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Treasury Department Issues Updated Guidance On Hemp Banking Rules

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Federal financial regulators on Monday released updated guidance for banks and credit unions that service hemp businesses.

The Financial Crimes Enforcement Network (FinCEN), which is part of the Treasury Department, said that the update is meant to expand on earlier guidance the agency provided following the federal legalization of hemp under the 2018 Farm Bill. The new memo explains changes in reporting requirements and emphasizes that because the crop is no longer a controlled substance, financial institutions don’t have to automatically flag transactions that are from hemp business accounts.

“This guidance explains how financial institutions can conduct due diligence for hemp-related businesses, and identifies the type of information and documentation financial institutions can collect from hemp-related businesses to comply with [Bank Secrecy Act] regulatory requirements,” FinCEN wrote. “This clarification is intended to enhance the availability of financial services for, and the financial transparency of, hemp-related businesses in compliance with federal law.”

They also emphasized that the notice does not “replace or supersede FinCEN’s previous guidance” on banking for marijuana businesses that was implemented under the Obama administration in 2014.

Unlike for marijuana companies, banks and credit unions do not have to automatically file suspicious activity reports, or SARs, solely because a business client is involved in the hemp market. They must still be filed for marijuana-related businesses, however.

FinCEN did say in the new document that there are circumstances where reporting would be warranted for hemp companies. It outlined four examples:

1. If a customer appears to be involved in marketing hemp in a state or territory where it remains illegal.

2. If a customer “appears to be using a state-licensed hemp business as a front or pretext to launder money derived from other criminal activity or derived from marijuana-related activity that may not be permitted under applicable law.”

3. If a customer seems to be involved in the hemp market in order to “conceal or disguise involvement in marijuana-related business activity.”

4. If a customer is “unable or unwilling to certify or provide sufficient information to demonstrate that it is duly licensed and operating consistent with applicable law.”

The regulatory agency also provided clarification on requirements for businesses that are involved in marketing both hemp and marijuana.

FinCEN said that “if the proceeds of the businesses are kept separate, or the customer and its financial institution are able to identify which proceeds are marijuana-related and which are hemp-related, then the 2014 Marijuana Guidance, including specific SAR filing, applies only to the marijuana-related part of the business.”

“FinCEN expects financial institutions to monitor the transactions of hemp-related businesses for signs of suspicious or unlawful activity, just as with other customers,” the notice states. “To the extent the financial transactions of a hemp-related business are comingled with marijuana-related activities, a financial institution should apply FinCEN’s 2014 Marijuana Guidance, which provides clarity on how to file SARs on marijuana-related activities.”

This FinCEN guidance comes days after the agency released its latest update on the number of financial institutions that are servicing cannabis-related businesses. It showed a slight decline in the number of banks and credit unions that are taking on marijuana clients since the last quarter.

Also this month, the National Credit Union Administration issued a memo explaining issues related to providing financial services to hemp businesses. The federal agency listed 17 questions and answers about banking hemp businesses that credit unions are likely to have. That includes information about the status of the USDA’s interim final rule, compliance for hemp production, NCUA rules for serving the industry and more.

Bipartisan Senators File Marijuana And CBD Research Amendment To Defense Spending Bill

Photo courtesy of Brendan Cleak.

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CBD Company’s Appeal Could Let Marijuana And Psychedelics Companies Trademark Businesses Pre-Legalization

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As it stands, you can’t trademark a product that’s not currently legal under federal law—like marijuana or psychedelics. But a CBD beverage company is appealing that rule, and it could have wide-ranging implications for burgeoning industries surrounding potentially soon-to-be-legal substances.

The U.S. Patent and Trademark Office (USPTO) says that companies cannot secure trademarks for products that aren’t lawful for commerce, even if they’re simply submitting “intent to use” applications that could take years to process while a pending policy change works its way through Congress or federal agencies.

“While applicant may be anticipating that CBD-based beverages will be made lawful at the federal level within the time frame for filing an allegation of use, that anticipation does not make this application registrable,” USPTO wrote in explaining its decision to deny a registration to Joy Tea, which markets hemp-derived CBD drinks. “The lawfulness of the goods is determined at the time the application is filed and not what may or may not be lawful at the federal level years from now.”

Joy Tea is appealing the rejection with the Trademark Trial and Appeal Board.

While hemp and its derivatives like CBD were legalized under the 2018 Farm Bill, USPTO denied its trademark request because the Food and Drug Administration (FDA) does not currently have regulations in place that allow for the lawful marketing of cannabinoids in food items or dietary supplements.

While the federal food regulator has said it’s working on rules to allow for the marketing of CBD-infused products, USPTO says that for now, “FDA intentions, public opinion in favor of legalization of cannabis, and anticipation of change in the current law have no bearing on the prosecution of a trademark application.”

But Larry Sandell, an intellectual property attorney at Mei & Mark LLP who is representing Joy Tea, told Marijuana Moment that it’s improper to deny his client a trademark registration in the meantime.

“The general idea as to why [companies submit intent to use applications]—outside the cannabis space—is if you’re marketing a new product, and you’re starting to lay the groundwork, it would be terrible if somebody could just swoop it up and beat you to the trademark office and steal it out from under you,” he said.

Traditional pharmaceutical companies that are interested in selling products that aren’t currently approved by FDA have this option—but CBD businesses are barred.

“There’s no real logical basis for the split,” Sandell said.

But USPTO said the comparison is “misleading because pharmaceuticals are not per se unlawful.”

Joy Tea “has not argued or demonstrated that it is seeking or has sought FDA approval for the sale of its CBD-based beverages,” the agency said. “Applicant’s goods are not merely ‘unapproved’ but are actually ‘unlawful.'”

To resolve the issue, Joy Tea, is seeking an appeal.

“At base, this Appeal seeks to overturn, or at least narrow, this per se rule,” the company’s filing states. “No statute or applicable regulation supports disqualifying an applicant’s bona fide intent that stems from a belief—especially an objectively reasonable belief—that its intended future commerce will be legal future commerce,”

It further argues that “market movement in cannabis-related stocks evinces that—notwithstanding the current law—many people anticipate changes in federal law toward cannabis legalization in the immediate future and have been willing to invest in this belief.”

If the appeal succeeds and companies are prospectively able to trademark products that aren’t currently legal under federal law, that would have a significant impact on businesses entering the space.

If it fails, however, that would mean that the status quote prevails, putting these companies “in a terrible spot,” Sandell said.

It would mean, for example, that a company could preempt another company that plans to sell a cannabis product by taking their business name and using it for a legal, unrelated purpose.

Should Joy Tea’s current effort fail, Sandell said they will appeal to a federal circuit court. They’re expecting a response to the initial briefing by mid-summer.

Read the text of the appeal on the CBD trademark below: 

CBD Tea Trademark Appeal by Marijuana Moment

Head Of Top Federal Drug Agency Says It’s Time To Consider Decriminalization

Photo by Kimzy Nanney.

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Minnesota Marijuana Legalization Bill Could ‘Absolutely’ Pass Full Legislature If GOP Senate Allows A Vote, Sponsor Says

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A bill to legalize marijuana in Minnesota is set for a House floor vote this week, and the sponsor of the legislation is optimistic that it could pass the full legislature—if only the GOP-controlled Senate would just allow a vote on it.

This measure—filed by House Majority Leader Ryan Winkler (D), Speaker Melissa Hortman (D) and other lawmakers—has moved through a dozen committees since February. It would allow adults 21 and older to purchase and possess up to 1.5 ounces of cannabis and cultivate up to eight plants, four of which could be mature.

Despite being advanced through 12 House panels, there have been lingering doubts about its prospects in the Senate. But Winkler said in an interview on Sunday that, if Republican leadership in the chamber give it a vote, “it absolutely could pass.”

“Support for legalizing cannabis for recreational or personal use, making sure that we have a safe, regulated marketplace, that we are expunging criminal records for people who’ve been unfairly targeted for law enforcement reasons for cannabis in the past, making sure that we’re creating a marketplace that reflects Minnesota’s values—all those things are our priorities in this bill, and they are priorities for Minnesotans of all political persuasions,” Winkler said.

Pressed on whether the legislation could advance through the Republican-led Senate if it advances through the House, the leader said it “absolutely could pass,” citing public polling on the issue and the fact that South Dakota voters approved a legalization initiative last year.

“It cuts across both parties,” Winkler said. “I don’t see any reason why it wouldn’t pass both houses if the vote can come up in the Senate.”

But one provision of the legalization bill that the leader isn’t willing to cede on concerns expungements for people with prior cannabis convictions.

He said in a tweet on Monday that “expunging existing cannabis offenses is a non-negotiable piece of our legalization bill,” and that “is an economic and criminal justice issue.”

While Republican support remains an open question in either chamber, it is the case that the proposal has earned the support of several GOP members as its moved through an extensive committee process.

That’s despite the fact that Republicans have generally signaled that they’re more interested in revising the state’s existing medical cannabis program than enacting legalization of adult use.

But a GOP member of the House Taxes Committee, which approved the broader legalization bill last week, indicated that he felt an amendment he introduced and that was adopted could bolster Republican support.

That revision from Rep. Pat Garofolo (R) directs remaining cannabis revenue to a tax relief account after implementation costs are covered and substance misuse treatment and prevention programs are funded.


Marijuana Moment is already tracking more than 1,100 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.

Learn more about our marijuana bill tracker and become a supporter on Patreon to get access.

Before the Taxes Committee, the bill passed the Health Finance and Policy Committee, Public Safety and Criminal Justice Reform Finance and Policy Committee, Education Finance Committee, State Government Finance and Elections Committee, Judiciary Finance and Civil Law Committee, Environment and Natural Resources Finance and Policy Committee, Agriculture Finance and Policy Committee, Workforce and Business Development Finance and Policy Committee, Labor, Industry, Veterans and Military Affairs Finance and Policy Committee and Commerce Finance and Policy Committee.

The litany of committees the bill has gone through makes it perhaps the most thoroughly vetted legalization measure to move through a state legislature—and it means that a solid portion of the House has already had the chance to review, propose amendments to and vote on the legislation it as it advances to the floor, presumably increasing its chances of passage in the chamber.

The majority leader’s bill as introduced was identical to a proposal he filed last year, with some minor technical changes. Winkler, who led a statewide listening to gather public input ahead of the measure’s introduction, called it the “best legalization bill in the country” at the time. It did not advance in that session, however.

Under the legislation, social equity would be prioritized, in part by ensuring diverse licensing and preventing the market from being monopolized by corporate players. Prior marijuana records would also be automatically expunged.

On-site consumption and cannabis delivery services would be permitted under the bill. And unlike in many legal states, local municipalities would be banned from prohibiting marijuana businesses from operating in their areas.

Retail cannabis sales would be taxed at 10 percent. Part of that revenue would fund a grant program designed to promote economic development and community stability.

The bill calls for the establishment of a seven-person Cannabis Management Board, which would be responsible for regulating the market and issuing cannabis business licenses. It was amended in committee month to add members to that board who have a social justice background.

People living in low-income neighborhoods and military veterans who lost honorable status due to a cannabis-related offense would be considered social equity applicants eligible for priority licensing.

Cannabis retails sales would launch on December 31, 2022.

Gov. Tim Walz (D) is also in favor of ending marijuana prohibition, and in January he called on lawmakers to pursue the reform as a means to boost the economy and promote racial justice. He did not include a request to legalize through his budget proposal, however.

Walz did say in 2019 that he was directing state agencies to prepare to implement reform in anticipation of legalization passing.

Winkler, meanwhile, said in December that if Senate Republicans don’t go along with the policy change legislatively, he said he hopes they will at least let voters decide on cannabis as a 2022 ballot measure.

Heading into the 2020 election, Democrats believed they had a shot of taking control of the Senate, but that didn’t happen. The result appears to be partly due to the fact that candidates from marijuana-focused parties in the state earned a sizable share of votes that may have otherwise gone to Democrats, perhaps inadvertently hurting the chances of reform passing.

In December, the Minnesota House Select Committee On Racial Justice adopted a report that broadly details race-based disparities in criminal enforcement and recommends a series of policy changes, including marijuana decriminalization and expungements.

Head Of Top Federal Drug Agency Says It’s Time To Consider Decriminalization

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Head Of Top Federal Drug Agency Says It’s Time To Consider Decriminalization

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The head of a top federal drug agency is criticizing the ongoing policy of criminalizing people for drug use and is suggesting that the government should instead consider a policy of decriminalization.

Nora Volkow, director of the National Institute on Drug Abuse (NIDA), penned an essay for the journal Health Affairs that’s titled “Addiction Should Be Treated, Not Penalized.” It lays out the case against incarcerating people over low-level drug offenses and looking at the issue as a public health matter.

While it stops short of explicitly endorsing decriminalization, Volkow says that the current system leads to disproportionate enforcement against communities of color and can actually increase the risk of overdose deaths.

“Drug use continues to be penalized, despite the fact that punishment does not ameliorate substance use disorders or related problems,” she said. “Imprisonment, whether for drug or other offenses, actually leads to much higher risk of drug overdose upon release.”

“We have known for decades that addiction is a medical condition—a treatable brain disorder—not a character flaw or a form of social deviance,” Volkow continued in the essay, which was first published by Health Affairs late last month and republished on NIDA’s website on Friday. “Yet, despite the overwhelming evidence supporting that position, drug addiction continues to be criminalized. The US must take a public health approach to drug addiction now, in the interest of both population well-being and health equity.”

The NIDA head pointed out how people of color have been “disproportionately harmed by decades of addressing drug use as a crime rather than as a matter of public health.” Citing disparities in how opioid criminalization has been enforced and laws punishing crack more harshly than powder cocaine, Volkow said these are examples of “racial discrimination that have long been associated with drug laws and their policing.”

What makes these admissions notable is the source from which they’re coming. While NIDA is known among advocates as a source of resistance to reforms such as ending marijuana prohibition, its director sides with them on the fundamental principle that substance misuse should not be criminalized.

“The damaging impacts of punishment for drug possession that disproportionately impact Black lives are wide ranging. Imprisonment leads to isolation, an exacerbating factor for drug misuse, addiction, and relapse,” the director said. “It also raises the risk of early death from a wide variety of causes.”

Volkow also said that beyond incarceration, merely being arrested for marijuana possession “can leave the individual with a criminal record that severely limits their future opportunities such as higher education and employment.” And that enforcement trend hurts black people more than white people despite comparable rates of consumption.

“This burden reinforces poverty by limiting upward mobility through impeded access to employment, housing, higher education, and eligibility to vote,” she said. “It also harms the health of the incarcerated, their non-incarcerated family members, and their communities.”

These statements ostensibly lend themselves to a harm reduction policy position in favor of decriminalization, but Volkow doesn’t specifically say that’s the route lawmakers should take. Instead, she says that research “is urgently needed to establish the effectiveness and impact of public health–based alternatives to criminalization, ranging from drug courts and other diversion programs to policies decriminalizing drug possession.”

To that end, NIDA is “redoubling its focus on vulnerabilities and progression of substance use and addiction in minority populations,” she said. “We are exploring research partnerships with state and local agencies and private health systems to develop ways to eliminate systemic barriers to addiction care.”

The agency is “also funding research on the effects of alternative models of regulating and decriminalizing drugs in parts of the world where such natural experiments are already occurring,” Volkow said, presumably referencing countries such as Portugal that have stopped criminalizing people over simple possession.

“People with substance use disorders need treatment, not punishment, and drug use disorders should be approached with a demand for high-quality care and with compassion for those affected,” she said. “With a will to achieve racial equity in delivering compassionate treatment and the ability to use science to guide us toward more equitable models of addressing addiction, I believe such a goal is achievable.”

While NIDA might not be widely considered a champion of progressive drug policy, its director has previously conceded that existing federal drug laws aren’t working.

In 2019, for example, she acknowledged that the Schedule I status of marijuana and other drugs makes it “very difficult” for researchers to study the benefits and risks of those substances.

“Indeed, the moment that a drug gets a Schedule I, which is done in order to protect the public so that they don’t get exposed to it, it makes research much harder,” Volkow said during a House Appropriations subcommittee hearing. “This is because [researchers] actually have to through a registration process that is actually lengthy and cumbersome.”

She also discussed the potential benefits and risks of cannabis at a congressional hearing last year.

NIDA is also one of the main agencies behind a new development in federally sanctioned marijuana research. After requesting public input last year on a standard THC unit for cannabis studies, it announced last week that it had reached a determination to set the standard at five milligrams of THC per dosage.

Don’t Bring CBD Pet Shampoo Onto Military Bases, U.S. Air Force Warns

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