A powerful U.S. Senate panel has moved to block an amendment to let marijuana businesses store their profits in banks.
In a 21 – 10 vote, the Senate Appropriations Committee tabled an amendment on Thursday that would have shielded financial institutions that open accounts for cannabis businesses that are complying with state laws from being punished by federal regulatory authorities.
Current policy, which forces many marijuana businesses to operate on an all-cash basis, is “a big problem because it’s great for organized crime, it’s great for money laundering, it’s great for theft and larceny, it’s great for cheating on taxes, it’s great for cheating on your payroll,” Sen. Jeff Merkley (D-OR), the sponsor of the measure, said in a brief debate before the vote. “We’re really facilitating crime by not enabling the banking industry to provide basic services.”
Last week, the House Appropriations Committee defeated a similar cannabis banking proposal.
Several Democratic members of the Senate panel who said they otherwise support the ability of marijuana businesses in a growing number of states to access financial services objected on procedural grounds to the measure, which Merkley was seeking to attach to the Fiscal Year 2019 Financial Services and General Government funding bill.
Sen. Patrick Leahy (D-VT), for example, said that he wanted to keep spending legislation “free of new controversial policy riders” and that a more appropriate forum would be an authorizing committee that sets banking laws.
Nonetheless, Leahy himself has sponsored appropriations amendments to prevent the Justice Department from interfering with state medical cannabis laws instead of insisting that those measures go through the authorizing Judiciary Committee.
Also voicing opposition to the move were Sens. Christopher Coons (D-DE) and Jon Tester (D-MT).
“I’ve supported it in the past and I think it’s different today,” Tester said. “It adds a level of confusion to the folks who are out there doing business,” adding that it would give a “false hope” to cannabis providers because it only deals with the Department of the Treasury and not the Justice Department.
“Do I think these businesses ought to be able to bank?” he said. “Absolutely.”
Sen. James Lankford (R-OK), who is a vocal legalization opponent, also spoke up. “This amendment would [make] a confusing situation for banks and pot shops around the country…more confusing,” he said.
Legalization advocates were upset by the committee’s move.
“The Senate Appropriations Committee chose to bury its head in the sand rather than make it easier for licensed and regulated marijuana businesses to operate safely, transparently or effectively,” Justin Strekal, political director for NORML, said in an interview. “It’s absurd.”
Don Murphy of the Marijuana Policy Project added, “Today was a victory for the drug cartels and anyone else who benefits from billions of dollars of unaccountable, untraceable and unbankable cash.”
Ongoing federal marijuana prohibition and related money laundering laws have made many banks reluctant to work with cannabis businesses.
Nonetheless, new Treasury Department data first reported last week shows that a steadily increasing number of financial institutions have been opening accounts for marijuana growers, processors, retailers and related outfits even as Attorney General Jeff Sessions makes anti-cannabis moves and comments.
The House of Representatives passed a cannabis banking amendment in 2014 by a vote of 231 to 192, but the provision was not included in final spending legislation that year. Congressional Republican leadership has since blocked floor votes on cannabis measures.
Several Trump administration officials have indicated they would like to see a resolution to the issue.
Federal Reserve Chairman Jerome Powell said last week that the gap between state and federal cannabis laws “puts federally chartered banks in a very difficult situation.”
“It would great if that could be clarified,” he said.
Treasury Sec. Steven Mnuchin has implied in several appearances before congressional committees that he wants marijuana businesses to be able to access banks.
“I assure you that we don’t want bags of cash,” he testified before a House committee in February. “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.”
In another hearing he said that fixing cannabis banking issues is at the “top of the list” of his department’s concerns.
And Federal Deposit Insurance Corporation Chairwoman said on Tuesday that she’s asked staff to think about how to address marijuana banking issues, but that for now the agency’s hands are “somewhat tied.”
Despite the defeat of the banking amendments in House and Senate committees this month, there has been a recent string of other developments demonstrating marijuana’s political momentum.
Last week, the Texas Republican Party voted to adopt platform planks endorsing marijuana decriminalization, medical cannabis, industrial hemp and federal reclassification of the drug.
Earlier this month, President Trump voiced support for bipartisan congressional legislation that would allow states to enact marijuana legalization laws without federal interference. U.S. Senate Majority Leader Mitch McConnell (R-KY) is leading the charge for hemp legalization, with the support of Minority Leader Chuck Schumer (D-NY).
See the full text of the marijuana banking amendment as considered by senators below:
“None of the funds made available in this Act may be used, with respect to the States of Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming, or with respect to the District of Columbia, Puerto Rico, or Guam, to penalize a financial institution solely because the institution provides financial services to an entity that is a manufacturer, producer, or a person that participates in any business or organized activity that involves handling marijuana or marijuana products and engages in such activity pursuant to a law established by a State or a unit of local government.”
See the full committee roll call vote on tabling the amendment (an Aye vote is to block the measure from advancing):
- Mitch McConnell, Kentucky – Aye by proxy
- Lamar Alexander, Tennessee – Aye
- Susan Collins, Maine – Aye
- Lisa Murkowski, Alaska – Aye
- Lindsey Graham, South Carolina – Aye by proxy
- Roy Blunt, Missouri – Aye
- Jerry Moran, Kansas – Aye by proxy
- John Hoeven, North Dakota – Aye
- John Boozman, Arkansas – Aye
- Shelly Moore Capito, West Virginia – Aye
- James Lankford, Oklahoma – Aye
- Steve Daines, Montana – No
- John Kennedy, Louisiana – Aye
- Marco Rubio, Florida – Aye by proxy
- Cindy Hyde-Smith, Mississippi – Aye
- Richard Shelby, Alabama, Chairman – Aye
- Patrick Leahy, Vermont, Ranking Member – Aye
- Patty Murray, Washington – No by proxy
- Dianne Feinstein, California – No by proxy
- Dick Durbin, Illinois – Aye by proxy
- Jack Reed, Rhode Island – Aye by proxy
- Jon Tester, Montana – Aye by proxy
- Tom Udall, New Mexico – No
- Jeanne Shaheen, New Hampshire – No by proxy
- Jeff Merkley, Oregon – No
- Chris Coons, Delaware – Aye
- Brian Schatz, Hawaii – No by proxy
- Tammy Baldwin, Wisconsin – No
- Christopher Murphy, Connecticut – Aye by proxy
- Joe Manchin, West Virginia – No
- Chris Van Hollen, Maryland – No
Illinois Will ‘Blow Past’ $1 Billion In Legal Marijuana Sales In 2021, Chamber Of Commerce President Says
“Are we going to get to a billion dollars? I think we’re going to blow past the billion dollars based on the experience in smaller states,” the Chamber leader said.
By Elyse Kelly, The Center Square
Illinois’s cannabis industry is growing up fast, with adult-use recreational cannabis sales expected to hit $1 billion by year-end.
In March alone, Illinoisans spent $110 million on recreational marijuana.
Todd Maisch, president and CEO of the Illinois Chamber of Commerce, said one factor contributing to Illinois’ explosive growth is that most neighboring states haven’t legalized marijuana yet.
“What we saw early on in states like Washington and Colorado is they did have demand come in from surrounding states, which frankly benefits our industry and benefits the taxes collected,” Maisch said.
Cannabis sales have already surpassed alcohol’s tax revenues for the state, and Maisch said he thinks $1 billion estimates are conservative.
“Are we going to get to a billion dollars? I think we’re going to blow past the billion dollars based on the experience in smaller states,” Maisch said.
There are only a couple of things that could stop Illinois’ explosive cannabis market growth, Maisch said. He said that policymakers could ruin things by pushing taxes too high as evidenced by the tobacco market.
“As taxes have gone up and up and up, they’ve pushed people all the way into the black market or they’ve created this grey market in which people are ostensibly paying some of the taxes, but they’re still getting sources of tobacco products that avoid much of the tax,” Maisch said.
The other thing that could head off continued growth is other states opening up recreational-use markets.
“So if you start to see surrounding states go to recreational, that’s definitely going to flatten the curve because we’re not going to be pulling in demand from other states,” Maisch said.
Maisch points out some concerns that accompany the explosion of Illinois’s recreational cannabis market including workforce preparedness.
“All of those individuals who are deciding to go ahead and consume this product are really taking themselves out of a lot of job opportunities that they would otherwise be qualified, so there’s a real upside and a downside,” Maisch said.
While it’s easy to track the revenues this industry brings into state coffers, he points out, it will be harder to track the lack of productivity and qualified individuals to operate heavy machinery and other jobs that require employees to pass a drug test.
Missouri Regulators Derail Medical Marijuana Business Ownership Disclosure Effort With Veto Threat
Missouri regulators say they feel requiring medical marijuana business license ownership disclosures under a House-approved amendment could be unconstitutional, and they may urge the governor to veto the legislation.
By Jason Hancock, Missouri Independent
An effort by lawmakers to require disclosure of ownership information for businesses granted medical marijuana licenses was derailed on Thursday, when state regulators suggested a possible gubernatorial veto.
On Tuesday, the Missouri House voted to require the Department of Health and Senior Services provide legislative oversight committees with records regarding who owns the businesses licensed to grow, transport and sell medical marijuana.
The provision was added as an amendment to another bill pertaining to nonprofit organizations.
Its sponsor, Rep. Peter Merideth, D-St. Louis, said DHSS’s decision to deem ownership records confidential has caused problems in providing oversight of the program. He pointed to recent analysis by The Independent and The Missourian of the 192 dispensary licenses issued by the state that found several instances where a single entity was connected to more than five dispensary licenses.
The state constitution prohibits the state from issuing more than five dispensary licenses to any entity under substantially common control, ownership or management.
On Thursday, a conference committee met to work out differences in the underlying bill between the House and Senate.
Sen. Eric Burlison, a Republican from Battlefield and the bill’s sponsor, called the medical marijuana amendment an “awesome idea. I think it’s awesome.”
However, he said opposition from the department puts the entire bill in jeopardy.
“The department came to me,” he said, “and said they felt that this was unconstitutional.”
DHSS has justified withholding information from public disclosure by pointing to a portion of the medical marijuana constitutional amendment adopted by voters in 2018 that says the department shall “maintain the confidentiality of reports or other information obtained from an applicant or licensee containing any individualized data, information, or records related to the licensee or its operation… .”
Alex Tuttle, a lobbyist for DHSS, said if the bill were to pass with the medical marijuana amendment still attached, the department may recommend Gov. Mike Parson veto it.
The threat of a veto proved persuasive, as several members of the conference committee expressed apprehension about the idea of the amendment sinking the entire bill.
Merideth said the department’s conclusion is incorrect. And besides, he said, the amendment is narrowly tailored so that the information wouldn’t be made public. It would only be turned over to legislative oversight committees.
Rep. Jered Taylor, R-Republic, chairman of the special committee on government oversight, said the amendment is essential to ensure state regulators “are following the constitution, that they’re doing what they’re supposed to be doing.”
The medical marijuana program has faced intense scrutiny in the two years since it was created by voters.
A House committee spent months looking into widespread reports of irregularities in how license applications were scored and allegations of conflicts of interest within DHSS and a private company hired to score applications.
In November 2019, DHSS received a grand jury subpoena, which was issued by the United States District Court for the Western District. It demanded the agency turn over all records pertaining to four medical marijuana license applications.
The copy of the subpoena that was made public redacted the identity of the four applicants at the request of the FBI. Lyndall Fraker, director of medical marijuana regulation, later said during a deposition that the subpoena wasn’t directed at the department but rather was connected to an FBI investigation center in Independence.
More recently, Parson faced criticism for a fundraiser with medical marijuana business owners for his political action committee, Uniting Missouri.
The group reported raising $45,000 in large donations from the fundraiser. More than half of that money came from a PAC connected to Steve Tilley, a lobbyist with numerous medical marijuana clients who has been under FBI scrutiny for more than a year.
Colorado Sold More Than Half A Billion Dollars In Legal Marijuana In 2021’s First Three Months
More than $10.5 billion in cannabis has been sold in Colorado since it was legalized in 2014. Those sales translate into over $1.7 billion in tax revenue that goes towards public schools, infrastructure projects and local government programs.
By Robert Davis, The Center Square
Colorado’s marijuana sales eclipsed the half-billion dollar mark in the first quarter of 2021, the state Department of Revenue (DOR) said on Tuesday.
In all, marijuana sales were over $560 million between January and March. More than $10.5 billion in marijuana has been sold in Colorado since it was legalized in 2014.
Those sales translate into over $1.7 billion in tax revenue that goes towards public schools, infrastructure projects and local government programs.
DOR compiles its monthly marijuana sales report by adding the state’s medical and recreational sales together. The total does not include marijuana accessories or any products that do not contain medical marijuana.
Marijuana sales reached $207 million in the month of March alone. In exchange, the state collected $39.6 million in taxes.
Marijuana tax revenue is collected through three state taxes: a 2.9 percent sales tax on marijuana sold in stores, a 15 percent tax on retail marijuana and a 15 percent retail marijuana excise tax.
State law requires 71 percent of the total to be remitted to the marijuana tax cash fund, a budget account that is statutorily required to fund health care, health education, substance abuse prevention and treatment programs and law enforcement.
The remaining 29 percent is then subdivided between the state public school fund and the general fund. Schools receive just over 12 percent of the total while the general fund receives greater than 15 percent.
In April, the public school fund received over $14 million. The account supports school construction projects and is controlled by the School Board Investment Fund, a three-member panel responsible for maintaining the fund’s capital that was established in 2016.
Meanwhile, the marijuana tax cash fund received over $16 million and the general fund received $3.5 million.