Connect with us

Politics

State Financial Regulators Press Congress To Allow Marijuana Banking Access

Published

on

The top financial regulators in 25 states and U.S. territories are joining together to pressure Congress to pass legislation allowing marijuana businesses to store their profits in banks.

“It is incumbent on Congress to resolve the conflict between state cannabis programs and federal statutes that effectively create unnecessary risk for banks seeking to operate in this space. The looming threat of civil actions, forfeiture of assets, reputational risk, and criminal penalties is not conducive to a legal, regulated marketplace,” the officials wrote to House and Senate Democratic and Republican leaders in a letter on Monday.

“We urge Congress to consider legislation that creates a safe harbor for financial institutions to serve a state-compliant business or entrusts sovereign states with the full oversight and jurisdiction of marijuana-related activity,” the regulators continued. “Establishing a safe harbor for banks to serve these entities would help reduce the risk associated with large cash-and-carry operations and bring the safeguards, activities, and sales associated with this business into the regulatory reporting compliance framework.”

Although a growing number of states are moving to legalize cannabis for recreational or medical use, continuing federal prohibition leaves many banks reluctant to work with marijuana businesses, forcing growers, processors and retailers to largely operate on a cash-only basis—which can make them targets for robberies.

In March, the House Financial Services Committee approved a bill to shield banks from being punished by federal regulators for providing financial services to marijuana businesses operating in accordance with state laws. Advocates expect the legislation, which cleared the panel in a bipartisan vote of 45-15, to be considered on the floor within the next several weeks.

Last week, more than a fifth of the U.S. Senate filed identical cannabis banking legislation, though it has not yet been scheduled for a hearing or a vote.

The new letter from state officials was led by Pennsylvania Secretary of Banking and Securities Robin L. Wiessmann and is co-signed by regulators from states such as Alaska, Colorado, Georgia, Massachusetts, New York, Oklahoma and Utah, among others.

“A majority of states now have medical marijuana programs and it has become increasingly necessary to craft policy to respond to emerging challenges in this rapidly growing industry,” Wiessmann said in a press release. “Establishing a safe harbor for banks to serve these entities would help reduce the risk associated with large cash-and-carry operations and bring the safeguards, activities, and sales associated with this business into the regulatory reporting compliance framework.”

Wiessmann led a group of 13 state financial regulators in sending a similar letter to Congress last year.

Trump administration officials have indicated they’d like Congress to resolve the issue sooner rather than later.

“There is not a Treasury solution to this. There is not a regulator solution to this,” Treasury Sec. Steven Mnuchin said during a House hearing last week. “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.”

In a separate hearing he pledged to have his staff review the pending cannabis banking legislation and provide a possible endorsement within two weeks.

Earlier this month, three Federal Reserve Bank presidents called on Congress to solve the issue.

In February, Federal Reserve Chairman Jerome Powell said during a Senate hearing that it “would be great to have clarity” on cannabis banking.

“Financial institutions and their regulators and supervisors are in a very difficult position here with marijuana being illegal under federal law and legal under a growing number of state laws,” he said. “It puts financial institutions in a very difficult place. It puts supervisors in a difficult place too.”

In the new letter to congressional leadership, the state banking officials wrote that “barriers for financial institutions to serve marijuana and ancillary businesses create a commercial risk from the lack of robust and comprehensive regulation and supervision and a diminished ability to identify operators acting to circumvent federal and state licensing and regulatory frameworks.”

“This raises concerns with respect to tracking the flow of funds, issues of public safety because of cash volume, and a loss of economic activity, workforce development and community development opportunities,” they wrote. “We must work together to look for solutions rather than ignoring the new policy landscape.”

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

Nine Members Of Congress Tell DEA To Revise Proposed Hemp Rule On THC Content

Published

on

Nine members of Congress sent a letter to the Drug Enforcement Administration (DEA) on Tuesday, urging the agency to revise its proposed hemp regulations.

DEA released an interim final rule (IFR) for the crop in August, and it said the regulations were simply meant to comply with the 2018 Farm Bill that legalized hemp and its derivatives. But stakeholders and advocates have expressed serious concerns about certain proposals, arguing that they could put processors at risk of violating federal law and hamper the industry’s growth.

Reps. David Joyce (R-OH) and Denver Riggleman (R-VA) led the letter and pointed specifically to a provision of DEA’s IFR that could impact processing hemp extracts. The agency stipulated that “any such material that contains greater than 0.3% of Δ9-THC on a dry weight basis remains controlled in schedule I.”

That’s problematic, the lawmakers said, because in many cases the process of extracting cannabinoids from hemp temporarily causes THC levels to increase beyond that threshold. And so while Congress intended to legalize those extracts, businesses that produce the materials could find themselves inadvertently breaking the law.

“Our offices have received countless calls from constituents involved in the hemp industry who are extremely fearful that simply following the provisions of the Farm Bill will result in criminal liability under the IFR,” the lawmakers’ letter states. “The IFR will likely have the effect of inhibiting these nascent state hemp programs thereby harming those American companies and workers who chose to pursue careers in the hemp industry and made significant investments to effectuate those aspirations.”

Therefore, the lawmakers are “requesting a resolution to this issue as quickly as possible,” adding that “DEA must revise the IFR to eliminate the ambiguities set forth above and provide peace of mind to all Americans who have chosen to pursue a career in the hemp industry.”

Reps. Rodney Davis (R-IL), Morgan Griffith (R-VA), Glenn Grothman (R-WI), Don Young (R-AK), Anthony Gonzalez (R-OH), Earl Blumenauer (D-OR) and Matt Gaetz (R-FL) also signed the letter.

A public comment period on DEA’s proposed rules closed on Tuesday. It saw more than 3,300 submissions, many of which focused on issues with the “work in progress” hemp THC issue.

“This IFR’s criminalizes work in progress hemp extract, a fundamental component of any consumer hemp/CBD product, and will negatively impact the hemp/CBD industry at a time when financial pressure is already high,” one commenter wrote. “Hemp and subsequent extracts are not controlled substances.”

Another issue identified by more than 1,000 commenters concerns delta-8 THC. The most widely known cannabinoid is delta-9 THC, the main component responsible for creating an intoxicating effect, but delta-8 THC from hemp is also psychoactive and is an object of growing interest within the market.

Because DEA’s proposed regulations state that all “synthetically derived tetrahydrocannabinols remain schedule I controlled substances,” some feel that would directly impact the burgeoning cannabinoid, as its converted from CBD through the use of a catalyst—and that could be interpreted as a synthetic production process.

In any case, it’s not clear whether DEA deliberately crafted either of these rules with the intent of criminalizing certain hemp producers—but stakeholders and advocates aren’t taking any chances.

The U.S. Department of Agriculture (USDA) has faced separate criticism over its own proposed hemp rules, though it has been more proactive in addressing them. Following significant pushback from the industry over certain regulations it views as excessively restrictive, the agency reopened a public comment period, which also closed this month.

USDA is also planning to distribute a national survey to gain insights from thousands of hemp businesses that could inform its approach to regulating the market.

Read the congressional coalition’s letter to DEA on its hemp rule below: 

DEA IFR Letter by Marijuana Moment

State And Local Marijuana Regulators Demand Congress Prioritize Federal Legalization Bill

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.
Continue Reading

Politics

Pennsylvania House Votes To Protect Medical Marijuana Patients From DUI Charges

Published

on

The Pennsylvania House of Representatives approved an amendment on Tuesday that would protect medical marijuana patients from being penalized under the state’s DUI laws for using their legal medicine.

The proposal cleared the chamber as an amendment to a broader piece of legislation concerning motor vehicle policies. It passed in a 109-93 vote.

As it stands, registered medical cannabis patients can be convicted of driving under the influence of a controlled substance if THC metabolites are detected in their blood. That’s despite the fact that marijuana can remain present in the body well after someone is considered impaired.

The House-approved amendment, which is now attached to a bill previously passed by the Senate, exempts “marijuana used lawfully in accordance with” the state’s medical cannabis law from DUI statutes.

“I think that you can ask any veteran or anybody that’s using medical cannabis right now, if they took the prescription on Monday, [on] Wednesday, they’re not high,” Rep. Ed Gainey (D) said in a floor speech before the vote. “And if they got pulled over, they darned shouldn’t be charged for being intoxicated or under the influence of medical marijuana.”

“I think we’re putting an undue burden on the people of Pennsylvania if we’re saying this is what we want to do after we fought so hard to pass medical marijuana and we know what it’s done to help the people of Pennsylvania,” he said.

The amendment is similar in intent to separate standalone legislation introduced by Sen. Camera Bartolotta (R) in June to end the “zero tolerance” DUI policy for medical marijuana.

While Pennsylvania legalized medical cannabis in 2016, with the first dispensaries opening two years later, the law has not caught up as it concerns impaired driving. A person can test positive for THC for weeks after last consuming marijuana, rendering traditional roadside tests incapable of determining active impairment.

Several legal cannabis states have enacted per se THC limits in blood, similar to blood alcohol requirements. However, evidence isn’t clear on the relationship between THC concentrations in blood and impairment.

A study published last year, for example, concluded that those who drive at the legal THC limit—which is typically between two to five nanograms of THC per milliliter of blood—were not statistically more likely to be involved in an accident compared to people who haven’t used marijuana.

Separately, the Congressional Research Service in 2019 determined that while “marijuana consumption can affect a person’s response times and motor performance… studies of the impact of marijuana consumption on a driver’s risk of being involved in a crash have produced conflicting results, with some studies finding little or no increased risk of a crash from marijuana usage.”

The modest cannabis DUI reform approved by the Pennsylvania House comes amid repeated calls from the state’s leaders to more broadly legalize marijuana for adult use.

Last week, Gov. Tom Wolf (D) in a speech stressed that marijuana reform could generate tax revenue to support the state’s economic recovery from the coronavirus pandemic and that ending criminalization is necessary for social justice.

That marked the third time in three months that the governor has held events focused on making the case for legalization. Last month, he took a dig at the Republican-controlled legislature for failing to act on reform in the previous session. And in August, he suggested that the state itself could potentially control marijuana sales rather than just license private retailers as other legalized jurisdictions have done.

Lt. Gov. John Fetterman (D), a longstanding legalization advocate, has been similarly vocal about his position. In speeches and on social media, the official has expressed frustration that Pennsylvania has yet to enact the policy change, especially as neighboring like New Jersey are moving in that direction.

He said last month that farmers in his state can grow better marijuana than people in New Jersey—and that’s one reason why Pennsylvania should expeditiously legalize cannabis before voters next door in the Garden State enact the policy change this November.

Fetterman also recently hosted a virtual forum where he got advice on how to effectively implement a cannabis system from the lieutenant governors of Illinois and Michigan, which have enacted legalization.

While Wolf initially opposed adult-use legalization, he came out in support of the reform last year after Fetterman led a statewide listening tour last year to solicit public input on the issue.

Shortly after the governor announced that he was embracing the policy change, a lawmaker filed a bill to legalize marijuana through a state-run model.

A majority of Senate Democrats sent Wolf a letter in July arguing that legislators should pursue the policy change in order to generate revenue to make up for losses resulting from the COVID-19 pandemic.

State And Local Marijuana Regulators Demand Congress Prioritize Federal Legalization Bill

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.
Continue Reading

Politics

Montana Supreme Court Rejects Challenge To Marijuana Legalization Initiative

Published

on

The Montana Supreme Court on Wednesday rejected a lawsuit seeking to invalidate a marijuana legalization initiative that will appear on the state’s November ballot.

With weeks before the election, opponents asked the court to quash the measure, arguing that because it involves appropriating funds, it violates state statute on citizen initiatives.

The court didn’t weigh in on the merits of the challenge; rather, it said the petitioners with the campaign Wrong for Montana (WFM) failed to demonstrate “urgency or emergency factors” that would justify moving the case into its jurisdiction instead of going through trial and appeals courts first.

It left the door open for the opponents to take its challenge through the traditional process. Brian Thompson, the attorney representing the plaintiffs, told Marijuana Moment that they now intend to file the suit in district court “soon,” but he wasn’t able to provide an exact timeline.

“We express no opinion on the merits of WFM’s constitutional challenge, nor to its right to pursue this challenge in district court,” the justices wrote. “However, WFM’s claim does not present an appropriate basis on which to invoke this Court’s original jurisdiction. Even if it did, WFM has wholly failed to establish that urgency or emergency factors make litigation in the trial courts and the normal appeal process inadequate.”

Dave Lewis, policy advisor to the pro-legalization New Approach Montana, said in a press release that this “was an easy decision for the Montana Supreme Court.”

“At best, this lawsuit was a frivolous longshot,” he said. “At worst, it was an intentional effort to create confusion right before the election.”

The measure in question would establish that adult-use marijuana system. The lawsuit did not target a separate, complementary initiative that would specify that only those 21 and older could participate in the legal market.

It is the case that state statute says citizens “may enact laws by initiative on all matters except appropriations of money and local or special laws” and that the initiative does allocate cannabis tax revenue to certain programs. But prior measures that have appeared on the state’s ballot have done so as well.

Under the proposal, half of the public revenue generated from marijuana sales would go toward environmental conservation programs—a provision that earned the campaign key endorsements last month.

The initiative is already on the ballot and voting has started, so presumably if the court had sided with the plaintiffs, the votes simply wouldn’t have been counted or implementation would have been prevented. It is also possible that a court could rule that monies raised by legal cannabis sales under the initiative would simply into the state’s general fund instead of toward the specific programs delineated in its current text.

“We’re receiving strong support from voters across the state,” Lewis, who is a former Republican state senator and former budget director for three Montana governors, said. “Instead of making a coherent argument against the initiatives, our opponents tried to deprive Montanans of their constitutional right to a citizen initiative process.”

“Our opponents are desperately throwing everything at the wall in the hope that something sticks,” he added. “They’re resorting to fear tactics and misinformation because they know that a majority of Montana voters are ready to vote yes on legalizing, regulating, and taxing marijuana for adults 21 and over.”

In neighboring Nebraska, the state Supreme Court did rule last month that a measure to legalize medical cannabis that had qualified for the November ballot could not proceed because it violated the state’s single-subject rule for ballot initiatives.

Recent polling indicates that Montana voters are positioned to approve the legalization proposal. Forty-nine percent of respondents in a survey released last week said they support the policy change, with 39 percent opposed and 10 percent remaining undecided.

This story has been updated to include comment from Thompson.

Read the Montana Supreme Court’s ruling on the marijuana challenge and the original lawsuit below:

Montana Marijuana Lawsuit by Marijuana Moment

Colorado Governor Tells Texas Not To Legalize Marijuana So His Own State Can Get More Tourists

Photo elements courtesy of rawpixel and Philip Steffan.

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.
Continue Reading
Advertisement

Marijuana News In Your Inbox

Support Marijuana Moment

Marijuana News In Your Inbox

Do NOT follow this link or you will be banned from the site!