” into a New York State-based industrial hemp farm, Schumer said, with other companies potentially drawn to the sector by such a prominent anchor business.
“Hemp is a very valuable product and a burgeoning crop here” in southern New York, said Schumer, offering a very brief remedial education in the plant for those present at a press conference he convened. “I’m not kidding when I say this, but hemp is everywhere.”
“This is going to be a major shot in the arm” for the area, he added.
“Hemp” is more of a legal than a botanical distinction. Under U.S. law, cannabis sativa with 0.3 percent or more THC is considered “marijuana” and falls under federal drug-control laws. Cannabis with less than 0.3 percent THC is considered industrial hemp.
Hemp has been legal to import and process, but until very recently, hemp cultivation was mostly illegal in the U.S.
That prohibition that ended when President Donald Trump signed the 2018 Farm Bill into law last month. The previous 2014 version of the Farm Bill created a pilot program for states that wished to legalize small-scale hemp cultivation as part of research programs.
Based on that success and on growing support for an end to cannabis prohibition nationwide, the 2018 Farm Bill legalized cultivation of hemp outright. Almost immediately, politicians began touting the crop’s potential as a miracle product and an economic boon with enthusiasm once reserved only for acolytes of hemp evangelist Jack Herer.
Senate Majority Leader Mitch McConnell, who championed the hemp legalization provisions, signed off on the final version of the Farm Bill with a hemp pen—but for now, Schumer, his Democratic counterpart, may have stolen the top Republican’s fire.
“I’ve always believed that states should be the laboratories of democracy,” he said. “I’ve been very eager to have the hemp industry grow in New York and the Southern Tier.”
Photo courtesy of Senate Democrats.
Alcohol Sales Aren’t Impacted By Marijuana Legalization, Trade Association Finds
Marijuana legalization hasn’t hurt alcohol sales in the years since legal markets were established in Colorado, Washington State and Oregon, according to a new study from an alcohol trade association.
The Distilled Spirits Council looked at alcohol tax and shipment data before and after legalization to determine whether cannabis reform impacted sales of spirits, beer or wine in legal states.
“Simply put, the data show there has been no impact on spirits sales from recreational marijuana legalization,” the council’s chief economist, David Ozgo, said in a press release on Thursday.
“We now have four years of retail recreational marijuana sales history in Colorado and Washington state, and three years in Oregon, and each of these markets remain robust for spirits sales,” he said. “We did this study because there is a lot of misinformation circulating about the impact of recreational marijuana legalization on distilled spirits and the wider alcohol market.”
Per capita spirits sales actually increased slightly in post-legalization years, which was consistent with national trends. Sales were up 7.6 percent in Colorado, 5.4 percent in Washington and 3.6 percent in Oregon.
The trade association also analyzed beer and wine sales during the same period. For beer, sales were down marginally, with drops of 3.6 percent in Colorado, 2.3 percent in Washington and 3.6 in Oregon. But again, that’s consistent with national trends, according to the study.
Wine sales were mixed across the three states: Up 3.2 percent in Colorado, down 3.1 percent in Washington and up .7 percent in Oregon.
The Distilled Spirits Council also used their analysis as an opportunity to plug their policy recommendations to lawmakers in states considering marijuana legalization. While the association has declined to take a position on whether to legalize, it shared a list of recommendations ranging from equitable taxes on cannabis and alcohol to THC content disclosure requirements.
There is at least one major alcohol group that is willing to support states’ right to legalize, though. The Wine & Spirits Wholesalers of America (WSWA) called for the end of federal marijuana prohibition last year and, in December, went so far as to host a briefing on cannabis policy for lawmakers and congressional staffers.
Reform advocates have questioned whether legal access to marijuana would adversely impact alcohol sales, with more people opting to consume cannabis over booze. There is some research that indicates the alcohol industry is being interrupted in medical marijuana states, but more data is needed.
Photo courtesy of Pixabay.
Former DNC And RNC Chairs Join One Of The World’s Largest Marijuana Companies
One of the world’s largest marijuana companies announced the formation of an international advisory board on Thursday. Among those joining the team at Tilray are former Vermont Gov. Howard Dean, who also served as the Democratic National Committee (DNC) chair, and Michael Steele, who headed the Republican National Committee (RNC) and served as Maryland’s lieutenant governor.
That the former chairs of both major parties are entering the legal cannabis industry reflects the narrowing political divide over the issue. But it also seems to reflect a personal evolution on the issue for Dean, who two decades ago as governor of Vermont opposed even legalizing industrial hemp out of concern that it would lead to marijuana legalization.
”I don’t think it’s in anybody’s best interest to do that. It sends the wrong message to our kids,” he said at the time. “I think the principal interest of the advocates is to legalize marijuana.”
According to legalization advocates, Dean also effectively blocked a vote on a medical cannabis bill that was going through the Vermont legislature in 2002, repeatedly arguing that neither voters nor lawmakers should be able to implement a legal medical marijuana system because, to him, it was a public health decision and up to the Food and Drug Administration (FDA) to determine whether the plant had therapeutic value.
Though he later attempted to distance himself from more aggressive anti-marijuana actions at the federal level while running for the Democratic Party’s 2004 presidential nomination, he declined to rule out ending raids against medical cannabis facilities—but he did say individual patients suffering from serious illnesses shouldn’t be raided or locked up over marijuana.
During his ultimately failed presidential bid, Dean said he would require the FDA to completed a scientific assessment of cannabis within one year and that he was willing to accept whatever outcome the agency arrived at.
In the years since, he has remained sheepish about legalization, though he’s voiced support for decriminalization and said that “we need to completely change the way we deal with drug laws in this country.”
Steele, for his part, has talked frequently in recent years about the need to end federal cannabis prohibition and also cultivate a legal industry that’s inclusive and responsible. But during his time at the RNC, the party declined to embrace reform as part of its platform.
In an editorial for The Hill earlier this year, Steele said he’s a “strong supporter of medical marijuana.”
“I favor state-based access to medical marijuana from both a philosophical and policy standpoint,” he wrote. “I also support the reform of our federal cannabis laws to bring conformity to federal regulations and state laws.”
Later, he seemed to back broader legalization in an interview with Arcview.
“I don’t have a problem with adult use as long as it’s appropriately regulated and taxed and all those other things that make sure that it doesn’t get into the hands of anyone under a certain age,” he said. “And so there are ways that you can approach the private, personal use of cannabis beyond the medical scope that I think can go to address a number of the concerns that people have.”
Dean and Steele both appeared on a HuffPost Live segment in 2012, where they discussed the failures of the drug war and the shifting politics of reform. Now, the two political leaders will reunite to advise Tilray executives as the company “pursues its aggressive global growth strategy.”
Other members of the new international advisory board include former German Foreign Minister Joschka Fischer, former Portuguese Minister of Foreign Affairs Jaime Gama and former New Zealand Minister of Foreign Affairs and Trade Donald McKinnon.
“We are honored to welcome this impressive group of distinguished leaders to the Tilray team,” company CEO Brendan Kennedy said in a press release on Wednesday. “As we pioneer the future of our industry around the world, the experts on our International Advisory Board will advise us on our rapidly expanding global business.”
The former DNC and RNC chairs aren’t the only former politics bigwigs to make headlines over embracing the legal industry. Former House Speaker John Boehner joined the advisory board of another marijuana firm, Acreage Holdings, earlier this year, announcing that he’s “all in on the cannabis industry.” Previously, he had said he was “unalterably opposed” to legalization.
Photo courtesy of Brian Shamblen.