The Virginia House of Delegates approved a bill to decriminalize marijuana on Monday, and the Senate is expected to pass similar legislation later this week.
The House-passed proposal would make simple possession a civil penalty punishable by a maximum $25 fine. Current policy stipulates that a first offense is punishable by a maximum $500 fine and up to 30 days in jail. Lawmakers approved the bill in a 64-34 vote.
Over in the Senate, their version of the decriminalization bill will receive a first reading in that chamber later on Monday and get a full floor vote ahead of a Tuesday crossover deadline to move bills from one body to the other. This follows successful votes in the chamber’s Judiciary and Appropriations Committees.
“Momentum was slow to build during the first half of the session, but I think a lot of consensus has been reached by the halfway point,” Jenn Michelle Pedini, executive director of Virginia NORML, told Marijuana Moment. “We’re heading into crossover with a much clearer understanding of what’s likely to shake out from this session.”
My bill, HB 972 just passed the House! It decriminalizes simple marijuana possession in the Commonwealth. Since this issue disproportionately affects people of color, it is an important first step in combating the racial disparities in the Virginia criminal justice system. pic.twitter.com/zy84odOxlw
— Charniele Herring (@C_Herring) February 10, 2020
Advocates are confident that both decriminalization bills will be crossed over. If the Senate version moves forward, lawmakers will convene a conference committee to reconcile the legislation into a single proposal to send to Gov. Ralph Northam (D).
The governor campaigned on decriminalization and included the policy change proposal in his annual State of the Commonwealth speech last month.
While many advocates generally view the decriminalization legislation as a step in the right direction, the state’s ACLU chapter has voiced opposition to both reform bills, arguing that they don’t do enough to address social equity and restorative justice.
Del. Don Scott Jr. (D) said prior to the vote that refusing to support the incremental step of decriminalization and leaving the status quo intact while holding out for broader change is “cray cray.”
Pedini said “I certainly agree” that decriminalization is “essentially a half-measure” and that “while it will reduce arrests by about 50 percent, it will do nothing to address the disparate enforcement of marijuana laws across races.”
“We’ve said that clearly for years now. That being said, the administration has prioritized decriminalization so our job is to make sure that that bill is as good as they will let it be,” Pedini argued.
Last week, a separate piece of cannabis legislation also cleared the Senate. The resolution would require a commission to “study and make recommendations for how Virginia should go about legalizing and regulating the growth, sale, and possession of marijuana by July 1, 2022 and address the impacts of marijuana prohibition.”
— Jennifer McClellan (@JennMcClellanVA) February 6, 2020
The resolution now heads to the House for consideration.
Pedini said the measure is necessary because the Virginia legislature generally isn’t inclined to enact bold reforms without a formal study, and the deadline this legislation imposes means lawmakers would be positioned to pursue cannabis legalization in time for the 2021 session.
Northam hasn’t openly endorsed legalizing and regulating marijuana in Virginia, but Attorney General Mark Herring (D) has suggested that the governor may come around with additional information. To that end, Herring, who is running for governor in 2021 to replace the term-limited Northam, organized a panel last year to hear from officials in states with legal cannabis about their experiences.
Herring said the panel could give the governor the resources he needs to embrace legalization.
While decriminalization and the legalization study resolution are getting the most attention, they are far from the only cannabis bills moving through the legislature this year.
Legislation that would allow non-residents temporarily living in the state to access medical cannabis was approved in the House last week. SB 185, which would provide protections for caregivers in assisted living facilities who handle medical marijuana for patients, received its first reading on Friday.
Another bill that would legalize certain medical cannabis products—as opposed to simply regulate them and offer patients an affirmative defense, as the current system works—also advanced.
This article has been updated to correct the fine for possession under the House-passed bill.
Photo courtesy of Mike Latimer.
GOP Senator Presses Treasury Secretary On Tax Credits For Marijuana Businesses
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.
Photo courtesy of C-SPAN.
American Bar Association Wants Protections For Marijuana Banking And Lawyers Working With Cannabis Clients
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.”
HOD Res 103D: Adopted. Urges enactment of laws to ensure that it shall not constitute a federal crime for banks and financial institutions to provide cannabis-related services. #ABAMidyear
— American Bar Association (@ABAesq) February 17, 2020
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.”
HOD Res 103B: Adopted as revised. Urges enactment of laws to ensure lawyers can provide legal advice and services for clients' legal marijuana-related activities. #ABAMidyear
— American Bar Association (@ABAesq) February 17, 2020
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
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.