Treasury Secretary Steven Mnuchin said on Wednesday that he will not take administrative action to protect banks that service marijuana businesses from being penalized by federal regulators, stating that it’s up to Congress to resolve the problem.
During a hearing before the House Appropriations Financial Services and General Government Subcommittee, Rep. Charlie Crist (D-FL) pressed the secretary to use his authority to instruct regulators not to punish banks for working with state-legal cannabis businesses.
“We have limited abilities [under existing guidance] to direct this issue,” the Mnuchin replied. “I would encourage Congress one way or another, without me making a policy view of dealing with this issue. The conflict is a problem. In which direction it is resolved I leave that to Congress and other experts.”
Later in the hearing, Rep. David Joyce (R-OH) pressed Mnuchin on the issue, requesting that Treasury keep Congress updated on problems related to dealing with marijuana businesses under federal prohibition.
The secretary again acknowledged that the ongoing conflict between federal and state marijuana laws creates “significant problems” for the Internal Revenue Service (IRS) and financial regulators. And he continued to implore Congress to take action.
“I’m not making a policy view on this because that’s not in my lane as to the conflict between state law and federal law. What I would say is my lane—and again I’ll repeat this because I think it’s important—this creates significant problems for the IRS,” he said, adding that federal officials have had to create “cash rooms” to store deposits from marijuana companies that don’t have access to traditional financial services.
“That creates significant risk in the communities for collecting this amount of cash. It’s problematic.”
Mnuchin, who’s been repeatedly asked to weigh in on cannabis banking issues in various hearings, said financial regulators are facing “significant issues” because of the existing legal conflicts. While the Financial Crimes Enforcement Network (FinCEN) can issue guidance clarifying its policies, he said it was incumbent upon Congress to resolve the problem legislatively.
“I would encourage Congress to deal with this one way or another, without me making a comment,” he said. “This is now an industry that is growing, that has a lot of cash and, as one of your colleagues made the comment, if this were somewhere else in the world with all this cash we’d have a very different view of it.”
Joyce followed up by stating that he’s surprised that more marijuana businesses haven’t been targets of crime given the large volumes of cash they operate with and asked the secretary whether he believes allowing these firms to access banking services would create transparency that could expose drug cartel activity.
Mnuchin didn’t directly answer the question but said, “I’m acknowledging that this creates problem for us and should be addressed.”
“Without legislation, we have limitations in what we can do on this issue. There is a conflict between federal and state law, and we don’t have the ability at Treasury to fix that conflict,” he said. “As long as that conflict exists, this is a business that generates lots of cash and obviously that creates concerns for us, both in our standpoint of money laundering and our standpoint of just the IRS in collecting it.”
At one point during the hearing, Rep. Mark Amodei (R-NV) chimed in to say that “the biggest money launderers” for federally illegal marijuana businesses are tax collectors.
“The irony is incredible,” he said.
While Mnuchin didn’t endorse any particular piece of legislation, there is a House-passed bill to resolve the problem that’s currently sitting in the Senate. Sen. Cory Gardner (R-CO) said last month that lawmakers are “close” to making a deal to advance the Secure and Fair Enforcement (SAFE) Banking Act.
In the meantime, certain banks continue to accept cannabis business accounts, federal data shows, though the number of firms being reported under current guidance has dipped, likely because regulators clarified that hemp companies are lawful and that financial institutions working with them don’t have to file tracking reports since the crop was federally legalized under the 2018 Farm Bill.
Idaho Medical Marijuana Activists ‘Likely’ To Seek Signature Gathering Relief After Court Ruling
A campaign to legalize medical marijuana in Idaho is preparing to potentially collect signatures again, as they are likely to seek the same relief that a federal court recently granted a separate campaign that found its petitioning efforts crippled by the coronavirus pandemic.
The judge said activists behind Reclaim Idaho, which is pushing an initiative on school funding, can start collecting signatures in-person and electronically for 48 days starting July 9. While the Idaho Cannabis Coalition wasn’t involved in that case, they feel the ruling will apply to them and they’re actively monitoring the situation.
“We are in the process of working with the local medical marijuana campaign to assess whether Judge Winmill’s order provides a route for the medical marijuana initiative to still qualify for the November ballot,” Tamar Todd, legal director for the New Approach PAC, which is lending support to the state cannabis effort, told Marijuana Moment.
“The medical marijuana campaign is similarly situated to the Reclaim Idaho campaign and will likely ask for a similar extension of time and permission to collect signatures electronically from the Secretary of State, and if necessary, from the District Court,” she said. “I don’t know the exact timeline as there are a number of moving pieces but it will be quick.”
On June 23, U.S. District Judge B. Lynn Winmill gave the state two options: either allow electronic signature gathering for 48 days or simply place the Reclaim Idaho initiative on the ballot regardless of the signature requirement. The state chose neither and proceeded to request that the ruling be stayed.
The judge denied the state’s request to stay the order, so the signature gathering for the school funding campaign can proceed on July 9. The state has since filed an emergency motion with the U.S. Court of Appeals for the Ninth Circuit to challenge the lower court’s ruling.
“The district court order severely and unquestionably disrupts Idaho’s election,” the state deputy attorney general wrote in the motion.
The deadline to submit 55,057 signatures to qualify the cannabis initiative passed on May 1, shortly after the group announced it was suspending petitioning activities because of the health crisis and the stay-at-home social distancing measures the state enacted. The cannabis campaign said it has about 45,000 raw signatures on hand at this point, and they’re confident that can fill the gap if they get the deadline extension and electronic petitioning option.
Under the proposed measure, patients with qualifying conditions could receive medical cannabis recommendations from physicians and then possess up to four ounces of marijuana and grow up to six plants.
While advocates say passing medical marijuana in one of the remaining states without such policies on the books would be a victory for patients in its own right, it could also have outsized federal implications. A House-passed bill to protect banks that service state-legal cannabis businesses from being penalized by federal regulators is currently sitting in limbo in a Senate committee chaired by a senator who represents the state.
Creating a medical marijuana program in Idaho, which is one of small handful of states that don’t yet even have limited CBD laws, could put additional pressure on Senate Banking Committee Chairman Mike Crapo (R-ID) to move the financial services legislation in Congress.
Summer Dreams Of Marijuana-Infused Slushies Are Melted By Oklahoma Regulators
Bad news for Oklahoma medical marijuana patients trying to beat the summer heat with a marijuana-infused slushy: State regulators say the icy beverages “are unlikely to meet requirements set forth in Oklahoma statutes and rules” for cannabis products.
As the weather heats up, THC-infused slushy machines have been popping up at more and more Oklahoma dispensaries. Made by companies such as Glazees, which offers flavors such as watermelon and blue raspberry, the THC-infused drinks sell for about $12-$15.
But despite their popularity with some patients, regulators say the slushies fail to comply with a number of state rules, such as a requirement that products be packaged in child-resistant containers. Dispensaries themselves also “are not allowed to alter, package, or label products,” regulators said.
State rules further require that all medical marijuana products be tested in their final form. “In this instance, the finished product is the slushy mixture to be dispensed to patients/caregivers, not the syrup,” regulators said. “If water, ice, or any other substance is added to the product, additional testing is required to ensure the product is safe for consumption and final-product labeling is accurate.”
The OMMA has received multiple inquiries regarding the processing and dispensing of marijuana-infused slushies on-site at medical marijuana dispensaries. Learn more here: https://t.co/3b6XFzYe2f pic.twitter.com/MPq4Z3PWft
— Oklahoma Medical Marijuana Authority (@OMMAOK) July 2, 2020
Regulators didn’t specify how adding water or ice to cannabis products could affect consumer safety, however.
The Oklahoma Medical Marijuana Authority (OMMA) issued the update on Thursday in what it called a “slushy-machine guidance” memo. The office said it had received “multiple inquiries regarding the processing and dispensing of marijuana-infused slushies on-site at medical marijuana dispensaries.”
It’s not the first obstacle encountered by Oklahoma marijuana businesses, which began popping up across the state voters passed a medical marijuana law in 2018.
Earlier this year, lawmakers passed a wide-ranging medical cannabis expansion bill, which would have allowed out-of-state residents to obtain temporary licenses, permitted licensed businesses to deliver marijuana to customers and eliminated jail time for for first-time possession convictions. But Gov. Kevin Stitt (R) then vetoed the bill, and lawmakers didn’t hold a vote to override the action.
Oklahoma activists also filed a proposed marijuana legalization ballot measure in December, but it’s unlikely the campaign can gather enough signatures to put the measure before voters this November. Their signature-gathering was largely delayed due to the coronavirus pandemic, and only last week did the state Supreme Court rule that the campaign could initiate petitioning. Supporters now have about 90 days to gather nearly 178,000 signatures from registered voters.
Photo courtesy of Max Pixel
Virginia Lawmakers Announce Plans To Legalize Marijuana, One Day After Decriminalization Takes Effect
Only a day after a new marijuana decriminalization law took effect in Virginia, top state lawmakers are announcing that they’re already looking ahead to full legalization.
A group of Democratic legislators on Thursday announced plans to introduce a bill to legalize and regulate a commercial cannabis market in the state. While the measure isn’t set to be filed until next year, lawmakers framed legalization as necessary in the fight for social and racial justice.
“Decriminalizing marijuana is an important step in mitigating racial disparities in the criminal justice system, but there is still much work to do,” House Majority Leader Charniele Herring (D) said in a press release. “While marijuana arrests across the nation have decreased, arrests in Virginia have increased.”
Other lawmakers backing the broader legalization push include Sens. Adam Ebbin (D) and Jennifer McClellan (D), as well as Del. Steve Heretick (D).
On Wednesday, the state’s new marijuana decriminalization policy took effect. The law, approved by lawmakers earlier this year and signed by Gov. Ralph Northam (D), removes criminal penalties for low-level marijuana possession. Under the change, having up to an ounce of cannabis is now punishable by a $25 fine and no threat of jail time or a criminal record.
Prior Virginia law punished simple marijuana possession with up to 30 days in jail, a $500 fine and a long-term criminal record.
“This bill will prevent low-level offenders from receiving jail time for simple possession while we move toward legalization with a framework that addresses both public safety and racial equity in an emerging market,” Herring said of the new law, which she sponsored in the House of Delegates and Ebbin led in the Senate.
The decriminalization measure also contains a provision to study future legalization. It requires a bevy of executive agencies, including “the Secretaries of Agriculture and Forestry, Finance, Health and Human Resources, and Public Safety and Homeland Security,” to convene an expert working group to study the matter. That panel’s report is due in November.
A separate legislative agency, the Joint Legislative Audit and Review Committee (JLARC), is also studying the impacts of possible legalization as the result of yet another resolution approved by lawmakers this year.
Lawmakers said on Thursday that the JLARC report, which is due in December, would inform how they shape legalization legislation they expect to file in 2021.
“Elements of the JLARC study include review of best practices from states such as Illinois that have developed a legal framework, testing and labelling recommendations, and measures to reduce illicit sales,” according to a press release from Ebbin’s office. “The study will also examine how best to provide redress and economic opportunity for communities disproportionately impacted by marijuana prohibition, and recommend programs and policies to reinvest in affected communities.”
The Virginia Legislative Black Caucus doesn’t want to wait for the results of the two reviews, however, and is pushing fellow lawmakers to take up cannabis legalization during a special session in August. In addition, the caucus has said its members intend to file bills to implement automatic expungement, ban no-knock warrants, require courts to publish racial date on people charged with low-level offenses and enact other sweeping criminal justice reforms.
Jenn Michelle Pedini, development director for the legalization advocacy group NORML and executive director of the group’s Virginia chapter, said the organization, which has worked with lawmakers on past reforms, looks forward to continuing to bring evidence-based cannabis policy to Virginia.
“For far too long, young people, poor people, and people of color have been disproportionately impacted by cannabis criminalization, and Virginia must take immediate steps to right these past wrongs and undo the damage that prohibition has waged upon hundreds of thousands of Virginians,” Pedini said. “It is time to legalize and regulate the responsible use of cannabis by adults in the Commonwealth.”
Ebbin said that despite the meaningful step of decriminalization, the state still has a long way to go.
“Today Virginia is taking an important first step in reducing the harm caused by the criminalization of cannabis,” he said in a statement. “The prohibition of marijuana has failed and the consequence of this failure has been felt overwhelmingly by Virginians of color, but it has not ended. It will only end when it is replaced by a regulated adult-use market that emphasizes equity—making whole those who have been burdened most by making sure they have a seat at the table and access to the marketplace. We are looking forward to doing the hard work needed to get this right.”
In the meantime, the Senate Democratic Caucus has announced it will pursue a bill during the special session next month to end law enforcement searches of people or vehicles based solely on the smell of marijuana, which critics say is a recipe for discriminatory enforcement. The group also noted that the chamber approved legislation during the regular legislative session that would have expunged certain marijuana charges and convictions, but that those bills didn’t make it to the governor’s desk.