He was a self-admitted outlier among his Democratic colleagues in the House. But this week, Rep. Joe Kennedy III (D-MA), a formerly avowed opponent of marijuana reform, announced that he now supports legalizing cannabis.
But what’s the inside story on how the young Democrat prepared to publicly announce his evolution on cannabis?
“Congressman Kennedy had thoughtful discussions with experts across the fields of health care, mental health, criminal justice and public safety,” Dan Black, Kennedy’s press secretary, told Marijuana Moment in an email. In addition to constituents, the congressman “engaged with advocacy groups on both sides of the issue, who offered him critical perspective.”
In announcing his newfound support for legalization in an op-ed published by the health news site STAT on Tuesday, the 38-year-old congressman acknowledged that he’s “remained skeptical” about ending prohibition and attributed that skepticism to his “ongoing work with the mental health and addiction communities.” But in addition to witnessing the harms of drug addiction, he has also come to realize the harms of criminalization when it comes to patients, veterans and communities of color.
“Over the past year, I’ve worked to rectify these perspectives,” Kennedy wrote in his op-ed. And to that end, national advocacy groups like the Drug Policy Alliance (DPA) helped him along the way, holding talks with the congressman and his staff and providing fact-based research demonstrating the benefits of legalization as well as the costs of the drug war.
Two DPA officials—Michael Collins, director of the group’s office of national affairs, and Jolene Forman, a staff attorney—gave Marijuana Moment an inside look at the calculated evolution of Kennedy’s policy position. It started, they said, with an email from one of the congressman’s staffers about six months ago.
“We were one of the groups that he reached out to,” Forman said in a phone interview on Tuesday. “His staffers were trying to understand the impacts of legalization, and when we write these laws as an advocacy organization, what kind of public health and criminal justice consequences we were taking into consideration because he has a very clear public health focus and he has a background as a prosecutor, so he’s focused on inequities in the criminal justice system.”
“We sent them a ton of information. We probably inundated them with information.”
After several conversations with staffers, DPA held direct talks with Kennedy—answered his questions, explained the inadequacies of simple decriminalization as opposed to broad legalization and discussed specific legislation like the Marijuana Justice Act that the congressman could have the chance to vote for in the next Congress.
Initially, Kennedy was hesitant, for several reasons, according to Forman: his family’s well-publicized history with substance use disorders, the “public health-related harms that he wanted to make sure weren’t exacerbated by legalization” and also racial disparities in arrests. The congressman “wanted to know why decriminalization wasn’t sufficient to addressing those disparities, so we really needed to demonstrate how decriminalization still leaves great disparities in marijuana enforcement and really doesn’t repair any of the past harms of unequal marijuana enforcement,” she said.
Black, from Kennedy’s office, said that “in the end what swayed him most was the fact that—despite stark differences of opinion on the benefits and harms of marijuana itself—nearly every person he spoke with agreed emphatically with the premise that federal marijuana policy is broken.”
“They also universally agreed that those failures are disproportionally impacting certain Americans over others—communities of color devastated by criminal justice inequities, those struggling with mental health left unprotected from addiction, or veterans left disadvantaged by our country’s bottleneck in medical research.”
Kennedy’s policy pivot could prove politically advantageous in the long-run. Though he hasn’t explicitly signaled any intention to run for higher office, he’s a young and ambitious lawmaker who some consider a viable future presidential candidate. Being out of step on cannabis—not just with his colleagues but also with 66 percent of the general public—could turn off reform-minded voters. To some, it’s no coincidence that Kennedy’s pro-legalization editorial ran on the same day that his home state of Massachusetts launched its legal adult-use marijuana market.
From health care to criminal justice, the failures of our nation's prohibition on marijuana can be seen in every corner of our society. Status quo isn’t working & states aren’t turning back. It’s time to legalize & regulate marijuana at the federal level. Read my @STATnews op/ed: https://t.co/q5ZHzYpRwz
— Rep. Joe Kennedy III (@RepJoeKennedy) November 20, 2018
“He wants to, I assume, have a lengthy political career—have more of a national profile,” said Collins, who was formally named as DPA’s top staffer in Washington, D.C. this week after serving in the role in an interim capacity following the retirement of longtime director Bill Piper. “Has the policy on marijuana changed in the past two years? No. But the politics has, and it’s become unacceptable for Democrats to oppose legalization.”
“I think part of this is, as I said, Kennedy sees the writing on the wall on this issue and doesn’t want to continue to be on the wrong side of history, which is I think why he came out in such a prominent way,” he said.
Kennedy said as much in an interview with CBS Boston affiliate WBZ4 on Wednesday, noting that “states are moving forward on this and they’re not rolling it back.”
“You’re seeing this in progressive states, you’re seeing this in conservative states, you’re seeing it from conservative legislators as well,” he said.
The news of Kennedy’s pro-legalization transformation took many advocates off guard. After all, he’s consistently voted against marijuana legislation—even bipartisan amendments like one to allow veterans to access medical cannabis or shield children and families who use non-intoxicating cannabidiol (CBD) extracts from federal enforcement. The announcement also sent waves through the prohibitionist community.
Kevin Sabet, president of the nation’s leading anti-legalization organization Smart Approaches to Marijuana—which was co-founded by former Rep. Patrick Kennedy (D-RI), a relative of the current congressman—didn’t respond to Marijuana Moment’s request for comment. But in a statement released Tuesday, he said he “spoke with Rep. Kennedy about this matter recently” and that the congressman isn’t a fan of “the profit-hungry marijuana industry.” In a tweet, Sabet said he talked to Kennedy “at length” Monday night ahead of the announcement and reiterated that the congressman “no fan” of commercial legalization.
I didn't say it wasn't. I said he's not a fan of the pot industry, or legalization. I have spoken to him lots (incl last night at length). Have you?
— Kevin Sabet (@KevinSabet) November 20, 2018
But Sabet’s last-minute chat wasn’t enough to ward off the legalization endorsement. While the congressman said he remains concerned about “the public health impact of marijuana,” he also said that legalization “would restore the federal government’s ability to regulate a powerful new industry thoroughly and thoughtfully.”
“Legalization is not a cure-all. Risks remain and regulatory vigilance is required. Criminal justice inequities will persist until adequate state-level reforms are sought nationwide. But legalization would guide states choosing to move forward with strong and clear national standards meant to ensure that all Americans are protected fully and equally.”
While Black said his boss “is not endorsing any specific piece of legislation” at this time, he’s “waiting to see what proposals emerge in the new Democratic House.” With major committee chairs already talking about holding votes on cannabis-related legislation, Kennedy will likely soon have the opportunity to make good on his call for reform—and actually vote for it.
Photo courtesy of Ted Eytan.
Marijuana Banking Bill Would Save Federal Money, Congressional Budget Office Says
The federal government would save money if a bipartisan bill to give marijuana businesses access to banks is approved, according to a report released by the Congressional Budget Office (CBO) on Friday.
The legislation, which cleared the House Financial Services Committee in a bipartisan vote of 45 to 15 in March, would change federal law to protect financial institutions that service the cannabis industry from being penalized by regulators. That reform would set off a chain of events, beginning with a likely increase in the number of banks accepting deposits from those businesses, CBO reasoned.
Assuming the bill takes effect near the end of the 2019 fiscal year, the office estimates that starting in 2022, banks would see a $1.2 billion increase in deposits, and credit union deposits would grow by $200 million. By 2029, the amounts “would rise to $2.1 billion and $350 million, respectively.”
Because those deposits would have to be insured through the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA), the CBO took into account the possibility that individual financial institutions will fail, and the estimated cost of resolving those failures is $5 million.
That said, those direct spending costs would be “offset by assessments levied on insured financial institutions,” which would amount to about $9 million.
“As a result, CBO estimates, H.R. 1595 would decrease net direct spending by $4 million over the 2019-2029 period,” the office reported.
Rep. Ed Perlmutter (D-CO), the bill’s chief sponsor, told Marijuana Moment that its enactment would have benefits beyond fiscal savings.
“Getting cash off our streets and making our communities safer will come at no cost to the federal government and actually save money while providing a much-needed long-term banking solution for legitimate marijuana businesses across the country,” he said.
“This CBO score should only increase the significant momentum in Congress behind passing the SAFE Banking Act,” Neal Levine, CEO of the Cannabis Trade Federation, told Marijuana Moment. “It is now apparent that we can help diminish a serious threat to public safety at no net cost to the federal government. We look forward to the bill passing through the House and hope the Senate will follow suit.”
There are some implementation costs to take into account, CBO says. The administrative costs are estimated to be $3 million. But the FDIC and NCUA are able to charge premiums on the financial institutions they regulate to cover much of those costs. The total net administrative costs would, therefore, be about $1 million.
The Federal Reserve would also have to spend funds to implement the bill, and that would reduce remittances to the Treasury Department. Those remittances are considered revenue, which is expected to decrease by about $1 million if the legislation is implemented.
Then there are costs related to other provisions of the bill. Financial regulators would have to update and issue new guidance, which would “cost less than $500,000 over the 2019-2024 period.”
The legislation also requires the Government Accountability Office to study barriers to entry in the marijuana industry and to financial services for minority- and women-owned cannabis businesses. The costs are estimated to be less than $500,000 annually from 2020 to 2024.
The CBO also estimated that enacting the legislation “would not increase on-budget deficits by more than $5 billion in any of the four consecutive 10-year periods beginning in 2030.”
The CBO outlined “several noteworthy areas of uncertainty” that could change the calculus.
1. New guidance from federal financial regulators could be more or less stringent than existing guidance implemented under the Obama administration, which could impact the amount of deposits banks and credit unions will receive.
2. Data on cannabis-related deposits is currently “limited,” as federal restrictions have forced marijuana businesses to operate on a largely cash basis. That means CBO’s estimates on the amount of deposits financial institutions will see could end up being “greater or smaller.”
3. If those estimates do end up being different, costs associated with the bank and credit union insurance funds “could be higher or lower depending on the amount of premium collections and capital deposits and on changes in the resolution costs for financial institutions.”
Sahar Ayinehsazian, an associate attorney at Vicente Sederberg LLP who specializes in cannabis banking, told Marijuana Moment that most of the figures lined up with her expectations. However, given that many marijuana businesses have gravitated toward credit unions rather than banks, she said the estimate increase in deposits to those financial institutions may well end up being larger.
“Looking at the chances of this legislation passing from an economic standpoint, I think [the CBO score is] good news,” she said.
Other advocates agreed that the CBO estimate should help efforts to advance the bill.
“For years, cannabis advocates have been preaching the net benefits SAFE Banking would have on consumers, patients, financial institutions, regulators and taxpayers. This CBO cost estimate confirms that,” Michael Correia, director of government relations for the National Cannabis Industry Association, told Marijuana Moment. “The increase of insured deposits, coming from the added certainty this legislation brings, far outweighs the minor administrative costs to implement this bill.”
The House marijuana banking bill currently has 184 cosponsors, and a companion Senate version has 30 lawmakers signed on. The committee of jurisdiction in the upper chamber has not yet set a hearing or a vote, but pressure is increasing.
Banking associations from all 50 states urged the Senate to take up the legislation earlier this week. Other organizations that have called for a resolution to the cannabis banking dilemma include the National Association of Attorneys General, which has endorsed the bill, and the National Association of State Treasurers, representing state treasurers and finance officials, which adopted a resolution last week in favor of the legislation’s passage.
Want 4 million more reasons why members of Congress should support the #SAFEBankingAct, which would allow cannabis businesses to access the banking system in the 33 states where it’s legal? @USCBO says the legislation will save taxpayers $4M over 10 years.
— American Bankers Association (@ABABankers) May 24, 2019
The new analysis is just the third time that the CBO, which is mandated to score bills that pass full committees, has issued a report on the economic impact of standalone cannabis legislation. The agency scored two marijuana research bills that cleared committees last year.
This story was updated to include comment from Perlmutter and Correia.
Federal Small Business Administration Pressed On Supporting Marijuana Industry
Sen. Jacky Rosen (D-NV) pressed a federal official responsible for advocating for small businesses on Wednesday about whether existing laws and regulations are preventing the growth of state-legal marijuana markets.
The line of questioning comes as members of Congress are preparing legislation aimed at removing barriers to small business assistance for cannabis industry participants.
The senator said at a hearing of the Senate Small Business and Entrepreneurship Committee that her state’s legal industry is attracting small businesses and entrepreneurs who are selling millions of dollars of product each month. She asked Major Clark, acting chief counsel of the office of advocacy at the Small Business Administration (SBA), about the unique barriers these companies face under federal prohibition.
“Senator, that’s a difficult question,” Clark replied. “We have not actually studied the issue of marijuana in that regard, and we have not because the federal government has not yet legalized it.”
“We do, in conversations with a lot of businesses, get inquires as to what they can do and how they can do it. But to actually do an analysis of it, we have not yet done that,” he said. “I’m sure that as soon as the federal government decides to legalize this substance, we will begin to study its impact and the ability to use it in a more economical context within the state.”
Watch the conversation about small business assistance for cannabis operators at 35:50 in the video below:
Rosen followed up to get Clark’s opinion about whether marijuana companies would benefit from some of the guidelines and resources the SBA offers to small businesses in other industries.
“These types of businesses can benefit from some of these types of things, but again, because this issue is an issue that has not reached the surface of being legalized, we have actually stayed away from trying to advise these businesses on these particular aspects,” he said.
Nevada’s cannabis industry cannot thrive without access to financial services. At yesterday’s @SmallBizCmte hearing, I asked what steps @SBAgov is taking to break down regulatory barriers for our nation’s legal marijuana businesses to ensure they can continue to grow. pic.twitter.com/lyfXGwpoRf
— Senator Jacky Rosen (@SenJackyRosen) May 24, 2019
Sen. James Lankford (R-OK), chair of the committee, weighed in on the issue after the Rosen’s time expired, saying that he recognizes the difficulty that federal agencies face when it comes to regulating a controlled substance.
“It is a unique challenge dealing with a Schedule I drug on the federal side and to also know that some states, including my own, have said that they want to allow it,” Lankford said, referring to the medical cannabis law that Oklahoma voters approved in 2018. “And the federal government and the [Food and Drug Administration] continues to study it and say there’s no medicinal gain from this product.”
“It’s a Schedule I drug. I get it,” he said. “The science, and whether it is SBA or whoever it is continues to be able to deal with that.”
While lawmakers push to get marijuana businesses access to federally authorized financial services, industry advocates say that SBA-specific reform legislation may be on the horizon.
The day after Rosen questioned the SBA official about cannabis policy, Khurshid Khoja, a board member for the National Cannabis Industry Association, said at a press conference on Capitol Hill that a bill was being drafted to “essentially get SBA services for cannabis businesses and for cannabis businesses from disproportionately impacted communities.”
Watch the SBA reform discussion at about 32:15 in the video below:
“The House Small Business Committee is looking into the issue and is interested in holding a hearing and drafting legislation this summer that addresses these issues,” a cannabis policy lobbyist who didn’t wish to be named in order to discuss plans that are in development, told Marijuana Moment separately.
Photo courtesy of Brian Shamblen.
GOP Congressman Exposes Flaws In VA Marijuana Research Projects
Rep. Matt Gaetz (R-FL) emphasized the importance conducting clinical trials on medical marijuana at the U.S. Department of Veterans Affairs (VA) on Tuesday, a topic on which he has often focused.
He also criticized the catch-22 of VA cannabis research, arguing that while the department is able to conduct clinical trials on marijuana, it doesn’t effectively publicize those studies, leaving veterans who might be interested in participating in the dark.
The congressman started by asking whether Mike Colston, director of mental health policy and oversight at the Department of Defense, felt that giving veterans access to medical cannabis could reduce suicides.
Colston said “there’s far more research to be done” and that there’s “insufficient evidence for or against that position.”
Gaetz cited research showing reductions in opioid use in states that have loosened cannabis laws, and he questioned whether “the current offramp for opioid addiction,” which typically involves prescribing long-term opioids that are less potent and less prone to abuse, “is a more effective offramp than medical cannabis.”
“I just think those are the three evidence-based therapies right now that meet the medical bar,” Colston said, referring to bupenehprine, methadone and naltrexone. “Obviously more research can change that.”
That prompted Gaetz to expand on VA policy as it pertains to medical cannabis. He asked for confirmation that the department’s doctors cannot currently recommend marijuana to veterans in states where it’s legal.
They can’t do that because “there’s a federal law against it right now,” Keita Franklin, national director of suicide prevention at the VA, claimed. (This has been a point of contention for legalization advocates, who argue that only the VA’s own internal administrative policies, and not an overarching federal law, blocks such recommendations.)
But VA officials can conduct clinical trials on marijuana, Franklin said.
“We have two ongoing research studies going on right now in this space,” she said. “I think we are open to research, yes.”
The congressman wanted to know if the VA publishes information about these studies and where to find it. The VA official wasn’t sure—and that was exactly Gaetz’s point.
“I don’t think anyone is clear, which is the source of my frustration because I think that there are a lot of these clinical trials that are seeking veterans,” he said. “The VA, due to a lack of clarity, won’t publicize that information or make it available, and then we’re unable to do the research that Captain Colston says is necessary to advance additional options for veterans trying to get off opioids and to stop them from killing themselves.”
Lawmakers have introduced legislation this session that would allow VA doctors to issue medical cannabis recommendations and require the department to conduct clinical trials on the plant’s potential therapeutic benefits for veterans, among other cannabis and veterans-related bills.
But if the VA is mandated to research the plant, Gaetz wants the department to better publicize the studies so that would-be participants actually know about them.
Photo courtesy of YouTube.