William Barr, President Trump’s nominee to serve as the next U.S. attorney general, made headlines earlier this month when he pledged during his Senate confirmation hearing not to “go after” marijuana companies that comply with state laws.
Now, in response to written questions from senators, Barr is putting that pledge on paper, in black and white. He’s also calling for the approval of more legal growers of marijuana for research, and is acknowledging that a recent bill legalizing hemp has broad implications for sale of cannabis products.
“As discussed at my hearing, I do not intend to go after parties who have complied with state law in reliance on the Cole Memorandum,” he wrote, referring to Obama-era cannabis enforcement guidance that then-Attorney General Jeff Sessions rescinded last year.
That said, Barr isn’t committing to formally replacing the Cole Memo, which generally directed federal prosecutors not to interfere with state marijuana laws, with new guidance reiterating the approach.
“I have not closely considered or determined whether further administrative guidance would be appropriate following the Cole Memorandum and the January 2018 memorandum from Attorney General Sessions, or what such guidance might look like,” he wrote in response to a question from Sen. Cory Booker (D-NJ). “If confirmed, I will give the matter careful consideration.”
And Barr, who previously served as attorney general under President George H. W. Bush, says it would be even better if Congress got around to addressing the growing gap between state and federal marijuana laws.
“I still believe that the legislative process, rather than administrative guidance, is ultimately the right way to resolve whether and how to legalize marijuana,” he wrote in a compilation of responses delivered to the Senate Judiciary Committee on Sunday.
But even as Barr reiterated that he wouldn’t go after people and businesses that benefited from the Cole memo, he voiced criticism of policy directives like it and of the idea of legalization in general.
“An approach based solely on executive discretion fails to provide the certainty and predictability that regulated parties deserve and threatens to undermine the rule of law,” Barr wrote in response to a question from Sen. Dianne Feinstein (D-CA). “If confirmed, I can commit to working with the Committee and the rest of Congress on these issues, including any specific legislative proposals. As I have said, however, I do not support the wholesale legalization of marijuana.”
Nonetheless, legalization advocates were happy to see the nominee reiterating his non-enforcement pledge when it comes to state-legal businesses.
“It’s positive to see Barr make the same commitments on marijuana enforcement in writing as he did in the hearings,” Michael Collins, director of national affairs for the Drug Policy Alliance, said. “My hope is that he sends this message to all federal prosecutors so that states are given space to reform their outdated, broken, racist marijuana laws, and the country can turn the page on prohibition.”
Elsewhere in the 247-page document, Barr says that he supports expanding the number of institutions that are allowed to grow marijuana to be used in scientific research.
“I support the expansion of marijuana manufacturers for scientific research consistent with law,” he wrote in response to a question from Sen. Charles Grassley (R-IA). “If confirmed, I will review the matter and take appropriate steps.”
A single facility at the University of Mississippi has for half a century maintained a monopoly on the cultivation of cannabis for research, but due to concerns about the availability and quality of its products, the Drug Enforcement Administration in 2016 announced a process to license additional manufacturers. However, under Sessions, the Department of Justice has blocked the agency from acting on any of the several dozen applications it has received from would-be growers.
“I am not familiar with the details of these applications or the status of their review,” Barr wrote. “If confirmed, I can commit to reviewing the matter.”
Barr also acknowledged that, due to the passage of the Farm Bill and its hemp legalization provisions late last year, hemp-derived cannabidiol (CBD) and other components and products made from low-THC cannabis plants are legally distinct from those that come from marijuana.
“Products derived from hemp, including CBD, are therefore subject to different legal and regulatory restrictions than those derived from non-hemp marijuana plants under certain circumstances,” he wrote.
He also pledged to “look into” pending medical and scientific evaluations of CBD, which could lead to its formal rescheduling under the Controlled Substances Act.
All told, the cannabis comments indicate that if Barr is confirmed by the Senate, the Justice Department would be poised to take a very different approach to marijuana issues than it did under Sessions, who has long been a vocal legalization opponent.
“After decades of failed drug war, it’s difficult to grasp the progress we’ve made in just the past couple of years. From a hawkish attorney general who sent a chill through the industry and threatened to escalate enforcement to a nominee who put his hands-off federalist approach to prohibition in writing,” said Don Murphy, director of federal policies for the Marijuana Policy Project. “William Barr didn’t just wave the white flag, he signed a peace agreement.”
NORML Political Director Justin Strekal said Barr is “incredibly wise to acknowledge that the genie is out of the bottle when it comes to the marijuana reform movement.”
“Now is the time for the Department of Justice to work in good faith with the Senate Judiciary Committee on legislative solutions that address the senseless waste of law enforcement’s precious time and resources due to the failed federal policy of prohibition,” he said.
Congressman Says Marijuana Could Be Legal Sooner If Trump Stops Tweeting
The plan to federally legalize marijuana is well underway, Rep. Earl Blumenauer (D-OR) said in a new interview. But it’d be moving a lot quicker if it weren’t for distractions emanating from the president’s Twitter account, he joked.
Blumenauer gave a status update on his plan to end federal cannabis prohibition during a Sunday KATU-TV interview in which he was asked whether he felt Congress was still on track to legalize marijuana by year’s end.
“We are in really great shape. We’ve had a number of votes in the House. The things I’ve put in the blueprint are moving forward,” the congressman said, adding that the Judiciary Committee held a major hearing on legalization legislation in July.
Blumenauer issued a memo to his party’s leadership last year—which he called a “blueprint”—in which he laid out a step-by-step plan by which House committees could advance incremental cannabis legislation while building up to the eventual federal legalization of marijuana by the end of 2019.
“We’ve got things keyed up. I think there’s a great chance of doing it this Congress—maybe even this fall—depending on how crazy things get,” he said in the TV interview.
“Every time I turn around, there’s some other national catastrophe or Trump is out there with Twitter storms,” he cautioned. “It’s not a manageable situation, but the issues dealing with cannabis are on the right track.”
“We can get it wrapped up this Congress, maybe even this year.”
Watch Blumenauer’s marijuana comments, starting at about 9:35 into the video below:
While the 116th Congress is by many measures the most cannabis friendly in history, advocates hoped that reform legislation would move more expeditiously, especially in the Democratic-controlled House.
I recently spoke with @BrianWoodKATU on Your Voice Your Vote about some pressing issues: gun violence, my visit to the southern border, healthcare reform, cannabis legalization, the housing crisis, and more…https://t.co/Nb2V2a13Q4
— Earl Blumenauer (@repblumenauer) August 19, 2019
For example, a bipartisan bill that would protect banks that service marijuana businesses from being penalized by federal regulators cleared the House Financial Services Committee in March, but it didn’t get a full House floor vote before the August recess like advocates anticipated.
That said, companion legislation did get a somewhat unexpected hearing in the Senate Banking Committee even after the panel’s chair indicated it wouldn’t advance as long as cannabis remains federally illegal.
Blumenauer also said in the interview that voters are ahead of Congress on the issue, moving forward with state-level legalization efforts while legislative action on Capitol Hill crawls ahead. And beyond the U.S.’s border, the congressman mentioned that Mexico will be implementing legalization this fall.
Photo courtesy of KATU 2.
Credit Unions Can Bank Hemp Businesses, Federal Agency Announces
A federal financial agency released updated guidelines on banking in the hemp industry on Monday, following up on requests from multiple lawmakers to provide clarity on the issue.
The National Credit Union Administration (NCUA) said in its interim guidance that providing banking services to hemp businesses is allowable since the crop and its derivatives were federally legalized under the 2018 Farm Bill. The notice also emphasized the economic potential of hemp and the role credit unions can play as the industry continues to develop.
“Lawful hemp businesses provide exciting new opportunities for rural communities,” NCUA Chairman Rodney Hood said in a press release. “I believe today’s interim guidance keeps with the mission of the nation’s cooperative credit system to serve people who have been overlooked and underserved.”
“Many credit unions have a long and successful history of providing services to the agriculture sector,” he said. “My expectation is that credit unions will thoughtfully consider whether they are able to safely and properly serve lawfully operating hemp-related businesses within their fields of membership.”
Growth in hemp-related commerce will create a need for capital & financial services. Interim guidance gives #creditunions the ability to step in & provide hemp-related businesses these customary financial services. Learn more: https://t.co/otTzUt3tL7
— The NCUA (@TheNCUA) August 19, 2019
— The NCUA (@TheNCUA) August 19, 2019
In a letter sent to Sen. Michael Bennet (D-CO) last month, which the presidential candidate’s Senate office shared exclusively with Marijuana Moment, Hood noted that NCUA was “working on possible future guidance to financial institutions” but that such guidance would be subject to change depending on what regulations the U.S. Department of Agriculture (USDA) ultimately develops.
In the meantime, the new interim guidance notes that “growth in hemp-related commerce could provide new economic opportunities for some communities, and will create a need for such businesses to be able to access capital and financial services” while clarifying that credit unions “may provide the customary range of financial services for business accounts, including loans, to lawfully operating hemp related businesses within their fields of membership.”
While NCUA said that it is “generally a credit union’s business decision as to the types of permissible services and accounts to offer,” it highlighted the need to comply with the Bank Secrecy Act (BSA) and with Anti-Money Laundering (AML) requirements, in particular:
—Credit unions need to maintain appropriate due diligence procedures for hemp-related accounts and comply with BSA and AML requirements to file Suspicious Activity Reports (SARs) for any activity that appears to involve potential money laundering or illegal or suspicious activity. It is the NCUA’s understanding that SARs are not required to be filed for the activity of hemp-related businesses operating lawfully, provided the activity is not unusual for that business. Credit unions need to remain alert to any indication an account owner is involved in illicit activity or engaging in activity that is unusual for the business.
—If a credit union serves hemp-related businesses lawfully operating under the 2014 Farm Bill pilot provisions, it is essential the credit union knows the state’s laws, regulations, and agreements under which each member that is a hemp-related business operates. For example, a credit union needs to know how to verify the member is part of the pilot program. Credit unions also need to know how to adapt their ongoing due diligence and reporting approaches to any risks specific to participants in the pilot program.
—When deciding whether to serve hemp-related businesses that may already be able to operate lawfully–those not dependent on the forthcoming USDA regulations and guidelines for hemp production–the credit union needs to first be familiar with any other federal and state laws and regulations that prohibit, restrict, or otherwise govern these businesses and their activity. For example, a credit union needs to know if the business and the product(s) is lawful under federal and state law, and any relevant restrictions or requirements under which the business must operate.
“Hemp provides new opportunities for communities with an economic base involving agriculture,” the notice states. “The NCUA encourages credit unions to thoughtfully consider whether they are able to safely and properly serve lawfully operating hemp-related businesses within their fields of membership.”
“Lending to a lawfully operating hemp-related business is permissible.”
After USDA releases its rules for the hemp industry, which are expected to come ahead of the 2020 planting season, NCUA said it “will issue additional guidance on this subject.”
Senate Majority Leader Mitch McConnell, who like Bennet has also pressured federal regulators to clear up confusion around hemp banking, took credit for NCUA’s response and celebrated the new guidance.
At @senatemajldr’s request, @TheNCUA issues guidance to assist legal #hemp industry. Hearing concerns from his constituents, McConnell urged NCUA to provide clarification to help address this barrier in #Kentucky. @KYCreditUnions applauds the positive news https://t.co/5kaQmxJE1x
— Senator McConnell Press (@McConnellPress) August 19, 2019
“I’m delighted to hear the NCUA has answered my call on behalf of Kentuckians to ensure the legal hemp industry can access much-needed financial services,” McConnell said in a press release. “Although President Trump signed into law my initiative last year to remove hemp from the federal list of controlled substances, many of my constituents have told me about their difficulty receiving loans and other services that are necessary to successfully run a hemp business.”
“Through this guidance by the NCUA, I look forward to more hemp farmers, processors and manufacturers starting or growing their operations with the help of Kentucky’s credit unions,” he said. “As Senate Majority Leader, I’ll continue advocating for Kentucky’s priorities throughout the federal government, and I’m proud of today’s positive news.”
Credit unions have generally been friendlier to the marijuana and hemp industries than have conventional banks, and NCUA has similarly taken a more proactive role in evolving to meet the demands of these burgeoning markets.
For example, the agency’s head clarified earlier this month that credit unions wouldn’t be punished simply for serving hemp businesses so long as they were following standard procedures. NCUA also released a draft rule in July that would allow people with past drug convictions to work at credit unions.
Cannabis banking issues have received significant congressional attention this session, with a bipartisan consensus emerging around creating a legislative fix so that hemp and marijuana businesses are able to access financial services.
The hemp industry in particular has enjoyed bipartisan support since the crop was legalized, but while marijuana remains a federally controlled substance, more lawmakers from across the aisle are expressing interest in affording cannabis businesses the same access in order to increase financial transparency and mitigate public safety risks associated with operating on a largely cash-only basis.
The House Financial Services Committee approved a bill in March that would protect banks that service marijuana businesses from being penalized by federal regulators, and the Senate Banking Committee also held a hearing on the issue last month.
Banking Chairman Mike Crapo (I-ID), who suggested earlier this year that his panel wouldn’t convene to discuss the matter as long as cannabis is federally illegal, has since taken a stance that the issue needs to be resolved.
But while advocates hoped that legislation to address marijuana banking problems would be taken up by the full House ahead of the August recess, that window closed and attention is now turned to a potential hearing in the fall.
Photo courtesy of Brendan Cleak.
Marijuana Taxes Differ In Legalized States, Complicating Projections
The marijuana legalization movement is often described as a state-level experiment—and one aspect of its implementation that’s garnering more attention is how legalized jurisdictions approach cannabis taxes in different ways.
Pew Charitable Trusts has been monitoring taxation in the legal industry and released a report on Monday that explains the challenges of establishing effective tax schemes and accurately projecting revenues, especially considering that experts don’t have a sizable body of historical data on which to base predictions like they do for alcohol and tobacco.
That said, there are some lessons to be taken from recent years since early legalizers implemented their respective programs.
Because tax rates differ significantly for marijuana businesses and consumers depending on the state, revenue from cannabis sales has varied, leaving policymakers in a flux as they work to meet budget goals and predict future trends, Pew reported.
Revenue was 40 percent higher in the first six months of sales than Nevada anticipated, for example, while sales in California were 45 percent lower than initially projected.
Here’s a breakdown of marijuana tax revenue in five adult-use states:
Pew also observed that revenue growth is slowing in Colorado and Washington, the first states to legalize for recreational use, as the market evolves.
— Pew States (@PewStates) August 19, 2019
“Supporters of legalizing recreational marijuana expected a new revenue source for states, but market uncertainties continue to challenge revenue forecasters and policymakers,” Pew concluded. “The difficulty in forecasting revenue is compounded by the fact that states have only recently begun to understand the recreational marijuana market: the level of consumer demand for recreational marijuana products, the types of users and how much they might pay for the drug, and competition with the black market.”
“States have learned some lessons but continue to grapple with unknowns.”
In order to prevent budget shortfalls that could impact funding for certain programs, policymakers should take caution and bear in mind the differences “between marijuana revenue’s short-term growth and long-term sustainability.”
“While these new dollars can fill immediate budget needs, they may prove unreliable for ongoing spending demands,” Pew said. “Policymakers should look to other, more familiar sin taxes for lessons on how to manage marijuana tax revenue most effectively.”
Photo courtesy of WeedPornDaily.