Politics
USDA Unveils Guidelines For Federal Loans To Hemp Business
The U.S. Department of Agriculture (USDA) recently released guidelines for processing federal loans for the hemp industry.
Since hemp was federally legalized under the 2018 Farm Bill, it is now considered an agricultural commodity like any other crop, and USDA has taken several steps to sync the market with its various programs and services. And the department’s new memo to state and county offices provides clarity on how to process direct or guaranteed loan applications for hemp producers.
The seven-page document, which was released last month, describes the various requirements a hemp business must satisfy in order to access USDA’s lending services. Chief among those requirements is for a prospective borrower to be licensed under a USDA-approved state or tribal hemp program, or under USDA’s basic regulations if the jurisdiction the business operates in has not submitted its own rules.
“While it’s understood that this new commodity will likely produce some servicing challenges because of State and Federal regulations, it should be treated as closely as possible to any other agricultural commodity and serviced in the same manner,” the memo states. “Hemp will be considered like any other borrower produced commodity, if the hemp was produced under a license authorized by the 2014 or 2018 farm bills, and provided the crop is not abandoned or destroyed.”
Borrowers who are not licensed to grow hemp will be considered in non-monetary default and any losses will not be covered.
While the document emphasizes that hemp should generally be treated the same as other crops, it also acknowledges unique requirements and challenges that the market continues to face.
For example, hemp that contains more than 0.3 percent THC must be disposed of under the department’s rules. And, the memo says, USDA’s Farm Service Agency (FSA) “will not pay for these services for direct loans and FSA will not cover a lender’s advance to the borrower to cover the cost as part of any guaranteed loan loss claim.”
Officials should also be cognizant of ongoing problems with banking access for the industry, as some financial institutions still decline to service businesses that produce the crop despite its federal legalization.
“Applicants should ensure the availability of a banking institution authorizing these financial transactions to ensure availability of proceeds to support payment of expenses and debts,” USDA said. “Additionally, producers will be required to assign their sale proceeds to FSA in an amount not to exceed their annual payment.”
For direct and guaranteed loans, hemp businesses must have a contract with FSA laying out termination policies and their ability to repay the loans. Part of that calculus should involve looking at the “intended use of hemp being produced,” whether that’s fiber, seed or CBD oil.
The Farm Bill doesn’t allow for hemp licenses to be transferred, which also has some lending service implications, USDA wrote.
The memo says that “if the borrower defaults on the loan, dies, or abandons the operation, under no circumstance could another legal individual, lender, or FSA Agency official obtain the right to the commodity and attempt to liquidate it as a full or partial income recovery attempt.”
This latest document seems to build off the establishment of loan programs for hemp businesses that was described in a memo released in February. The purpose of that notice, which itself was an update to one published last October, was to provide “updated guidance on the analysis and evaluation of Direct Loan applications and/or requests for guaranteed loans for industrial hemp growers, especially as it relates to contracts.”
USDA announced last year that producers operating under the 2014 Farm Bill could access certain federal loans, but it said regulations had to be developed for those growing hemp under the latest agriculture legislation. In the time since, the department has been systematically approving state and tribal hemp plans on a rolling basis while at the same time pushing to normalize the industry—by providing hemp businesses with access to federal crop insurance, for example.
More recently, the hemp industry scored a victory after Congress passed legislation last month stipulating for the first time that farmers who cultivate the crop are eligible for federal coronavirus relief programs through the Small Business Administration.
Photo courtesy of Pixabay.
A Seattle City Council committee considered a resolution on Friday that would decriminalize a wide range of activities around psychedelic drugs, including cultivation and sharing with others, by declaring those activities among the city’s lowest law enforcement priorities.
The council’s Public Safety and Human Services Committee heard comments from the proposal’s supporters, including Councilmember Andrew Lewis and the advocacy group Decrim Nature Seattle. While the panel did not vote on the draft resolution, Councilmember Lisa Herbold, who chairs the committee, said the full City Council will likely take up the measure in coming weeks.
“Hopefully the city—as tends to be the case on many impactful progressive issues in the state of Washington—can lead the way on setting the table for an important conversation many communities around the country are having,” Lewis, who introduced the measure, said at the meeting.
As introduced, the proposed resolution expresses the City Council’s support for what it calls “full decriminalization” around psychedelics used “in religious, spiritual, healing, or personal growth practices.” It would apply to plants or fungi that contain substances “including, but not limited to” psilocybin mushrooms, ayahuasca, igoba and mescaline, though it would not include the peyote cactus.
If adopted, the resolution would declare “that the investigation, arrest, and prosecution of anyone engaging in entheogen-related activities…should be among The City of Seattle’s lowest enforcement priorities” and request that the Seattle Police Department “move towards the formal codification and adoption of that practice as departmental policy.”
It would further express the council’s intent to analyze the city’s municipal “to determine what changes would be necessary to protect from arrest or prosecution individuals who cultivate entheogens.” Those changes would be made through a subsequent city ordinance.
It’s already city policy neither to detain nor arrest individuals caught with psychedelics, nor to confiscate those substances, the resolution says—the result of a state Supreme Court decision earlier this year. But other activity, including cultivation and distribution, remain punishable by arrest and incarceration.
Supporters say there are compelling reasons to expand decriminalization beyond simple possession: The resolution points to the disproportionate impact of the drug war on people of color and low-income communities, calling decriminalization “an effort to begin to correcting the irreparable harm.” It also acknowledges the emerging potential of psychedelics, in conjunction with therapy, to treat a variety of mental health conditions, including depression and anxiety, post-traumatic stress disorder (PTSD), end-of-life anxiety, substance use-disorder and others.
The resolution was inspired in part by the City Council’s interest in reducing opioid-related deaths. In June, Lewis Herbold formally asked a task force to examine “public policy governing psychedelic medicines” as a way to combat the overdose epidemic. Late last month, the task force came back with recommendations that the city decriminalize psychedelics and consider removing criminal penalties around all drugs.
At the same time, the advocacy group Decrim Nature Seattle (DNS) has been lobbying the council to make the policy change around plant- and fungi-derived psychedelics. The group began its work two years ago, and in May it submitted a draft ordinance to Lewis’s office at the councilmember’s request. Members have also appeared regularly at council meetings to urge the policy change.
Lewis told Marijuana Moment this month that it’s his “personal goal” to introduce an ordinance to decriminalize psychedelics by the end of this year. “And frankly, if there’s sort of a consensus and there’s lightning in a bottle, I don’t think it’s inconceivable that an ordinance could be passed this year,” he said. “I think it’s actually pretty reasonable.”
In an email to Marijuana Moment ahead of Friday’s committee meeting, Tatiana Luz Quintana, DNS’s co-director and co-chair of education and outreach, said the group expects the resolution “will prepare the council to spend time creating a work plan to address full decriminalization, meaning possession, cultivation, social sharing (non-monetary exchange) and community-based healing and ceremony.”
“The implications of this policy change would be long lasting,” Quintana said. “Within Seattle, after these reforms, many people who operate in the underground will be more free to advertise their services. Decriminalization will also promote a consciousness shift in the public, increasing exposure to conversations around psychedelics, helping to break the ice and break down stigmas, and create an environment ripe for integrating these substances into our culture.”
DNS said the change will allow Seattle to establish best practices, including around education and community-based healing. Advocates also presented to the City Council committee a sign-on letter in support of decriminalization signed by more than 40 area healthcare professionals.
The policy change would not apply to peyote, which is excluded from its definition of entheogens due to the cactus’s special cultural significance to certain Native American peoples and the ongoing effort to protect the plant. Peyote matures slowly and is currently categorized by conservationists as “vulnerable” after an uptick in illicit harvesting. The cactus, native to Mexico and parts of the American Southwest, has no federal protection in the U.S., while in Mexico it can be harvested legally only by Indigenous groups.
Both the city resolution and the opioid task force recommendations also call for psychedelics reform at the state level. The resolution says the city’s Office of Intergovernmental Relations add to its agenda for the 2022 legislative session “support for full decriminalization of entheogens at the state level, including the drafting of legislation that could be sponsored by a state legislative representative.”
Like much of the rest of the country, Washington State is contemplating major changes in how it treats drug use. Earlier this year, lawmakers considered legislation that would have removed all penalties for possession of relatively small, “personal use” amounts of drugs and instead invested in treatment and recovery services. While that bill died in committee, lawmakers from both parties acknowledged at the time that the state’s drug control apparatus was broken.
Shortly thereafter, the state Supreme Court overturned Washington’s felony law against drug possession completely, sending lawmakers scrambling to replace the law. Ultimately they approved a modest reform, reducing the state’s felony charge for drug possession to a misdemeanor and earmarking more money for treatment.
Earlier this month, advocates announced a push to put a measure on Washington’s 2022 ballot that would decriminalize all drugs and invest state money in treatment and recovery.
Jurisdictions across the country are increasingly removing or reducing penalties around drug possession and consumption, especially when it comes to psychedelics. Since Denver in 2019 became the first U.S. city to decriminalize psilocybin mushrooms, a number of states and municipalities have made similar changes to dismantle the drug war.
Oregon voters passed a pair of initiatives last November to legalize psilocybin therapy and decriminalize possession of all drugs. On the local level, activists in Portland are mounting a push to have local lawmakers pass a resolution decriminalizing the cultivation, gifting and ceremonial use of a wide range of psychedelics.
Washington, D.C. voters also approved a ballot measure last year to deprioritize enforcement of laws criminalizing psychedelics.
In California last week, activists were cleared to begin collecting signatures for a historic initiative to legalize psilocybin mushrooms in the state. Oakland and Santa Cruz have already enacted psychedelics decriminalization.
Detroit currently stands to become one of the next major cities to decriminalize psychedelics, with the reform proposal making the local ballot for this November.
Elsewhere in Michigan, the Ann Arbor City Council has already elected to make enforcement of laws prohibition psychedelics like psilocybin, ayahuasca and DMT among the city’s lowest priorities—and lawmakers recently followed up by declaring September Entheogenic Plants and Fungi Awareness Month. Advocates have also introduced a reform resolution to the Grand Rapids City Council.
Massachusetts cities that have enacted the policy change include Northampton, Somerville and Cambridge. In July, state lawmakers heard testimony about a bill to create a task force charged with studying the implications of legalizing psychedelics like psilocybin and ayahuasca.
The governor of Connecticut recently signed legislation recently that includes language requiring the state to carry out a study into the therapeutic potential of psilocybin mushrooms.
Texas also recently enacted a bill to require the state study the medical benefits of psychedelics for military veterans.
A New York lawmaker introduced a bill in June that would require the state to establish an institute to similarly research the medical value of psychedelics.
The Maine House of Representatives passed a drug decriminalization bill this year, but it later died in the Senate.
In Oakland, the first city where a city council voted to broadly deprioritize criminalization of entheogenic substances, lawmakers approved a follow-up resolution in December that calls for the policy change to be adopted statewide and for local jurisdictions to be allowed to permit healing ceremonies where people could use psychedelics.
Meanwhile, Denver activists who successfully led the 2019 campaign to make the city the first in the U.S. to decriminalize psilocybin possession have set their eyes on broader reform, with plans in the works to end the criminalization of noncommercial gifting and communal use of the psychedelic.
In a setback for advocates, the U.S. House of Representatives recently voted against a proposal from Rep. Alexandria Ocasio-Cortez (D-NY) that would have removed a spending bill rider that advocates say has restricted federal funds for research into Schedule I drugs, including psychedelics such as psilocybin, MDMA and ibogaine. However, it picked up considerably more votes this round than when the congresswoman first introduced it in 2019.
Report provisions of separate, House-passed spending legislation also touch on the need to expand cannabis and psychedelics research. The panel urged NIDA to support expanded marijuana studies, for example. It further says that federal health agencies should pursue research into the therapeutic potential of psychedelics for military veterans suffering from a host of mental health conditions.
There was an attempt by a Republican congressman to attach language into a defense spending bill that would promote research into psychedelics therapy for active duty military members, but it was not made in order in the House Rules Committee this week.
Report provisions of separate, House-passed spending legislation also touch on the need to expand cannabis and psychedelics research. The panel urged NIDA to support expanded marijuana studies, for example. It further says that federal health agencies should pursue research into the therapeutic potential of psychedelics for military veterans suffering from a host of mental health conditions.
NIDA also recently announced it’s funding a study into whether psilocybin can help people quit smoking cigarettes.
There was an attempt by a Republican congressman to attach language into a defense spending bill that would promote research into psychedelics therapy for active duty military members, but it was not made in order in the House Rules Committee this week.
In May, lawmakers in Congress filed the first-ever legislation to federally decriminalize possession of illicit substances.
Read the full Seattle psychedelics decriminalization resolution below:
Photo courtesy of Wikimedia/Mädi.
Politics
House Committee Will Vote On Federal Marijuana Legalization Bill Next Week, Days After Banking Reform Advances
A bill to federally legalize marijuana will be voted on by the House Judiciary Committee next week, the panel announced on Friday.
The development comes one day after the House voted in favor of a defense spending bill that includes an amendment that would protect banks that service state-legal cannabis businesses from being penalized by federal regulators.
Judiciary Committee Chairman Jerrold Nadler’s (D-NY) Marijuana Opportunity, Reinvestment and Expungement (MORE) Act will receive a markup on Wednesday. The panel will consider a dozen pieces of legislation during the meeting, according to a press release. That includes his bill to “decriminalize marijuana federally and invest in communities that have been disproportionately harmed by the War on Drugs,” Nadler said.
“Many of these bills were reported out of the committee and passed by the full House of Representatives last Congress, and I look forward to working with all my colleagues once again to get these bills through Congress and on to the president’s desk,” the chairman said.
Nadler’s cannabis legislation passed the House last year but did not advance in the Senate under GOP control. This time around, advocates are optimistic that something like the chairman’s bill could be enacted now that Democrats run both chambers and the White House, and as more states are moving to enact legalization.
The legislation would remove marijuana from the Controlled Substances Act (CSA), allow people with cannabis convictions to have their records expunged and create a federal tax on marijuana with the revenue going to support community reinvestment and other programs.
It also contains language to create a pathway for resentencing for those incarcerated for cannabis offenses, protect immigrants from being denied citizenship over marijuana and prevent federal agencies from denying public benefits or security clearance due to its use.
“We are excited to see Chairman Nadler and House leadership move forward once again with passing the MORE Act,” Justin Strekal, political director of NORML, said. “Public support and state-policy demand for repealing federal marijuana criminalization has never been higher and Congressional action on this legislation is long overdue. The days of federal marijuana prohibition are numbered.”
There’s been some contention between advocates and stakeholders on which reform should come first: the bipartisan banking legislation that’s cleared the House in some form five times now or the comprehensive legalization bill that passed the chamber for the first time late last year.
Legalization advocates do want to see legislation from Rep. Ed Perlmutter (D-CO) become enacted, as there are public safety problems caused by all-cash businesses and it would take an important step toward normalizing the growing industry. But social equity-minded activists argue that advancing the incremental reform first would mainly benefit large marijuana businesses without addressing the harms of cannabis criminalization.
The fate of the banking proposal will likely be decided in conference with the Senate, which has not included the policy change in its National Defense Authorization Act (NDAA) and where key lawmakers have insisted that they will push for broader reform before allowing the incremental change to be enacted.
Separately, Senate Majority Leader Chuck Schumer (D-NY), Finance Committee Chairman Ron Wyden (R-OR) and Sen. Cory Booker (D-NJ) are also leading the charge on a legalization bill in their chamber. But weeks after a public comment period on a draft version of the proposal closed, finalized text has yet to be formally filed—and it’s far from certain that Schumer will be able to find enough votes to advance the comprehensive reform through his chamber.
It should be noted that President Joe Biden remains firmly opposed to adult-use marijuana legalization. While he supports more modest reforms such as decriminalizing cannabis, expunging prior records and letting states set their own marijuana policies, there’s an open question about whether he would be moved to sign a broad bill like the MORE Act or the Senate legalization legislation should such a proposal reach his desk.
With respect to the MORE Act, the latest version does not include language that was added just before last year’s House floor vote that would have prevented people with previous cannabis convictions from obtaining federal permits to operate marijuana businesses. That was a contentious provision that appeared at the last minute and which advocates strongly opposed.
And whereas the the prior version of the legislation contained language to help economically disadvantaged people enter the legal marijuana market, that language was revised to extend Small Business Administration (SBA) aid—such as loans, financial literacy programs and job training—to help people who have been harmed by the war on drugs pursue business opportunities in any industry, not just cannabis.
Advocates are encouraged by the new revisions to the bill, but there are still additional components they hope to see changed as it goes through the legislative process. For example, they also took issue with provisions added to the MORE Act prior to last year’s vote that would have stipulated that cannabis can still be included in drug testing programs for federal workers.
The current version of the MORE Act has 66 cosponsors, including seven lawmakers that signed on this week. All are Democrats.
Separately, a proposal to federally deschedule marijuana that does not include social equity components was filed by a pair of Republican congressmen in May.
Feds Fund Study Into Whether Psilocybin Can Help People Quit Smoking Cigarettes
Photo courtesy of Philip Steffan.
Politics
More Banks Say They’re Working With Marijuana Businesses, Federal Report Shows As Lawmakers Advance Reform
The number of banks and credit unions reporting that they work with marijuana businesses ticked up last quarter, according to new federal data.
As of June 30, there were 706 financial institutions that had filed requisite reports saying they were actively serving cannabis clients. Thats up from 689 in the previous quarter but still down from a peak of 747 in late 2019.
Via FinCEN.
The new figures released by the Financial Crimes Enforcement Network (FinCEN) come amid a congressional push to protect banks and credit unions that work with the cannabis industry from being penalized by federal regulators.
While there’s 2014 FinCEN guidance in place meant to help financial institutions navigate the space, lawmakers want to enact clear, statutory protections. And that would be accomplished through House-passed standalone legislation, or an amendment that was attached to a defense spending bill this week.
Until then, there’s still reluctance within the banking sector when it comes to servicing businesses that work with a Schedule I controlled substance, and that’s reflected in the relatively low number of depository institutions that actually follow the guidance and take on cannabis clients.
Last year saw a significant and consistent drop in the number of banks and credit unions that reported having marijuana accounts, but those figures began to stabilize this year.
“Short-term declines in the number of depository institutions actively providing banking services to marijuana-related businesses (MRBs) may be explained by filers exceeding the 90 day follow-on Suspicious Activity Report (SAR) filing timeframe,” FinCEN, which is part of the Treasury Department, said. “Several filers take 180 days or more to file a continuing activity report. After 90 days, a depository institution is no longer counted as providing banking services until a new guidance-related SAR is received.”
Past reports from the agency had noted that it stopped including hemp-only businesses in its quarterly reports since the crop was federally legalized under the 2018 Farm Bill, which could account for at least some of the drop depicted in earlier data, but that language does not appear in this latest report.
Also, FinCEN didn’t mention the potential impact of the coronavirus pandemic on marijuana banking trends this time.
As of the end of last quarter, there were 518 banks and 188 credit unions reporting active marijuana clients, according to the federal agency.
Via FinCEN.
When it comes to the prospects of enacting cannabis banking reform, stakeholders are encouraged by the inclusion of the Secure and Fair Enforcement (SAFE) Banking Act in the must-pass National Defense Authorization Act (NDAA) and hope that will be the vehicle to finally provide safeguards to the financial sector.
But while the issue is bipartisan, the proposal will face challenges in the Senate, where key leaders have insisted that comprehensive legalization should advance first before lawmakers enact a policy change that’s viewed as principally favorable to the industry.
Sen. Cory Booker (D-NJ), for example, has said that he “will lay myself down” to block any other senators who seek to pass marijuana banking legislation before the body approves comprehensive cannabis reform like the federal legalization bill he unveiled alongside Senate Majority Leader Chuck Schumer (D-NY) and Senate Finance Committee Chairman Ron Wyden (D-OR).
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Rep. Ed Perlmutter (D-CO), chief sponsor of the SAFE Banking Act, spoke with Marijuana Moment about the process moving forward in a phone interview on Wednesday. He said he is optimistic about the measure’s prospects with NDAA as the vehicle, though he conceded that he hadn’t spoken with Schumer or other key senators who are actively finalizing the legalization legislation.
“I think the fifth time is the charm,” he said. “I mean, obviously, we still have to do some work to make sure that it remains part of the NDAA as the House and the Senate go to conference. So we still have work to do with the Senate to make sure that it remains part of it. But I think that it will.”
“I mean, the fact that it deals with cartels and national security, on top of the need for the public safety piece of this thing, I think that we’ll be able to convince the conference committee and the conferees generally to keep it in,” he said. “But we still have work to do.”
