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Twelve GOP Lawmakers Thank Senate Chairman For Delaying Marijuana Banking Bill

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Twelve Republican lawmakers sent a letter to the chair of the Senate Banking Committee on Thursday, thanking him for proposing a series of restrictive changes to a House-passed bill to provide marijuana businesses with greater access to financial services. Meanwhile, a coalition of more than 1,300 cannabis industry professionals sent a separate letter urging the chairman to advance the bill as written.

The first letter, led by Rep. Ted Budd (R-NC), thanked Sen. Mike Crapo (R-ID) for “introducing a public health perspective to the question of banking for marijuana enterprises, including recreational stores that are advertising products that are appealing to children.”

“We understand you have received significant pushback from these businesses for raising public health questions related to their business practices, and we urge you to stand strong,” it continues.

After the House approved the Secure and Fair Enforcement (SAFE) Banking Act in a largely bipartisan vote in September, there were open questions about how the GOP-controlled Senate would approach the legislation. Initially Crapo indicated that he was not interested in discussing the bill, but he took some by surprise when he later said he wanted to hold a vote on the legislation in his panel by the end of 2019.

The committee held a hearing on the issue in July but did not mark up the legislation. Then the chairman said in December that he wanted to see several significant revisions, including some that reform advocates and industry stakeholders view as untenable. Among Crapo’s proposed revisions are limiting banking access to cannabis businesses that sell products with a maximum of two percent THC—a policy that would disqualify virtually all existing marijuana firms.

All twelve lawmakers who signed the new letter voted against the SAFE Banking Act on the House floor. They reiterated that they remain opposed to the reform move and laid out three areas of particular concern where they say the legislation “liberalizes federal law surrounding marijuana and would result in increased promotion of marijuana use.”

They wrote that high concentrations of THC in cannabis are a public health concern and that even relatively low levels of the cannabinoid can cause “IQ loss, increased risk of serious mental illness, and addiction.” They also argue that THC vapes, including those obtained in regulated markets, have been linked to lung injuries. Finally, they expresses worry about marijuana-impaired driving.

“We thank you again for your examination and consideration of these important public health topics,” the letter to Crapo concludes. “We remain opposed to liberalizing drug laws (including around banking), and we see these as some of our areas of greatest concern. We must protect our youth by preventing investment into companies that would prey upon them.”

The separate industry led letter—which was signed by representatives of major businesses and organizations such as the National Cannabis Industry Association, Cannabis Trade Federation, Marijuana Policy Project, VS Strategies, 4Front Ventures, Acreage Holdings and hundreds of others—makes the case that Crapo should proceed to hold a markup of the legislation as passed by the House.

“This is not a partisan issue, or a regional issue. We are a bipartisan group, with operations spread across the United States,” the letter states. “Simply put, this is an issue of fairness and of safety.”

“Because of the absence of banking reform that keeps pace with the federal hemp reforms and state-level medical and adult-use reforms, many cannabis businesses struggle to obtain and maintain bank accounts. Yet, banking is a crucial element for this burgeoning industry to operate safely. Without banking services, U.S. businesses will continue to operate in a cash environment that endangers employees and the public. Every day that we wait is another day that our employees and the members of the public who patronize our businesses are at risk of robbery and assault because we operate in an all cash environment.”

“We are merely asking that you facilitate the availability of financial services to the hemp and state-legal cannabis industry in order to improve public safety, allow states and the federal government to easily track and collect tax revenue, and assist the state-legal industry to displace an illicit market that is currently operating free from any regulatory oversight,” the group wrote, adding that the industry “stands ready to work with your office on the myriad technical issues that you have suggested should be a priority, including making certain that these products are not available to children.”

Responding to the opposing letter from GOP lawmakers, Justin Strekal, political director of NORML, told Marijuana Moment that if “a single signer of this letter was genuinely concerned about any of the issues laid out, then they would call for legalization and regulation, not maintaining prohibition and an illegal marijuana marketplace.”

“Sadly, they are simply relying on tired, lazy reefer madness rhetoric.”

Joining Budd in signing the letter are: Reps. Hal Rogers (R-KY), Robert Aderholt (R-AL), Doug Lamborn (R-CO), Mark Meadows (R-NC), Paul Gosar (R-AZ), David Rouzer (R-NC), Ken Buck (R-CO), Andy Biggs (R-AZ), Debbie Lesko (R-AZ), Dan Bishop (R-NC) and Andy Harris (R-MD).

Kevin Sabet, president of the prohibitionist group Smart Approaches to Marijuana, said in a press release that his group is “thankful these members of Congress are choosing to stand in support of public health and safety by reassuring Senator Crapo that he is acting in the best interest of the country by slowing down the rush to extend the federally illegal marijuana industry access to banks.”

“With the host of unknown health harms that can result from today’s super potent pot products, the risk of expanding this industry are too great,” he said.

Budd, for his part, said in a statement about the letter that he believes “we need a full examination of these harms to ensure that Americans, especially our children, don’t fall into an unhealthy lifestyle.”

The new dueling letters come weeks after after the House sponsors of the SAFE Banking Act wrote to Crapo, urging him to advance the financial services-focused bill despite his reservations on broader marijuana issues.

Pennsylvania Lawmaker Unveils Updated Marijuana Legalization Bill In Letter To Colleagues

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GOP Senator Presses Treasury Secretary On Tax Credits For Marijuana Businesses

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A Republican senator recently pressed the head of the Treasury Department on whether marijuana businesses qualify for a federal tax benefit.

During a Senate Finance Committee hearing on Wednesday, Treasury Secretary Steven Mnuchin was asked about the “opportunity zone” tax credit, which is meant to encourage investments in “distressed,” low-income communities through benefits such as deferrals on capital gains taxes.

Sen. James Lankford (R-OK), whose state’s voters approved a medical marijuana ballot measure in 2018, told Mnuchin that businesses that derive more than five percent of their profits from things like alcohol sales are ineligible for the tax credit, but there’s “not a definition dealing with cannabis businesses.”

“Are they within that five percent amount or are they not at all because there’s a federal prohibition on cannabis sales?” the senator asked.

“I’m going to have to get back to you on the specifics,” Mnuchin replied.

“That’d be helpful to get clarity because there are cannabis businesses across the country that, if they fall in opportunity zones, they’ll need clarification on that,” Lankford said. “When you and I have spoken about it before—it’s difficult to give a federal tax benefit to something that’s against federal law.”

 

Lankford, who opposes legalization and appeared in a TV ad against his state’s medical cannabis ballot measure, has raised this issue with the Treasury secretary during at least two prior hearings. When he questioned whether cannabis businesses qualify for the program last year, he clarified that he personally does not believe they should.

While Mnuchin’s department has yet to issue guidance on the issue, he said in response to the earlier questioning that his understanding is that “it is not the intent of the opportunity zones that if there is this conflict [between state and federal marijuana laws] that has not been cleared that, for now, we should not have those businesses in the opportunity zones.”

Mnuchin has also been vocal about the need for Congress to address the lack of financial resources available to state-legal marijuana businesses. Because so many of these companies are forced to operate on a largely cash-only basis, he said the Internal Revenue Service has had to build “cash rooms” to store their tax deposits.

“There is not a Treasury solution to this. There is not a regulator solution to this,” he said during one hearing. “If this is something that Congress wants to look at on a bipartisan basis, I’d encourage you to do this. This is something where there is a conflict between federal and state law that we and the regulators have no way of dealing with.”

Last week’s Finance Committee hearing was centered around President Trump’s Fiscal Year 2021 budget request, which separately includes a provision calling for the elimination of an appropriations rider that prohibits the Justice Department from using its fund to interfere in the implementation of medical cannabis laws as well as a continued block on Washington, D.C. spending its own local tax dollars to legalize marijuana sales.

American Bar Association Wants Protections For Marijuana Banking And Lawyers Working With Cannabis Clients

Photo courtesy of C-SPAN.

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American Bar Association Wants Protections For Marijuana Banking And Lawyers Working With Cannabis Clients

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The American Bar Association (ABA) approved two marijuana-related resolutions during its midyear meeting on Monday.

The group’s House of Delegates voted in favor of proposals endorsing pending federal legislation to protect banks that service cannabis businesses and calling for a clarification of rules to ensure that lawyers will not be penalized for representing clients in cases concerning state-legal marijuana activity.

Under the banking resolution, ABA “urges Congress to enact legislation to clarify and ensure that it shall not constitute a federal crime for banking and financial institutions to provide services to businesses and individuals, including attorneys, who receive compensation from the sale of state-legalized cannabis or who provide services to cannabis-related legitimate business acting in accordance with state, territorial, and tribal laws.”

ABA added that “such legislation should clarify that the proceeds from a transaction involving activities of a legitimate cannabis-related business or service provider shall not be considered proceeds from an unlawful activity solely because the transaction involves proceeds from a legitimate cannabis-related business or service provider, or because the transaction involves proceeds from legitimate cannabis-related activities.”

A bill that would accomplish this goal was approved by the House of Representatives last year, but it’s currently stalled in the Senate, where it awaits action in the Banking Committee. That panel’s chair, Sen. Mike Crapo (R-ID) is under pressure from industry stakeholders to advance the legislation, but he’s also heard from anti-legalization lawmakers who’ve thanked him for delaying the bill.

“Passage of the [Secure and Fair Enforcement] Banking Act or similar legislation will provide security for lawyers and firms acting to advise companies in the industry against having their accounts closed or deposits seized,” a report attached to the ABA resolution states. “This will also foster the rule of law by ensuring that those working in the state-legalized legitimate cannabis industry can seek counsel and help prevent money laundering and other crimes associated with off-the-books cash transactions.”

“Currently, the threat of criminal prosecution prevents most depository institutions from banking clients, including lawyers, who are in the stream of commerce of state-legalized marijuana. This Resolution is necessary to clarify that such provision of legal and other services in compliance with state law should not constitute unlawful activity pursuant to federal law.”

The second marijuana-related resolution ABA adopted on Monday asks Congress to allow attorneys to serve clients in cannabis cases without facing federal punishment.

Text of the measure states that the association “urges Congress to enact legislation to clarify and explicitly ensure that it does not constitute a violation of federal law for lawyers, acting in accord with state, territorial, and tribal ethical rules on lawyers’ professional conduct, to provide legal advice and services to clients regarding matters involving marijuana-related activities that are in compliance with state, territorial, and tribal law.”

Such a change would provide needed clarity for lawyers as more states legalize cannabis for adult use. ABA’s own rules of conduct have been a source of conflict for attorneys, as it stipulates that they “shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent.” Federal law continues to regard marijuana as an illegal, strictly controlled substance.

An ABA report released last year made the case that there’s flexibility within that rule, however, as “it is unreasonable to prohibit a lawyer from providing advice and counsel to clients and to assist clients regarding activities permitted by relevant state or local law, including laws that allow the production, distribution, sale, and use of marijuana for medical or recreational purposes so long as the lawyer also advises the client that some such activities may violate existing federal law.”

A new report attached to the resolution states that “statutory guidance is needed that explicitly ensures that attorneys who adhere to their state ethics rules do not risk federal criminal prosecution simply for providing legal counsel to clients operating marijuana businesses in compliance with their state law.”

“This Resolution accomplishes this elegantly by harmonizing federal criminal liability with States’ ethical rules regarding the provision of advice and legal services relating to marijuana business. If a state has legalized some form of marijuana activity and explicitly permitted lawyers to provide advice and legal services relating to such state-authorized marijuana activity, such provision of advice and legal services shall not be unlawful under the Controlled Substances Act or any other federal law.”

Last year, ABA adopted another cannabis resolution—arguing that states should be allowed to set their own marijuana policies.

Border Patrol Union Head Admits Legalizing Marijuana Forces Cartels Out Of The Market

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Border Patrol Union Head Admits Legalizing Marijuana Forces Cartels Out Of The Market

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The head of the labor union that represents U.S. Border Patrol agents acknowledged on Friday that states that legalize marijuana are disrupting cartel activity.

While National Border Patrol Council President Brandon Judd was attempting to downplay the impact of legalization, he seemed to inadvertently make a case for the regulation all illicit drugs by arguing that cartels move away from smuggling cannabis and on to other substances when states legalize.

Judd made the remarks during an appearance on C-SPAN’s Washington Journal, where a caller said that “the states that have legalized marijuana have done more damage to the cartels than the [Drug Enforcement Administration] could ever think about doing.”

“As far as drugs go, all we do is we enforce the laws. We don’t determine what those laws are,” Judd, who is scheduled to meet with President Trump on Friday, replied. “If Congress determines that marijuana is going to be legal, then we’re not going to seize marijuana.”

“But what I will tell you is when he points out that certain states have legalized marijuana, all the cartels do is they just transition to another drug that creates more profit,” he said. “Even if you legalize marijuana, it doesn’t mean that drugs are going to stop. They’re just going to go and start smuggling the opioids, the fentanyl.”

One potential solution that Judd didn’t raise would be to legalize those other drugs to continue to remove the profit motive for cartels. Former presidential candidate Andrew Yang made a similar argument in December.

Federal data on Border Patrol drug seizures seems to substantiate the idea that cannabis legalization at the state level has reduced demand for the product from the illicit market. According to a 2018 report from the Cato Institute, these substantial declines are attributable to state-level cannabis reform efforts, which “has significantly undercut marijuana smuggling.”

Additionally, legalization seems to be helping to reduce federal marijuana trafficking prosecutions, with reports showing decreases of such cases year over year since states regulated markets have come online.

In his annual report last year, Supreme Court Chief Justice John Roberts also noted reduced federal marijuana prosecutions—another indication that the market for illegally sourced marijuana is drying up as more adults consumers are able to buy the product in legal stores.

Top Mexican Senator Says Marijuana Legalization Bill Will Be Approved This Month

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