Sen. Chuck Grassley (R-IA), a longtime ardent marijuana legalization opponent, announced on Friday that he is stepping down as chair of the Senate Judiciary Committee in order to take over a separate leadership position, potentially paving a path forward for cannabis legislation in the 116th Congress.
Next in line for the chairmanship of the panel, which plays a central role in drug policy legislation, is Sen. Lindsey Graham (R-SC)—who certainly isn’t the most marijuana-friendly member of the Senate but is significantly more open-minded about medical cannabis and other common sense reform measures than the current chairman is.
I very much appreciate Senator @ChuckGrassley's leadership of the Senate Judiciary Committee.
He chaired the committee with a steady hand, sense of fundamental fairness, and resolve.
His leadership serves as a model to us all.
— Lindsey Graham (@LindseyGrahamSC) November 16, 2018
Whereas Grassley has refused to let any marijuana bills come to a vote as Judiciary chairman, Graham has made surprise appearances as a cosponsor of legislation to protect legal medical states from federal interference, reschedule cannabis and also remove cannabidiol (CBD) from the list of federally banned substances.
“Senator Graham chairing Judiciary is the best news reformers have heard since Pete Sessions lost reelection,” Don Murphy, director of federal policies at the Marijuana Policy Project, told Marijuana Moment, referring to the outgoing House Rules Committee chair who has consistently blocked marijuana legislation from votes.
The senator has “shown empathy for patients and is a vocal advocate of the Tenth Amendment,” Murphy said. Plus, he added, Graham’s relationship with President Donald Trump “also bodes well for passage” of key marijuana reform legislation.
“If I was in the industry, I’d be buying today.”
In 2015, Graham voted against an amendment that would have allowed the U.S. Department of Veterans Affairs to recommend cannabis to patients; but the next year he reversed himself and supported a similar proposal to expand access to medical marijuana for veterans.
Also in 2016, the South Carolina senator supported an amendment to prevent the Department of Justice from spending money to interfere with state medical cannabis laws.
Graham told Politico that same year that medical cannabis “could be life-changing” and that restrictions on research should be lifted.
At a CNN event in 2015 he said that while he’s “not a big fan of legalizing marijuana,” you can “count me in for medical marijuana” because he is “convinced that it helps people with epilepsy.”
Graham once referred to marijuana as “half as bad as alcohol” but added that didn’t “see a real need for me to change the law up here.”
Grassley, for his part, did cosponsor a limited CBD research bill, but that’s about as far as his openness to marijuana reform seems to extend.
“I’m cautiously optimistic about what can be accomplished with Senator Graham chairing Judiciary. He’s certainly more open-minded and dynamic when it comes to marijuana than Senator Grassley,” Michael Liszewski, principal of the cannabis-focused lobbying outfit The Enact Group, told Marijuana Moment. “However, as a former prosecutor he could be more insistent that DOJ enforce the letter of the existing law.”
It is also worth noting that Graham has not signed on to the current 115th Congress’s version of the far-reaching medical cannabis bill he previously cosponsored, nor has he gotten on board with growing bipartisan calls to more broadly amend federal marijuana law, something for which President Trump has voiced support.
“Moreover, he demonstrated some hyperbolic fears about state medical marijuana programs in a July 2016 subcommittee hearing,” Liszewski said, referring to a discussion on cannabis policy Graham chaired. “But even with all of that, we will have a better chance to move forward with legislation in the Senate than we had under Grassley.”
In all likelihood, medical cannabis legislation will be referred to the committee Graham is positioned to run during the next Congress. Bills referred to the Senate Judiciary in the 115th Congress include one to end federal marijuana prohibition, another that would remove CBD from the Controlled Substances Act (which Graham cosponsored) and the CARERS Act (a version of which he previously cosponsored). Grassley didn’t schedule hearings or votes on any of them.
Graham has made clear that marijuana isn’t a top priority for him, but his support for medical cannabis and his voting record suggest that the Judiciary Committee could become much more amendable sending reform bills to the Senate floor under his leadership at a time when advocates are more optimistic than ever about the prospects for federal change. At least, more amenable than it has been under Grassley.
And this latest development, combined with the fact that Democrats retook the House, adds to the increasingly favorable political landscape that marijuana reform advocates are entering in the next Congress.
In the meantime, Graham hasn’t yet been formally named as chairman, but he is next in the line of seniority among Republicans on the panel following Grassley’s switch to instead chair the Finance Committee and the retirement of Sen. Orrin Hatch (R-UT).
“As the chairman of the Senate Judiciary Committee, Lindsey Graham will have to make a choice when it comes to marijuana,” NORML political director Justin Strekal told Marijuana Moment. “Will he continue to perpetuate the failed policy of federal criminalization which resulted in over 659,000 Americans being handcuffed in 2017 alone, or will he be open to reform in a way the reflects the rapidly evolving nature of cannabis policy in the majority of states?”
“In the 116th Congress, there will be at least 66 Senators representing states with a regulated medical cannabis program,” Strekal added.
UPDATE: This story has been updated to include comments from representatives of NORML and the Marijuana Policy Project.
Photo courtesy of John Pemble.
GOP Senator Presses Treasury Secretary On Tax Credits For Marijuana Businesses
A Republican senator recently pressed the head of the Treasury Department on whether marijuana businesses qualify for a federal tax benefit.
During a Senate Finance Committee hearing on Wednesday, Treasury Secretary Steven Mnuchin was asked about the “opportunity zone” tax credit, which is meant to encourage investments in “distressed,” low-income communities through benefits such as deferrals on capital gains taxes.
Sen. James Lankford (R-OK), whose state’s voters approved a medical marijuana ballot measure in 2018, told Mnuchin that businesses that derive more than five percent of their profits from things like alcohol sales are ineligible for the tax credit, but there’s “not a definition dealing with cannabis businesses.”
“Are they within that five percent amount or are they not at all because there’s a federal prohibition on cannabis sales?” the senator asked.
“I’m going to have to get back to you on the specifics,” Mnuchin replied.
“That’d be helpful to get clarity because there are cannabis businesses across the country that, if they fall in opportunity zones, they’ll need clarification on that,” Lankford said. “When you and I have spoken about it before—it’s difficult to give a federal tax benefit to something that’s against federal law.”
Lankford, who opposes legalization and appeared in a TV ad against his state’s medical cannabis ballot measure, has raised this issue with the Treasury secretary during at least two prior hearings. When he questioned whether cannabis businesses qualify for the program last year, he clarified that he personally does not believe they should.
While Mnuchin’s department has yet to issue guidance on the issue, he said in response to the earlier questioning that his understanding is that “it is not the intent of the opportunity zones that if there is this conflict [between state and federal marijuana laws] that has not been cleared that, for now, we should not have those businesses in the opportunity zones.”
Mnuchin has also been vocal about the need for Congress to address the lack of financial resources available to state-legal marijuana businesses. Because so many of these companies are forced to operate on a largely cash-only basis, he said the Internal Revenue Service has had to build “cash rooms” to store their tax deposits.
“There is not a Treasury solution to this. There is not a regulator solution to this,” he said during one hearing. “If this is something that Congress wants to look at on a bipartisan basis, I’d encourage you to do this. This is something where there is a conflict between federal and state law that we and the regulators have no way of dealing with.”
Last week’s Finance Committee hearing was centered around President Trump’s Fiscal Year 2021 budget request, which separately includes a provision calling for the elimination of an appropriations rider that prohibits the Justice Department from using its fund to interfere in the implementation of medical cannabis laws as well as a continued block on Washington, D.C. spending its own local tax dollars to legalize marijuana sales.
Photo courtesy of C-SPAN.
American Bar Association Wants Protections For Marijuana Banking And Lawyers Working With Cannabis Clients
The American Bar Association (ABA) approved two marijuana-related resolutions during its midyear meeting on Monday.
The group’s House of Delegates voted in favor of proposals endorsing pending federal legislation to protect banks that service cannabis businesses and calling for a clarification of rules to ensure that lawyers will not be penalized for representing clients in cases concerning state-legal marijuana activity.
Under the banking resolution, ABA “urges Congress to enact legislation to clarify and ensure that it shall not constitute a federal crime for banking and financial institutions to provide services to businesses and individuals, including attorneys, who receive compensation from the sale of state-legalized cannabis or who provide services to cannabis-related legitimate business acting in accordance with state, territorial, and tribal laws.”
HOD Res 103D: Adopted. Urges enactment of laws to ensure that it shall not constitute a federal crime for banks and financial institutions to provide cannabis-related services. #ABAMidyear
— American Bar Association (@ABAesq) February 17, 2020
ABA added that “such legislation should clarify that the proceeds from a transaction involving activities of a legitimate cannabis-related business or service provider shall not be considered proceeds from an unlawful activity solely because the transaction involves proceeds from a legitimate cannabis-related business or service provider, or because the transaction involves proceeds from legitimate cannabis-related activities.”
A bill that would accomplish this goal was approved by the House of Representatives last year, but it’s currently stalled in the Senate, where it awaits action in the Banking Committee. That panel’s chair, Sen. Mike Crapo (R-ID) is under pressure from industry stakeholders to advance the legislation, but he’s also heard from anti-legalization lawmakers who’ve thanked him for delaying the bill.
“Passage of the [Secure and Fair Enforcement] Banking Act or similar legislation will provide security for lawyers and firms acting to advise companies in the industry against having their accounts closed or deposits seized,” a report attached to the ABA resolution states. “This will also foster the rule of law by ensuring that those working in the state-legalized legitimate cannabis industry can seek counsel and help prevent money laundering and other crimes associated with off-the-books cash transactions.”
“Currently, the threat of criminal prosecution prevents most depository institutions from banking clients, including lawyers, who are in the stream of commerce of state-legalized marijuana. This Resolution is necessary to clarify that such provision of legal and other services in compliance with state law should not constitute unlawful activity pursuant to federal law.”
The second marijuana-related resolution ABA adopted on Monday asks Congress to allow attorneys to serve clients in cannabis cases without facing federal punishment.
Text of the measure states that the association “urges Congress to enact legislation to clarify and explicitly ensure that it does not constitute a violation of federal law for lawyers, acting in accord with state, territorial, and tribal ethical rules on lawyers’ professional conduct, to provide legal advice and services to clients regarding matters involving marijuana-related activities that are in compliance with state, territorial, and tribal law.”
HOD Res 103B: Adopted as revised. Urges enactment of laws to ensure lawyers can provide legal advice and services for clients' legal marijuana-related activities. #ABAMidyear
— American Bar Association (@ABAesq) February 17, 2020
Such a change would provide needed clarity for lawyers as more states legalize cannabis for adult use. ABA’s own rules of conduct have been a source of conflict for attorneys, as it stipulates that they “shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent.” Federal law continues to regard marijuana as an illegal, strictly controlled substance.
An ABA report released last year made the case that there’s flexibility within that rule, however, as “it is unreasonable to prohibit a lawyer from providing advice and counsel to clients and to assist clients regarding activities permitted by relevant state or local law, including laws that allow the production, distribution, sale, and use of marijuana for medical or recreational purposes so long as the lawyer also advises the client that some such activities may violate existing federal law.”
A new report attached to the resolution states that “statutory guidance is needed that explicitly ensures that attorneys who adhere to their state ethics rules do not risk federal criminal prosecution simply for providing legal counsel to clients operating marijuana businesses in compliance with their state law.”
“This Resolution accomplishes this elegantly by harmonizing federal criminal liability with States’ ethical rules regarding the provision of advice and legal services relating to marijuana business. If a state has legalized some form of marijuana activity and explicitly permitted lawyers to provide advice and legal services relating to such state-authorized marijuana activity, such provision of advice and legal services shall not be unlawful under the Controlled Substances Act or any other federal law.”
Last year, ABA adopted another cannabis resolution—arguing that states should be allowed to set their own marijuana policies.
Border Patrol Union Head Admits Legalizing Marijuana Forces Cartels Out Of The Market
The head of the labor union that represents U.S. Border Patrol agents acknowledged on Friday that states that legalize marijuana are disrupting cartel activity.
While National Border Patrol Council President Brandon Judd was attempting to downplay the impact of legalization, he seemed to inadvertently make a case for the regulation all illicit drugs by arguing that cartels move away from smuggling cannabis and on to other substances when states legalize.
Judd made the remarks during an appearance on C-SPAN’s Washington Journal, where a caller said that “the states that have legalized marijuana have done more damage to the cartels than the [Drug Enforcement Administration] could ever think about doing.”
“As far as drugs go, all we do is we enforce the laws. We don’t determine what those laws are,” Judd, who is scheduled to meet with President Trump on Friday, replied. “If Congress determines that marijuana is going to be legal, then we’re not going to seize marijuana.”
“But what I will tell you is when he points out that certain states have legalized marijuana, all the cartels do is they just transition to another drug that creates more profit,” he said. “Even if you legalize marijuana, it doesn’t mean that drugs are going to stop. They’re just going to go and start smuggling the opioids, the fentanyl.”
One potential solution that Judd didn’t raise would be to legalize those other drugs to continue to remove the profit motive for cartels. Former presidential candidate Andrew Yang made a similar argument in December.
Federal data on Border Patrol drug seizures seems to substantiate the idea that cannabis legalization at the state level has reduced demand for the product from the illicit market. According to a 2018 report from the Cato Institute, these substantial declines are attributable to state-level cannabis reform efforts, which “has significantly undercut marijuana smuggling.”
Additionally, legalization seems to be helping to reduce federal marijuana trafficking prosecutions, with reports showing decreases of such cases year over year since states regulated markets have come online.
In his annual report last year, Supreme Court Chief Justice John Roberts also noted reduced federal marijuana prosecutions—another indication that the market for illegally sourced marijuana is drying up as more adults consumers are able to buy the product in legal stores.