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Top Senate Democrat Calls On Federal Regulators To Clarify Hemp Banking Rules

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Senate Minority Leader Chuck Schumer (D-NY) sent a letter to federal financial regulators on Monday, urging them to issue updated guidance to ensure that hemp businesses have access to banking services.

While hemp and its derivatives were federally legalized under the 2018 Farm Bill, companies that manufacture and sell hemp products are still being denied credit lines and bank accounts due to ongoing uncertainty within the financial sector, Schumer said.

The senator sent his letter to heads of the Federal Reserve, Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) on the same day that he visited a hemp farm in Cortland County, New York to discuss opportunities and challenges in the burgeoning industry.

“The industrial hemp industry is seeding and growing all over Upstate New York, with new businesses like Main Street Farms popping up left and right, which is why I fought so hard to strip the burdensome and outdated federal regulations from it by passing the Hemp Farming Act of 2018,” Schumer said in a press release. “However, if these businesses aren’t able to get financing from a bank or find a credit card processor that doesn’t charge them an arm and a leg, none of that matters all that much.”

“If the financial institutions aren’t given updated guidance by the major federal financial regulators clarifying the legality of industrial hemp, the industry in Central New York and producers like Main Street Farms will continue being tightly bound, prevented from growing and creating the good-paying jobs they’d otherwise be able to. That’s why I’m urging the FDIC, Federal Reserve and OCC to issue updated guidance to the financial institutions looking to provide services to industrial hemp-oriented businesses as soon as possible, to help growers, producers and industry harvest the massive potential of this versatile crop.”

Schumer has placed an emphasis on his role in advancing hemp legalization and his support for the industry. He’s worked particularly closely with Canopy Growth Corp., which recently launched a first-of-its-kind industrial hemp park in New York that’s expected to generate 200 jobs in the region. When Canopy announced that it was ousting then-CEO Bruce Linton, Schumer personally called executives at the business to ensure that the park project would still move forward. At the groundbreaking event last month, the senator cut the ceremonial ribbon.

He also took credit for securing funding within the U.S. Department of Agriculture for the nation’s only hemp seed bank, which will be located in Geneva, New York.

This isn’t the first time that federal financial regulators have faced congressional pressure to provide clarity to banking institutions as it concerns hemp.

Sen. Michael Bennet (D-CO) sent a similar letter to the federal officials in June, requesting guidance on “how financial institutions can offer financial products and services to hemp farmers and processors.” And during a confirmation hearing earlier that month, a top Federal Reserve official told Sen. Jon Tester (D-MT) that her agency “will try to clarify” that servicing hemp businesses is not illegal.

Schumer’s letter to regulators states that the “New York hemp industry has grown significantly, as new farms and businesses have emerged and existing ones have expanded,” which has “brought considerably more jobs and revenue to New York, making hemp an important part of the State’s agricultural industry.”

“As hemp farmers and businesses are exploring the full benefits of the 2018 Farm Bill, however, their growth has been hampered by regulatory uncertainty at financial institutions that has effectively led to a lack of access to financial products and services,” he wrote.

“Without access to traditional financial services, such as checking accounts and credit, many hemp businesses have been unable to effectively expand beyond their basic business operations. In order to alleviate these concerns, updated guidance would provide certainty for financial institutions to assess risk and make available a wider range of financial products to hemp cultivators and manufacturers.”

The letter notes that small hemp businesses and industry entrepreneurs are most impacted by the lack of regulatory clarity, and the press release says that Schumer’s office has even “heard stories from employees of hemp businesses being unable to access private loans due to the nature of their employment.”

“It is important that financial institutions recognize hemp as a legal agricultural industry as set forth in the 2018 Farm Bill,” the senator wrote. “I urge the FDIC, Federal Reserve, and OCC to provide guidance and best practices to the institutions under their authority that are looking to serve hemp farmers and businesses.”

Top Senate Democrat Announces Construction Of Only Hemp Seed Bank In The U.S.

Photo courtesy of Pixabay.

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.

Kyle Jaeger is Marijuana Moment's Los Angeles-based associate editor. His work has also appeared in High Times, VICE and attn.

Politics

Former FDA Chief Wants Federal Government To Regulate State Marijuana Markets

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Former Food and Drug Administration (FDA) Commissioner Scott Gottlieb said on Monday that the federal government should regulate state marijuana programs.

In his clearest comments on the issue to date, Gottlieb said in a CNBC appearance that the rise in vaping-related lung injuries underscores the need for a federal regulatory scheme that would empower agencies to impose industry standards on aspects of legal cannabis markets such as THC potency and allowable forms of consumption.

Previously, the official had been ambiguous about the extent to which the federal government should get involved, broadly arguing that vaping issues reflect a consequence of conflicting state and federal laws without specifically saying what his preferred policy fix would be. However, in an editorial for The Wall Street Journal published last week, he provided some clarification—hinting that federal drug scheduling laws should be reformed for cannabis—but still left room for interpretation.

But now, he is beginning to lay out specific details of a regulatory agenda.

Gottlieb said during the TV interview that enforcing prohibition is no longer “politically practicable” and that Congress should pass “a federal law that actually can be enforced and allow federal regulatory authorities to impose appropriate supervision.”

While he said he’s not in favor of adult-use legalization and would “like to see the recreational uses shut down entirely,” the reality is that many states have made that decision and so any federal regulatory scheme would have to include “some accommodation of that.”

“I think the time has come that we need to grapple with this at a federal level. We can’t ignore it any more.”

Asked whether states are capable of providing the types of regulations he’s calling for, Gottlieb said no because there’s a patchwork of policies across the country and states “don’t have the capacity to both police what’s being sold in their so-called legal dispensaries as well as shut down the black market.”

“I think you’re going to need federal authorities in there to do that,” he said.

Under the regulatory model Gottlieb is envisioning, FDA and other agencies such as the Drug Enforcement Administration (DEA) “could regulate what’s being sold for the potency, for the manufacturing, for the ingredients, for the claims that are being made.”

“Even if we were to federalize it and allow some form of recreational use, we could limit what can be sold, the potency of what could be sold, the forms in which it can be sold,” he said, adding that he doesn’t think vaping THC products should be allowed.

Federal agencies could impose “tighter controls on the medical claims, holding them to a higher standard and allowing some form of recreational use, probably for products that are lower concentration, that are only delivered in forms that pose less harm than vaping e-liquids,” he said.

“There’s a way to have a compromise where you allow some form of recreational access in the states that want to allow it but something that looks far different than what you have today, something that’s far less permissive than the state laws,” he said. “That’s not a great outcome in my view from a public health standpoint, but what we have now is far worse where you have a federal government not enforcing the law at all—barely enforcing the law—because they know the existing law isn’t practical, and the states not imposing any supervision because they’re incapable of doing it or they don’t want to step in in a vigorous way.”

Dietary Supplement Industry Pushes Congress To Allow CBD Product Sales

Photo courtesy of YouTube/CNBC.

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Scotland’s Ruling Party Unanimously Backs Drug Decriminalization Measure

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Delegates of the Scottish National Party (SNP) unanimously approved a resolution calling for the decriminalization of drug possession and consumption on Sunday.

At a conference in Aberdeen, lawmakers representing Scotland’s largest party and the third largest in the UK Parliament argued that removing criminal penalties for drug offenses and treating addiction as a public health issue would combat an ongoing overdose crisis.

The proposed amendment to the 1971 Misuse of Drugs Act stipulates that the current law is “not fit for purpose in 21st Century Scotland” and would add a provision “to allow for decriminalization of possession and consumption of controlled drugs so that health services are not prevented from giving treatment to those that need it.”

Members of Parliament Tommy Sheppard, Ronnie Cowan and Alison Thewliss of the SNP introduced the measure.

“Our law enforcement agencies are focused on the weak and vulnerable at the bottom of the pyramid, when they should be focused on the organized criminals at the top,” Sheppard said.

He added that if the UK government declines to pursue the reform move, it should “give Scotland the ability to do it instead, because we will take the steps necessary.”

Cowan noted that many people suffering from addiction have experienced some form of trauma and are self-medicating.

“Decriminalization demystifies drugs and places them firmly in the health arena,” he said. “Drug policy is about a mindset. Decriminalization changes the mindset and by changing that you can treat people as human beings and we can start a recovery process.”

As Common Space reported, previous SNP conferences have also seen the passage of progressive drug reform amendments, including one that would establish safe consumption sites to prevent overdoses and help people transition into treatment. Advocates have expressed frustration that the UK Parliament has generally resisted such harm reduction policies.

The Labour Party announced last month that it would launch a Royal Commission dedicated to reviewing the country’s drug laws if elected to the majority.

“The UK government’s cavalier attitude towards Scotland’s drugs emergency is simply appalling,” Thewliss said. “People are dying on our streets and the risk to the general public from discarded needles and transmission of blood borne diseases is very real—yet the Tories at Westminster sit on their hands.”

Glasgow Councillor Mhairi Hunter said at the conference that “challenging the stigma around addiction means challenging the laws that criminalize addiction.”

Over in the U.S., lawmakers remain primarily focused on reforming federal marijuana laws, but talk of broader decriminalization is growing. A survey released earlier this month found that a majority of Americans (55 percent) support the policy change.

Presidential candidates such as Pete Buttigieg and Tulsi Gabbard have voiced support for decriminalization during the course of their campaigns for the Democratic nomination.

Denver and Oakland enacted policies this year focused on psychedelics decriminalization.

Majority Of Americans Support Decriminalizing All Drugs, Poll Finds

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Dietary Supplement Industry Pushes Congress To Allow CBD Product Sales

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Four trade associations representing the dietary supplement industry signed a letter urging federal lawmakers to take action to provide for the lawful marketing of CBD products while the Food and Drug Administration (FDA) develops its regulations.

The American Herbal Products Association, Consumer Healthcare Products Association, Council for Responsible Nutrition and United Natural Products Alliance said Congress should “pass legislation to clarify that CBD derived from the hemp plant is a lawful dietary ingredient if the dietary supplement containing the CBD meets established product safety and quality criteria.”

To do that, the groups recommended granting a limited waiver that would exempt CBD products from a provision of the Food, Drug and Cosmetic Act that would allow companies to sell CBD as dietary supplements as long as the products are derived from hemp and meet health and safety standards.

“Given the rapidly growing marketplace of products, it is crucial that Congress take quick action to clarify the legal status of hemp-derived CBD dietary supplements,” the letter states. “At the same time, it is equally essential for FDA to have the resources it needs to protect the public from unsafe CBD products.”

“These actions are urgent given the strong consumer interest in CBD, the growth in products and sales, and the need for clarity among consumers, retailers, and manufacturers about the legal status of these products,” the groups said.

Congressional action is needed, they argued, because FDA officials have indicated that the rulemaking process for CBD could take up to five years. They also expressed appreciation for agriculture spending legislation approved by a the Senate committee that would allocate $2 million to FDA to support their efforts to develop cannabidiol regulations.

“We urge Congress to go even further to include substantial new resources to enable effective FDA oversight of this fast-growing category, including funding for efficient and timely review of new dietary ingredient notifications and enforcement of existing laws governing the safety, manufacturing, and labeling of dietary supplements containing CBD,” the letter continues. “We urge that you work with FDA to determine a level of funding adequate to assure effective regulation of the CBD marketplace that does not detract from other agency enforcement priorities.”

“This is the best, most efficient, and most timely way to both set a clear regulatory framework for the marketplace and better assure consumer protection. While we can appreciate the FDA’s deliberative interest in making sure that consumers have access to safe CBD products, we are concerned that continuing to leave the marketplace without clarity and adequate oversight for an extended period of years will both endanger consumers and the bright future of the hemp-derived products they seek. Since it appears FDA is unlikely to provide a timely and effective resolution to this challenge, Congress must act.”

The dietary supplement industry is far from alone in its call for an expedited process to allow CBD products to be marketed.

A bipartisan coalition of senators—and notably, Senate Majority Leader Mitch McConnell (R-KY)—have also urged FDA to clear a path to allow for the lawful marketing of CBD products while the agency continues to develop regulations.

Read the full CBD letter from the dietary supplement industry groups below: 

Dietary Supplement Trade As… by Marijuana Moment on Scribd

Former FDA Head Floats Federal Marijuana Regulation ‘Compromise’ To Address Vaping Issue

Photo by Kimzy Nanney.

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