A board member and former chairman of the federal National Credit Union Administration (NCUA) is sharply criticizing Congress for failing to reform marijuana laws, and he announced on Thursday that he will be taking steps to push lawmakers to enact policy changes to help financial institutions and stakeholders caught in the federal-state cannabis conundrum.
NCUA’s Rodney Hood said at the PBC Conference that he’s “concerned that the legal and regulatory infrastructure surrounding the cannabis industry is not evolving quickly enough,” and congressional inaction is largely to blame. He also said that he feels legalization at the federal level is an inevitability.
To help fill the policy gap, the regulator is calling for the creation of an interagency working group of federal financial regulatory agencies to develop a “principles-based approach to cannabis banking” and “deliver a preliminary regulatory framework that we can share with other regulators and members of Congress who share our concern about addressing these problems.”
“Let me be clear about where I stand,” he said, according to his remarks as prepared for delivery that were obtained by Marijuana Moment. “It is time for federal action to clarify and harmonize the laws and regulations surrounding the state-legal cannabis industry and marijuana-related businesses, so that this industry can take part in the legitimate financial services industry.”
Hood is a longtime regulator at NCUA, an independent federal agency that provides deposit insurance to credit unions. He served from 2005 to 2009 under the Bush administration, was named chairman by President Donald Trump in 2019 and served for two years before transitioning to a board position.
That long-term service under multiple administrations makes Hood’s comments on marijuana policy all the more noteworthy. Rarely do regulators openly take such forceful policy positions, especially those that aren’t necessarily shared by the administrations with which they work.
Hood didn’t endorse any particular pieces of legislation, though his remarks do specifically mention the Secure and Fair Enforcement (SAFE) Banking Act, and he said Congress needs to effectively “harmonize” federal and state cannabis laws so that the industry is no longer kneecapped and financial institutions don’t have to fear being penalized for servicing marijuana businesses.
He also spoke more broadly about the prospect of federal legalization and characterized it as an inevitability.
“I’ve heard a variety of perspectives, but there’s one common refrain: they all agree that legalization is a matter of when, not if—and they urge federal action to get it done,” he told attendees at the conference on cannabis banking, payments and compliance. “Legalization in some form is going to happen, and the abdication of responsibility to address these issues in Washington is simply ludicrous. This is precisely the time we need leadership at the federal level to steer this ship in the right direction.”
“It’s simply a remarkable social and cultural change that has taken place right before our eyes,” Hood said, referring to the growing number of states changing their laws, “and it’s only going to continue to develop over the coming years.”
“Yet while this revolution has unfolded, federal law surrounding marijuana and cannabis-derived products has barely changed. There have been some welcome changes at the federal level, like delisting hemp from the list of controlled substances in the 2018 Farm Bill, but even those changes have been slow to arrive and relatively marginal. And there’s been no meaningful legal change on the federal level when it comes to marijuana, despite all the rhetoric around marijuana legalization federally.”
One key consequence of the federal cannabis stalemate is that this explosive industry is currently left without traditional financial tools or access to the banking system, Hood said, pointing out that federal data indicates fewer than 200 credit unions report servicing state-legal marijuana businesses despite NCUA representing more than 5,000 financial institutions.
He said that disconnect “can only be described as a serious market failure.” And Hood intends to do what he can both internally at NCUA and on an interagency level to promote solutions.
NCUA has its own cannabis banking workgroup, the regulator said, and he will be working with them to “determine what we might do next to better address the challenges to cannabis banking on our side.”
But a broader effort that brings in multiple federal financial agencies is necessary, he argued. And helpfully, there’s an existing infrastructure for that coordination through the Federal Financial Institutions Examination Council. Hoods wants the agencies that are part of the council to “take the lead on this issue and to start developing a principles-based approach to cannabis banking.”
Further, the official said he will be personally lobbying Congress in his capacity as an NCUA board member to enact reform, while also pushing credit union trade associations to similarly pressure lawmakers to take up the issue.
“The problem is not with the financial institutions themselves; many of them would be happy to provide services to the industry, but they’re unsure of how to proceed given the limited FinCEN guidance,” Hood said, referring to an Obama-era memo that laid out how banks can serve cannabis businesses. “We have this promising industry that’s developing and growing rapidly—yet no way for the people who work in this industry to conduct the most fundamental business operations through legitimate financial channels. That is, frankly, an untenable situation.”
“Here’s a basic reality: as a rule, regulators really don’t like to get out too far ahead of the policy process. We always seek to respect the existing statutes, and to defer to Congress as the policy-making arm of the government. However, there are times when an independent regulator in the executive branch needs to step forward to provide leadership, or at least nudge things along. I believe that’s the case today with marijuana and the financial services industry.”
Advocates are largely pushing for legislation that would comprehensively reform federal marijuana laws, but there are some who feel Congress should first advance bipartisan cannabis banking legislation because it stands a stronger chances of passage and could help resolve critical public safety issue.
Hood said the SAFE Banking Act is an example of a proposal that he’s heard could improve the situation for financial institutions and clients. That legislation has passed the House on multiple occasions, most recently in April, but it’s so far languished in the Senate as leading lawmakers prioritize broader reform.
Hood also mentioned that, last year, NCUA separately issued a memo explaining issues related to providing financial services to hemp businesses after the crop was federally legalized.
Other panelists who are set to participate in the PBC Conference include Congressional Cannabis Caucus Co-chair Rep. Barbara Lee (D-CA), Rep. Eleanor Holmes Norton (D-DC) and several current and former Internal Revenue Service officials.
Read Hood’s full remarks as prepared for delivery below:
Rodney E. Hood
National Credit Union Administration
PBC Conference 2021:
Payments, Banking, Compliance in the Cannabis Industry
September 9, 2021
Thank you very much, and it’s a pleasure to join you today.
I was sworn in as the chairman of the NCUA board in 2019, but this is actually my second term of service on the board. I was appointed to the NCUA in 2005 under President Bush; I served a four-year term that ended in 2009. I can tell you that serving two appointments at the same agency, separated by a decade, is one way to gain a unique vantage point on how rapidly things can change.
For example, when I first served on the NCUA board, I don’t know that I would have attended this type of conference. Of course, that’s assuming I would have been invited in the first place.
At that time, several states had already allowed qualified patients to access and use marijuana for medicinal purposes, but as a regulator I would not have considered the banking challenges of the cannabis industry to be at the top of my list of concerns. Of course, during that time we were also facing the housing crisis, the financial industry meltdown, and the subsequent recession and recovery – so we were focused on some particularly compelling priorities.
Well, here we are today, which is a testament to how fast things can evolve in a relatively short time. I take that idea of change and evolution as my theme today, because as a regulator, I’m concerned that the legal and regulatory infrastructure surrounding the cannabis industry is not evolving quickly enough.
And so as not to leave you in suspense, let me be clear about where I stand: it is time for federal action to clarify and harmonize the laws and regulations surrounding the state-legal cannabis industry and marijuana-related businesses (MRB), so that this industry can take part in the legitimate financial services industry.
Growth of an industry, and new challenges
For our purposes here today, I don’t need to recount all of the statistics about the number of states that have legalized cannabis in one form or another, or the explosive growth of the state-legal cannabis industry over the last decade. If you weren’t already familiar with those facts and statistics, you wouldn’t be here. It’s simply a remarkable social and cultural change that has taken place right before our eyes, and it’s only going to continue to develop over the coming years.
Yet while this revolution has unfolded, federal law surrounding marijuana and cannabis-derived products has barely changed. There have been some welcome changes at the federal level, like delisting hemp from the list of controlled substances in the 2018 Farm Bill, but even those changes have been slow to arrive and relatively marginal. And there’s been no meaningful legal change on the federal level when it comes to marijuana, despite all the rhetoric around marijuana legalization federally.
As a result, we’ve seen only limited development of the basic commercial banking infrastructure needed to provide financial services to this rapidly growing industry. Looking at the data from the Treasury Department’s Financial Crimes Enforcement Network, or FinCen, as of the end of last year there were only 515 U.S. banks and 169 credit unions providing banking services to MRBs in accordance with the 2014 FinCEN guidelines, which as you all know is currently the only legitimate way for cannabis businesses to secure depository accounts with financial institutions.
Let’s think about those numbers. My agency, the NCUA, regulates the system of federally insured credit unions, which includes more than 5,000 institutions. Yet only 169 of those are providing services to one of the fastest growing industries in the nation? That can only be described as a serious market failure.
The problem is not with the financial institutions themselves; many of them would be happy to provide services to the industry, but they’re unsure of how to proceed given the limited FinCEN guidance. The guidance from FinCen, along with the Justice Department’s guidance in the 2013 Cole memo, which that Cole memo was rescinded anyway, was at least a start. But those were published in 2014 and 2013, respectively—almost a decade ago—and are too vague in any event to give financial institutions the clarity and confidence they need to move forward with cannabis banking beyond providing basic bank account services.
Which means we have this promising industry that’s developing and growing rapidly – yet no way for the people who work in this industry to conduct the most fundamental business operations through legitimate financial channels. That is, frankly, an untenable situation. In stating these facts, I’m not telling you anything you don’t know – again, it’s why we’re here today. The more critical question centers around what needs to happen next.
Here’s a basic reality: as a rule, regulators really don’t like to get out too far ahead of the policy process. We always seek to respect the existing statutes, and to defer to Congress as the policy-making arm of the government. However, there are times when an independent regulator in the executive branch needs to step forward to provide leadership, or at least nudge things along. I believe that’s the case today with marijuana and the financial services industry.
The hemp precedent
I have some relevant experience here based on the work we did at NCUA two years ago to normalize banking services for hemp-related businesses. One of the first regulatory reforms I undertook at the request of Senator McConnell was to push for interim regulatory guidance on providing financial services to hemp-related businesses. Many credit union industry leaders were focused on this issue, and we knew we needed to take action.
After Congress legalized hemp as an agricultural commodity, removing it from the list of controlled substances and allowing its cultivation in accordance with applicable State Plans, there remained a lack of clarity about the industry’s regulatory status while we awaited new rules from the U.S. Department of Agriculture. Keep in mind that the 2018 Farm Bill only addresses the cultivation of hemp — it is silent regarding the production and processing of hemp-derived products like CBD, which represents a huge slice of the hemp market in the United States.
And so a lot of hemp entrepreneurs found themselves stuck in a regulatory limbo – and as a result, financial services providers were unsure of how to work with them, especially since FinCEN guidelines only addressed state-licensed marijuana businesses and bank accounts. This new industry needed access to financial services to get off the ground – these entrepreneurs needed access to capital to invest in facilities and equipment; they needed to be able to meet payroll; they needed access to bank accounts so they didn’t have to rely on cash transactions; and so forth. Does that sound familiar?
So I wanted the NCUA to take a leadership role in providing some clarity while we worked through that transition. In our initial interim guidance, we sought to keep it fairly simple, and to give credit unions the flexibility they needed to work with lawfully operating hemp-related businesses. As long as they did their due diligence and managed their risks accordingly, we wanted credit unions to be able to experiment with the best way to work with these businesses. Based upon feedback to our initial guidance, we followed that up with additional advisory guidance in June 2020, to address unforeseen issues and to provide additional clarity.
Our approach was not overly prescriptive or heavy-handed. We wanted to provide credit unions the room to experiment and to decide for themselves how best to serve this burgeoning industry while we awaited the definitive regulatory guidance from the USDA, which finally took effect this year.
Now, there are still some significant challenges in the hemp space, and things haven’t progressed as quickly there as we might like, in part because they still don’t have a clear regulatory direction from the Food and Drug Administration. But I’m proud that, at least when it came to credit unions, we were able to take a leading role in setting standards and clarifying a forward direction.
I’d like to see something similar happen for cannabis and marijuana-related businesses, which is why I’d like to outline three steps that I would like to take now, as a regulator, to move this issue forward:
- First, we already have a working group at the NCUA devoted to cannabis banking, and I’ve been in communication with them and will be working with them to determine what we might do next to better address the challenges to cannabis banking on our side. At this point, we may be somewhat limited in what we can achieve, but I’m urging the agency to think hard about taking those next steps.
- Second, and this might be the most significant action item we can achieve right now, I am calling for the establishment of a formal working group on the part of financial regulators to take the lead on this issue and to start developing a principles-based approach to cannabis banking. The good news is that we already have a vehicle through which this could be accomplished: the Federal Financial Institutions Examination Council, or FFIEC. Most of you have never heard of FFIEC, which is fine, but it’s an interagency body that develops uniform principles, standards, and report forms for the federal examination of financial institutions. The NCUA is a member, and I’ve done a lot of work with the council over the years, so I know it’s a natural place for this working group to reside and to deliver a preliminary regulatory framework that we can share with other regulators and members of Congress who share our concern about addressing these problems.
- Third, I will urge Congress, in my capacity as an individual Board member, to take action to address cannabis banking as the 2014 FinCEN guidelines are simply not enough to support what hemp and cannabis businesses need to grow and sustain. You’re probably aware there are various legislative proposals dealing with these challenges. I’m told the SAFE Banking Act, for example, includes a number of promising proposals that would go a long way toward providing the clarity we need, but for now I don’t plan to endorse any particular piece of legislation. Congress should make that determination, but I will be happy to provide any advice or guidance from the regulators’ perspective that will be of assistance. In fact, just next week I’ll be talking to one of the credit union trade associations on their annual visit to meet with members of Congress, and I’ll be encouraging them to help us make the case to their representatives and senators. I certainly appreciate the members of Congress who are taking part in this conference today, and I look forward to working with them to make progress on this issue.
A caveat here: I’m a financial services industry regulator, and I can only speak to issues related to that area. I recognize there are a host of other regulatory issues that will need to be considered to address consumer protection issues, environmental issues, and other concerns.
The good news is that the banking issues should be relatively straightforward, compared to some of those challenges. We’re talking here primarily about taking deposits; opening up lending at reasonable rates of interest; and opening increased access to payment systems so you don’t have to handle massive piles of cash. If we can address those needs in a straightforward manner, we create an on-ramp to legitimize the cannabis industry while ensuring the safety and soundness of the financial system. Really, these should not be such difficult issues to address, should they? The 2014 FinCEN guidelines laid the groundwork for depository accounts, but it’s time now to build on those guidelines to accommodate the rapid growth of the industry.
I’ve spent a good deal of time and energy on this issue over the last couple of years, talking to experts on the legal side, on the industry side, in the financial services industry. I’ve heard a variety of perspectives, but there’s one common refrain: they all agree that legalization is a matter of when, not if – and they urge federal action to get it done.
The bottom line is this: Legalization in some form is going to happen, and the abdication of responsibility to address these issues in Washington is simply ludicrous. This is precisely the time we need leadership at the federal level to steer this ship in the right direction. In one of my discussions with an attorney who works on these issues, he noted that this is a unique opportunity to create a completely new industry – but that will require rethinking an outdated approach to marijuana that centers around the prohibition mindset.
As the great management thinker Peter Drucker noted, “The greatest danger in times of turbulence is not the turbulence – it is to act with yesterday’s logic.” Or perhaps in this case, to fail to act based on yesterday’s logic. It’s time to get past yesterday’s logic and focus on the future.
Moreover, as I look at this promising, growing industry, I can’t help but notice that it sits comfortably at the intersection of several of my top priorities: regulatory reform; support for entrepreneurialism and innovation; and financial inclusion. That’s a tremendous opportunity that brings tremendous challenges – but it requires leadership to get it done. And continued inaction, just allowing a patchwork of ad hoc state solutions to take effect, is not my idea of leadership.
The fact that we haven’t had adequate federal leadership on cannabis banking to date doesn’t mean that we can’t have leadership now, so I’m happy to take what actions I can to create forward momentum. For those of you in the industry, I can’t promise you that you’ll get everything you want—but certainly if we can address key needs like commercial lending and opening access to electronic payments for this industry, we’ll have made a significant step forward. And my pledge to you is that I’ll be working with you to get it done. Thank you.
Photo courtesy of Brian Shamblen.
House Officially Passes Defense Bill With Marijuana Banking Protections, But Key Senators May Block Path Ahead
The U.S. House of Representatives on Thursday approved a large-scale defense spending bill that includes an amendment to shield banks that works with state-legal marijuana businesses from being penalized by federal regulators. Now advocates and industry stakeholders are left wondering: what’s the fate of the reform in the Senate? And can it make it to the president’s desk?
New comments from Sen. Cory Booker (D-NJ)—who’s helping lead the charge to advance comprehensive marijuana legalization and who has been severely critical of efforts to enact banking reform first—signal that the path to pass the incremental policy change through the National Defense Authorization Act (NDAA) could be in jeopardy in the Senate. Other key senators have also expressed skepticism about the reform’s prospects through this process.
For supporters, things may have been more simple if the Senate had moved to include cannabis banking reform in its own version, but the text of NDAA released by Senate Armed Services Committee on Wednesday does not contain that language. That means the matter will need to be settled in a bicameral conference committee after the full Senate formally passes its bill. At that point, negotiators from both chambers will work to resolve differences between their separate proposals.
Already, there’s pushback from key senators to including the Secure and Fair Enforcement (SAFE) Banking Act in the NDAA that’s ultimately sent to President Joe Biden. That’s not especially surprising considering that leadership, including Senate Majority Leader Chuck Schumer (D-NY), has insisted on passing comprehensive justice-focused marijuana legalization first rather than advance an incremental reform on banking. But recent statements do raise questions about the prospects of enacting the reform through the defense bill.
It’s not that the SAFE Banking Act is partisan or especially controversial on its face; it’s a matter of legislative priorities for certain senators and a question of germaneness in NDAA. As of Tuesday, when the reform amendment was officially attached to the House version of the bill, it has now passed five times in the chamber, usually along largely bipartisan lines.
Rep. Ed Perlmutter (D-CO), chief sponsor of the SAFE Banking Act, spoke with Marijuana Moment about the process moving forward in a phone interview on Wednesday. He was optimistic about the measure’s prospects with NDAA as the vehicle, though he conceded that he hadn’t spoken with Schumer or other key senators who are actively finalizing legalization legislation that they hope to see move first.
“I think the fifth time is the charm,” he said. “I mean, obviously, we still have to do some work to make sure that it remains part of the NDAA as the House and the Senate go to conference. So we still have work to do with the Senate to make sure that it remains part of it. But I think that it will.”
“I mean, the fact that it deals with cartels and national security, on top of the need for the public safety piece of this thing, I think that we’ll be able to convince the conference committee and the conferees generally to keep it in,” he said. “But we still have work to do.”
Marijuana Moment is already tracking more than 1,200 cannabis, psychedelics and drug policy bills in state legislatures and Congress this year. Patreon supporters pledging at least $25/month get access to our interactive maps, charts and hearing calendar so they don’t miss any developments.
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Some advocates have expressed support for enacting the achievable banking policy change while working to build support for more comprehensive reform.
“Enactment of the SAFE Banking Act would improve public safety and business efficiency in the 36 states that currently permit some form of retail marijuana sales,” NORML Political Director Justin Strekal said. “The Senate should ensure this provision remains in the final version of this funding package and enact it swiftly.”
“The SAFE Banking Act is only the first step toward making sure that state-legal marijuana markets operate safely and efficiently,” he said. “The sad reality is that those who own or patronize these currently unbanked businesses would still be recognized as criminals in the eyes of the federal government and by federal law. This situation can only be rectified by removing marijuana from the list of controlled substances.”
Schumer and certain other senators, meanwhile, have insisted the banking issue should be tackled by holistically ending marijuana prohibition. They argue that it is inappropriate to pass what is seen as an industry-focused reform that helps businesses and investors while leaving unaddressed the harms of decades of racially disparate prohibition enforcement that should be addressed with equity-focused legalization.
Booker, who is helping Schumer alongside Senate Finance Committee Chairman Ron Wyden (D-OR) to produce a final legalization bill has said he would proactively work to block any senators who attempt to get marijuana banking reform passed before enacting social justice-focused legalization legislation.
And Booker told Politico on Wednesday that cannabis banking is “something that should not be included” in NDAA.
Senate likes to send NDAA amendments to a vote by unanimous consent. If one senator raises an objection to an NDAA Amendment, it can kill or stall it. Booker wouldn’t discuss his plans but said has “a lot of options as an individual senator” should the amendment be proposed.
— Natalie Fertig (@natsfert) September 22, 2021
“It undermines the ability to get comprehensive marijuana reform and the kind of things that are harder to get done like expungement of people’s records,” he said, echoing a point that Schumer made in an interview with Marijuana Moment in April. And a spokesperson for the majority leader affirmed that his position has not changed in light of the House development.
Should a senator propose a floor amendment to the chamber’s version of the defense bill to incorporate SAFE Banking, Booker left open the possibility of standing in its way.
Sen. Jeff Merkley (D-OR), sponsor of the standalone Senate version of the SAFE Banking Act, also declined to say whether he would push to attach the reform to NDAA and told Politico he’d “love to see if we can even do the more comprehensive [reform]—that’d be even better.”
Senate Armed Services Committee Chairman Jack Reed (D-RI), meanwhile, told Roll Call that the issue hasn’t been discussed by members of his panel. And bipartisan supporters of the reform—including Sens. Brian Schatz (D-HI) and Rand Paul (R-KY)—told the outlet they weren’t certain that the Senate would pursue marijuana banking through NDAA.
Schatz also said that Senate Minority Leader Mitch McConnell (R-KY) “doesn’t like” the marijuana banking proposal, and so “he’s going to have to consult with the Republicans in his conference who are in favor of this reform, but so far he’s been blocking it.”
Based on these comments, it seems increasingly clear that the effort to enact SAFE Banking through the must-pass defense bill faces a tough road ahead. And despite bipartisan support for the proposal on its own, it’s an open question as to whether the negotiators in committees of jurisdiction will be able to reach a consensus.
At an initial meeting of the House Rules Committee about NDAA on Monday, House Armed Services Committee Chairman Adam Smith (D-WA), who is managing the bill for the chamber, acknowledged that while some members might consider certain amendments “superfluous” to defense spending matters, the annual legislation has been used as a vehicle to advance non-germane legislation in the past. He added, though, that doing so has historically required the issues at hand to have broad bipartisan support in order to survive the House-Senate conference committee process.
He didn’t specifically cite the cannabis banking proposal, but Perlmutter himself said earlier in the hearing that “whether something is superfluous is always in the eyes of the beholder,” signaling that he feels his measure’s germaneness in this context is up for interpretation.
Smith said that “whatever superfluous items the Rules Committee decides to put in order and get attached to this bill, we go to conference, and in conference, we work in a bipartisan fashion.”
But beyond Smith and Reed, it will also be up to leading members of key committees that handle banking issues to decide whether the measure gets a ride to the president’s desk in NDAA.
“We’re not going to pull one over on anybody here. We’re going to have to work with committees of jurisdiction—not just the chairs, but the ranking members as well—to come to some agreement on those before we go forward,” he said. “So if you see an item that you consider to be superfluous being added to the bill, don’t freak out.”
The chair’s comments about needing support from leaders of committees of jurisdiction raise questions about whether the amendment stands a chance in conference with the Senate following House approval. Not only did House Financial Services Committee Ranking Member Patrick McHenry (R-NC) vote against the standalone SAFE Banking Act this year and in 2019, but on the Senate side, even Banking Committee Chairman Sherrod Brown (D-OH) has been generally unenthusiastic about advancing the reform.
On the flip side, House Finance Services Committee Chairwoman Maxine Waters (D-CA) is a supporter of the banking reform and brought it through her panel last Congress. Senate Banking Committee Ranking Member Pat Toomey (R-PA), for his part, has previously voiced support for advancing the SAFE Banking Act.
Perlmutter has said that he appreciates that Senate leadership is pushing for a more comprehensive end to federal marijuana prohibition—and he agrees with Booker that promoting social equity is an important objective—but he feels the SAFE Banking Act is urgently needed to address public safety issues resulting from the industry’s lack of access to traditional financial institutions.
Some of the strongest proponents for broad reform like Rep. Earl Blumenauer (D-OR) voted in favor of the SAFE Banking Act in April despite the body yet having taken up a legalization measure this session.
Mississippi Lawmakers Reach Deal On Medical Marijuana Legalization, Plan To Request Special Session
Lawmakers reached a deal on key provisions such as which agencies should be responsible for regulating the medical cannabis market.
By Geoff Pender, Mississippi Today
Legislative negotiators and leaders have agreed on a draft of medical marijuana legislation, and are anticipated to ask Gov. Tate Reeves (R) as early as Friday to call the Legislature into special session, sources close to the negotiations said Thursday.
Legislative leaders on Thursday released some details of the proposal—which had been kept close to the vest for months—such as that cities and counties will be allowed to “opt out” of having medical marijuana cultivation or dispensaries, although local voters can override this.
Negotiations have dragged on throughout the summer on crafting a medical marijuana program to replace one passed by Mississippi voters in November but shot down in May by the state Supreme Court on a constitutional technicality.
House Speaker Philip Gunn (R) in a Thursday interview on a Supertalk radio show said he believed the House and Senate leadership and negotiators are “in agreement” on a draft bill, and he believes both chambers have the votes to pass such a measure. He said he planned to get together with Lt. Gov. Delbert Hosemann (R), then barring any last minute glitches “inform the governor we are ready.”
Other sources close to the negotiations on Thursday told Mississippi Today they anticipate that request to the governor would happen as soon as Friday. Reeves has sole authority to call lawmakers into special session, and would set the date and parameters of a special session. Although legislative leaders have expressed interest in dealing with COVID-19 and other issues in a special session, Reeves has appeared unwilling but said he would call a session for medical marijuana, pending lawmakers are in agreement and he agrees with the measure.
Gunn in his radio interview on Thursday gave some particulars of the bill, but said “don’t hold me to it” and deferred to Rep. Lee Yancey, (R), the lead House negotiator on the measure. Yancey has worked with Sen. Kevin Blackwell, (R), the lead Senate negotiator. Blackwell could not immediately be reached for comment on Thursday.
Yancey gave Mississippi Today some highlights of the draft bill, which would be subject to changes by the full Legislature. They include:
Cities and counties could opt out. Voters could opt back in. City councils or aldermen, or county boards of supervisors, within 60 days of passage of legislation, could opt out from allowing cultivation or dispensing of medical marijuana within their borders. However, voters could gather 1,500 signatures, or signatures of 20 percent of voters, whichever is less, and force a referendum on the issue. If such a referendum to allow it fails, voters could try again in two years, similar to state alcohol referenda. Yancey said that under the draft measure, “Once it’s in, it’s in,” meaning once approved, a locality could not come back and ban it.
“This gives businesses the certainty they need to get started,” Yancey said. “No licenses will be issued the first 60 days after passage for cultivation and processing, and licenses (for cannabis use) and dispensaries wouldn’t start until the 90th day.”
Smoking cannabis would be allowed. There had been debate on whether Mississippi’s program would allow smoking of cannabis by patients, as most states with programs allow, or prohibit it, as Alabama does with its recently approved program.
“There are those who have certain debilitating conditions who need the effects of medical cannabis to take effect immediately,” Yancey said. “Ingesting a gummy or something like that could take 45 minutes to an hour. Whether it’s terrible seizures or pain and suffering or not being able to eat, there are those who need relief as immediately as possible… There are those who look at this from a bias of recreational use, but that’s not apples to apples, not fair. There are people who are suffering, who need the palliative relieve medical cannabis can provide, and our main goal is to allow people who are suffering terrible illnesses to get relief.”
Medical marijuana would be subject to sales tax and an excise. The state’s sales tax, currently at 7 percent, would be levied on medical marijuana, as well as a $15 an ounce excise. Yancey said the goal was to have a 5 percent excise, but that going rates for marijuana vary by potency and product, so the weight-based tax was the easiest way to get near that mark. Weight for edibles and other product would be based on the cannabis weight, not food or other product. Yancey said this tax rate would put Mississippi roughly in the middle of states with legalized medical cannabis.
“The going rate for mid-range (marijuana flower) is about $300 an ounce, so if you do the math, $15 an ounce would be around the 5%,” Yancey said. “If a product sold for lower, you would pay higher than that rate, if sold for more, you would pay less.”
Outdoor growing would not be allowed. Lawmakers during hearings this summer were told by officials from other states that regulating growing and safety of medical marijuana is easier with indoor growing facilities.
State Health Department would be in charge, with Department of Revenue, Agriculture Commission sharing some responsibilities. The Mississippi State Department of Health would oversee the state’s medical marijuana program, but the state’s taxing and agriculture agencies would share some regulatory duties. State Agriculture Commissioner Andy Gipson has told lawmakers he will not participate in regulating medical marijuana because marijuana is still federally illegal. Gipson has threatened to sue if lawmakers try to force him to participate.
Yancey said the proposal would allow Gipson to subcontract growing regulations to someone else.
“For instance, if the Board of Pharmacy said it was interested in regulating the plants—like they do with compounding pharmacies—they could do it,” Yancey said. “In a sense Andy wouldn’t have to do it himself, he could farm it out, no pun intended.”
Preference would be given to in-state companies. Yancey said cultivators would be licensed in tiers—from “micro cultivators” to large ones, based on square footage of canopy space. Micro growers, under 2,000 square feet, would have to be “100 percent Mississippi resident participation.” Larger ones initially would have to have 35 percent Mississippi ownership, but that requirement would be repealed after one year. Yancey said this could help Mississippians be involved in the business, but help the state avoid lawsuits other states have faced from out-of-state growers. Yancey said there would be a similar setup for processors, based on amount of pounds of product they produce.
Potency would be regulated. Yancey said there would be THC potency limits of 30 percent on flower, 60 percent on concentrates and infused products. He said any product above 30 percent THC would have to have a warning label.
Photo courtesy of Mike Latimer.
Feds Fund Study Into Whether Psilocybin Can Help People Quit Smoking Cigarettes
A top federal drug agency is funding a study into how psilocybin could help people quit smoking cigarettes—one of the latest examples of the government’s growing interest in psychedelic therapy.
The National Institute on Drug Abuse (NIDA) recently approved the grant, which will enable researchers at Johns Hopkins University (JHU), New York University and the University of Alabama at Birmingham to explore how so-called magic mushrooms can help people curb their addiction to cigarettes.
Matthew Johnson, a professor at JHU who will be a lead investigator in the study, announced the grant funding on Monday. He said he believes that this is the “first grant from the US government in over a half century to directly study therapeutics of a classic psychedelic.”
The research initiative will be a “multi-center, high-risk clinical study” into the therapeutic potential of psilocybin in tobacco addiction. It would build on earlier research that’s indicated that the psychedelic could play a valuable role in substance misuse disorders.
“This is extremely encouraging. Public funding for psychedelic science is critical,” Peter Hendricks, a University of Alabama professor who will be involved in the study, told Truffle Report. “My hope is that this opens the door to further scientific inquiry, and ultimately, the advancement of a treatment paradigm that has the potential to alleviate suffering across the globe.”
Johnson at JHU has been proposing a pilot study into the medical value of psilocybin for this treatment since 2014, stressing in a paper for the Journal of Psychopharmacology at the time that “despite suggestive early findings on the therapeutic use of hallucinogens in the treatment of substance use disorders, rigorous follow-up has not been conducted.”
Now NIDA is putting money toward the research project. But the parameters of the study and the level of funding is unclear. Johnson didn’t reply to several requests for comment.
There’s a sense of urgency to invest in psychedelics research, especially given that a new federal survey identified a rise in the use of hallucinogenic among young adults at the same time that alcohol consumption is declining.
NIDA Director Nora Volkow told Marijuana Moment in a recent interview that the increased media attention to psychedelics research, and the reform movement to loosen restrictions on these substances, is contributing to that trend.
“People start to discover the potential that these drugs have for therapeutics and the current trials that are ongoing,” she said. “This takes on a momentum because the ideal world of having a drug that can cure things very dramatically [is appealing].”
It makes sense that JHU would be take a lead role in the NIDA-backed research project.
Researchers at the university have been studying psychedelics for decades, and in 2019, it launched a first-of-its-kind psychedelics research center. The Center for Psychedelic and Consciousness Research has focused primarily on potential therapeutic uses for psychedelics, such as smoking cessation and treatment for depression, Alzheimer’s disease, anorexia and opioid withdrawal.
Interest in the therapeutic potential of psychedelics is growing, and there are some early signals that the issue may even be bipartisan.
Rep. Dan Crenshaw (R-TX), a veteran who recently moderated a conversation with a top psychedelics reform advocate, recently filed an amendment to a defense bill that would have allowed the secretary of defense to approve grants for research into the medical value of certain psychedelics such as MDMA, psilocybin, ibogaine and 5–MeO–DMT for active duty military members with post-traumatic stress disorder. That measure wasn’t allowed a House floor vote to the large-scale legislation, however, but it’s another example of how the issue is gaining momentum at the highest levels of government.
A former Republican congresswoman also recently touted the therapeutic benefits of psychedelics, sharing the story of how a close family friend was able to recover from alcoholism with the help of psilocybin.
The psychedelics reform movement is also continuing to grow.
Last week, California activists were cleared to begin collecting signatures for a historic initiative to legalize psilocybin mushrooms in the state.
Detroit could also become one of the next Michigan cities to decriminalize psychedelics, with the reform proposal making the local ballot for this November.
The Ann Arbor City Council has already elected to make enforcement of laws prohibition psychedelics like psilocybin, ayahuasca and DMT among the city’s lowest priorities—and lawmakers recently followed up by declaring September Entheogenic Plants and Fungi Awareness Month. Advocates have also introduced a reform resolution to the Grand Rapids City Council.
Oregon voters passed an initiative last November to legalize psilocybin therapy.
Washington, D.C. voters also approved a ballot measure last year to deprioritize enforcement of laws criminalizing psychedelics.
Meanwhile, Denver activists who successfully led a 2019 campaign to make the city the first in the U.S. to decriminalize psilocybin possession have their eyes set on broader reform, with plans in the works to end the criminalization of noncommercial gifting and communal use of the psychedelic.
Massachusetts cities that have enacted the policy change are: Northampton, Somerville and Cambridge. In July, state lawmakers heard testimony about a bill to create a task force charged with studying the implications of legalizing psychedelics like psilocybin and ayahuasca.
The governor of Connecticut recently signed legislation recently that includes language requiring the state to carry out a study into the therapeutic potential of psilocybin mushrooms.
Texas also recently enacted a bill to require the state study the medical benefits of psychedelics for military veterans.
A New York lawmaker introduced a bill in June that would require the state to establish an institute to similarly research the medical value of psychedelics.
In Oakland, the first city where a city council voted to broadly deprioritize criminalization of entheogenic substances, lawmakers approved a follow-up resolution in December that calls for the policy change to be adopted statewide and for local jurisdictions to be allowed to permit healing ceremonies where people could use psychedelics.
The Aspen, Colorado City Council discussed the therapeutic potential of psychedelics like psilocybin and proposals to decriminalize such substances at a meeting in May. But members said, as it stands, enacting a reform would be more better handled at the state level while entheogens remain strictly federally controlled.
Seattle lawmakers also recently sent a letter to members of a local task force focused on the opioid overdose epidemic, imploring the group to investigate the therapeutic potential of psychedelics like ayahuasca and ibogaine in curbing addiction. In response, the task force issued a recommendation for the widespread decriminalization of all drugs. The group said psychedelics in particular could represent a promising treatment to address substance abuse disorders and mental health issues.
Meanwhile, Portland, Oregon activists are mounting a push to have local lawmakers pass a resolution decriminalizing the cultivation, gifting and ceremonial use of a wide range of psychedelics.
In a setback for advocates, the U.S. House of Representatives recently voted against a proposal from Rep. Alexandria Ocasio-Cortez (D-NY) that would have removed a spending bill rider that advocates say has restricted federal funds for research into Schedule I drugs, including psychedelics such as psilocybin, MDMA and ibogaine. However, it picked up considerably more votes this round than when the congresswoman first introduced it in 2019.
Report provisions of separate, House-passed spending legislation also touch on the need to expand cannabis and psychedelics research. The panel urged NIDA to support expanded marijuana studies, for example. It further says that federal health agencies should pursue research into the therapeutic potential of psychedelics for military veterans suffering from a host of mental health conditions.
There was an attempt by a Republican congressman to attach language into a defense spending bill that would promote research into psychedelics therapy for active duty military members, but it was not made in order in the House Rules Committee this week.
When it comes to broader drug policy reform, Oregon voters also approved an initiative in November to decriminalize possession of all drugs. This year, the Maine House of Representatives passed a drug decriminalization bill, but it later died in the Senate.
In May, lawmakers in Congress filed the first-ever legislation to federally decriminalize possession of illicit substances.
Image courtesy of Kristie Gianopulos.