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Congressional Committee Discusses Challenges For Small Marijuana Businesses

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A congressional committee held a hearing on Wednesday to discuss opportunities for small businesses in the marijuana industry and the unique financial challenges those companies face under federal cannabis prohibition.

The House Small Business Committee convened for a meeting titled “Unlocked Potential? Small Businesses in the Cannabis Industry.” It came as pressure mounts on Congress to free up financial services for state-legal marijuana businesses in order to increase transparency, mitigate public safety risks and protect banks from being penalized by federal regulators.

One area that the panel focused on was access to resources provided by the federal Small Business Administration (SBA), which includes low-interest loans for small businesses and guidance for entrepreneurs.

Watch the hearing below:

“Entrepreneurship and small business owners are essential to America’s ingenuity,” the National Cannabis Industry Association (NCIA) said in testimony submitted to the committee. “These businesses enable economic development, provide high-quality jobs, and spur significant product innovation.”

“Addressing the challenges created by conflicting federal and state laws will allow state-compliant entities to operate in a fully regulated environment and encourage the expansion of regulated markets, increase consumer safety standards, reduce availability to minors and combat illegal trafficking throughout the country,” NCIA said.

In a memo detailing the issue in advance of the hearing, the committee said that the “current marijuana legalization movement presents new opportunities for entrepreneurship and business start-up in the cannabis industry.”

Not only are there opportunities for businesses that directly deal with marijuana such as cultivators and retailers but also for ancillary businesses such as “payment processors, accountants, insurance agents, agriculture-technology companies, technology companies developing apps, and countless more.”

Because the cannabis industry is in its formative stage, lawmakers have the chance to create policies designed to promote equity in the marketplace and ensure that communities disproportionately impacted by prohibition are given the tools to participate in the industry, the memo explains.

Access to capital is a primary concern that was addressed at the hearing. The panel said that revising SBA policy—which currently prohibits businesses that directly and indirectly work with marijuana from obtaining certain loans—would be a step in the right direction.

SBA issued a revised policy on its loan programs earlier this year, clarifying that while direct and indirect marijuana businesses are not eligible, hemp businesses can qualify for the loans since the crop was federally legalized under the 2018 Farm Bill. The new policy stipulates that “a business that grows, produces, processes, distributes or sells products made from hemp… is eligible.” That policy went into effect on April 1.

“SBA provides vital tools to the development and support of minority businesses and communities,” the Minority Cannabis Business Association’s Shanita Penny testified. “We believe access to SBA loans and services, with Congressional oversight, would help decrease the equity gap in the cannabis industry and keep cannabis revenues in the communities suffering the greatest economic and social harms of the War on Drugs.”

“SBA access is also critical to business owners dealing with a newly, regulated, constantly evolving industry. As more mature state programs course correct and improve regulations, small businesses are often left scrambling to remain compliant when packaging or labeling regulations change, businesses must either find new sources of capital to cover the cost of the changes or face significant fines for violations.”

The committee added in its memo that small marijuana businesses need assistance to “compete against well-financed conglomerates and other larger companies that have resources dedicated to locating and utilizing loopholes in laws.” And cannabis firms often incur “operating and pricing challenges” in addition to the lack of access to capital.

“In order to provide for inclusiveness within the legal industry, federal policy should strive to reduce roadblocks for qualified entrepreneurs in order to encourage participation from formerly disenfranchised populations,” NORML said in written testimony. “Particularly, in consideration for enterprising individuals who would benefit most from the critical resources that [SBA] provides for job creators around the country.”

Another issue that came up, which doesn’t get as much attention as banking issues in the industry, is the “challenge small business owners face is recruiting and retaining workers because the talent pool is unable to keep up.”

The committee noted that training and education for workers can be costly for small marijuana businesses, especially because it’s not traditionally a skillset that’s taught in universities or vocational schools.

“As increasingly more states legalize cannabis, it will be important for Congress and the agencies it oversees to work cooperatively to ease legislative and regulatory burdens on small businesses in states with legal cannabis,” the committee memo notes. “At the same time, the entrepreneurship opportunity the legitimate cannabis industry presents for entrepreneurs from traditionally underserved communities, including minorities and veterans, must be recognized.”

“However, small businesses in states with legal cannabis are currently struggling to fund and operate their businesses, due in part to conflicting federal and state guidance. Accordingly, this hearing will offer Members an opportunity to hear about the challenges faced by ‘ancillary’ or ‘indirect’ cannabis businesses, and how Congress can help remedy those challenges. Furthermore, the hearing will enable Members to explore ways to ensure a newly-legalized cannabis industry reflects our nation’s diversity, and is able to fairly compete with foreign and large companies.”

Other witnesses who appeared before the committee include Veterans Cannabis Coalition’s Eric Goepel and Dana Chaves, who is an executive at First Federal Bank and also chairs NCIA’s Banking Access Committee.

One of the most surprising pieces of testimony came from a representative of the conservative think tank the Heritage Foundation. Paul Larkin, a senior legal research fellow with the organization who otherwise raised concerns about cannabis reform during the hearing, said that “if Congress were to legalize recreational marijuana use, it should require that states own and operate distribution facilities.” The comment raised eyebrows, leaving some wondering why a representative of a right-leaning institution like the Heritage Foundation would essentially float socializing the marijuana market.

Though there was not a specific piece of legislation that the committee discussed, a source told Marijuana Moment last month that there are plans to introduce a bill this summer to tackle the small business issues at hand. Committee Chair Rep. Nydia Velazquez (D-NY) signaled at the hearing that she’d lead that effort.

“Despite growing economic opportunities around legal cannabis, factors like federal law enforcement, conflicting rules among the states and our current banking regulations are hindering the ability for entrepreneurs and small business to fully engage in this new industry,” the congresswoman said. “I am currently working on legislation that will work to open some of the agency’s programs to businesses in areas where the industry is legal.”

“The trend of legalization at the state level is not going to slow down, which will lead to more jobs in many sectors of our economy and we need to see what role the federal government can play,” she said.

Rep. Steve Chabot (R-OH), the panel’s ranking minority member, repeatedly pressed witnesses on whether they were aware of various harms of marijuana as shown by certain studies, though he seemed to acknowledge that pro-reform attitudes are winning the day.

“All the stuff that we’ve talked about here is inconsistent with federal law. It’s illegal if the law was enforced at the federal level,” he said. “And that’s something that I think probably the Congress ought to take it up and make a decision to let people know what they can do… I think we owe that to the public. And I don’t know which way the vote would go.”

“I’ve been around a long time. It seems like the older generation more feel that [marijuana should remain illegal],” Chabot said. “The younger generation seems to be just the opposite. And a lot of things have changed in the country in recent years, and that seems to be one of them.”

Florida Agriculture Commissioner Nicole Fried also submitted written testimony for the hearing. She argued that “America’s emerging cannabis industry has the potential to lift up every community from coast to coast” and that “now is the time for Congress and our federal government to empower small businesses and embrace the economic revolution of cannabis that puts American jobs, families, and livelihoods first.”

This congressional hearing is one of two focusing on marijuana policy that is scheduled for this week, with another concerning veterans and cannabis set for Thursday.

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This story was updated to include quotes from the hearing and written testimony.

Marijuana Moment is made possible with support from readers. If you rely on our cannabis advocacy journalism to stay informed, please consider a monthly Patreon pledge.

Kyle Jaeger is Marijuana Moment's Los Angeles-based associate editor. His work has also appeared in High Times, VICE and attn.

Politics

Connecticut Governor Says He’s Open To Smoking Marijuana After He Signs Legalization Bill

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The governor of Connecticut said on Friday that he isn’t ruling out smoking marijuana after he formally signs a legalization bill into law next week.

While most top politicians might still demure when asked if they’d partake in cannabis given ongoing stigma and federal prohibition, Gov. Ned Lamont (D) said matter-of-factly that “time will tell” when asked by a reporter if people can “expect to see the governor smoking a joint” after legalization goes into effect in the state.

News 12’s John Craven replied incredulously, “Really? You’re open to it?”

The governor first shrugged, then nodded his head yes.

“Not right now, but we’ll see” Lamont said.

Other governors in legal states have been playful about cannabis culture and their own relationship to the plant. But while a growing number of lawmakers are comfortable discussing their past marijuana use, this is a fairly remarkable exchange for the sitting top executive officer of a state.

It’s also a sign of the times, as congressional lawmakers step up the push to end federal prohibition and legalization bills move through numerous state legislatures.

Connecticut lawmakers sent Lamont an adult-use legalization bill on Thursday, and he’s confirmed his intent to sign it into law. It would make the state the 19th to have enacted the policy change and the fourth this year alone.

And while the governor has consistently emphasized the important of social equity in legalization legislation—at one point threatening to veto the bill because of a provision he felt could undermine its intent to effectively stand up disparately impacted communities—he also seems to see the personal benefits of the reform.

Similar to Lamont’s new comments, Washington Gov. Jay Inslee (D) raised some eyebrows in 2018 when he said in an interview that he grows cannabis himself. But then a spokesperson for his office denied that he actually personally cultivates marijuana.

Minnesota Marijuana Reform Could ‘Move Forward’ In Special Session That Just Launched, Top Lawmaker Says

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Minnesota Marijuana Reform Could ‘Move Forward’ In Special Session That Just Launched, Top Lawmaker Says

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Even though a Minnesota House-passed marijuana legalization bill died in the Senate without action by the end of this year’s regular session, a top lawmaker says there’s still a “possibility to move forward” on cannabis reform as part of a special session that began this week.

“Nobody really expected the medical program to be so successfully changed this year,” House Majority Leader Ryan Winkler (D) said at a rally with cannabis reform advocates on Wednesday, referencing a separate measure Gov. Tim Walz (D) signed last month that will allow patients to access smokable cannabis products.

According to The Star Tribune, Winkler added that “surprising things can happen” during a special session. “When you see Republican support and Democratic support in the House and Senate, there is a possibility to move forward.”

Advocates with Minnesota NORML are pushing for several specific policies to be incorporated into legislation that is set to be taken up by the legislature during the special session. The first is to expand the state’s decriminalization policy, and the second is to have the state petition for a federal exemption for Minnesota’s medical cannabis program.

Part of the motivation behind that latter proposal is to ensure that registered patients are able to lawfully purchase and possess firearms in spite of federal restrictions.

At the rally, which was organized by NORML, Republicans Against Marijuana Prohibition (RAMP) and other groups, Winkler and several other lawmakers spoke in favor of modest policy changes such as decriminalizing cannabis.

“Decriminalizing small amounts is important,” Rep. Jeremy Munson (R), one of only a handful of Republicans who voted for Winkler’s broad adult-use legalization bill, said at the rally. “If someone in Minnesota gets caught with two gummy bears, it’s a felony and they’ll lose their gun rights forever.”

The coalition proposed several key reforms that they say should be integrated into public safety and health legislation that’s currently moving through committee during the special session:

-Further reduce penalties for simple possession of marijuana.

-Allow people convicted of possession up to eight grams of cannabis to petition the courts for expungement.

-Require the Minnesota health commissioner to petition the Drug Enforcement Administration (DEA) for an exemption for its medical marijuana program.

”Reducing or eliminating the criminal penalties we’re seeing around marijuana is where we have consensus,” Thomas Gallagher of RAMP said in a press release. “Let’s focus on the people who have small quantities. There is injustice in a trivial amount of marijuana resulting in life-changing punishments like imprisonment, criminal records, and lost jobs and kids.”

Similar to the Minnesota activists’ call, Iowa officials have requested that federal agencies guarantee some level of protection for people participating in the state’s medical marijuana program.

The Hawaii legislature adopted a resolution in April seeking an exemption from DEA stipulating that the state is permitted to run its medical cannabis program without federal interference.

Back in Minnesota, the House approved a bill last month to legalize marijuana for recreational use following 12 committee assignments. That legislation stalled in the GOP-controlled Senate, however.

Advocates are hopeful about the possibility that further cannabis reforms could be accomplished in the special session, but they see an obstacle in Senate Majority Leader Paul Gazelka (R), who has been relatively silent on the issue since the end of the regular session.

He did previously say, however, that “we’re always said we were open to lowering the criminal penalties [for marijuana].”

The decriminalization legislation that advocates are rallying behind would make possession of up to eight grams of cannabis a petty misdemeanor. It would also make people with prior convictions for that level of possession eligible for expungements.

Under the separate medical cannabis expansion bill that the governor has signed, adults 21 and older will be able to access smokable marijuana products. That policy must take effect by March 1, 2022, or earlier if rules are developed and the state’s cannabis commissioner authorizes it.

Dispensaries could also provide a curbside pickup option for patients under the new law. It further removes restrictions for designated caregivers and allows them to tend to six registered patients at once, rather than just one.

Walz, who hadn’t been especially vocal about legalization as the broader legislation advanced during the regulator session, said, “I’ve thought for a long time about that,” adding that “we know that adults can make their own decisions on things, we know that criminalization and prohibition has not worked.”

“I’ve always thought that it makes sense to control how you’re doing this and to make sure that adults know what they’re getting into, and use it wisely,” he said. “I also think there’s a lot of inequity about how folks have spent time in jail or been arrested around this, especially in communities of color.”

The majority leader’s legalization legislation as introduced was identical to a proposal he filed last year, with some minor technical changes. Winkler, who led a statewide listening to gather public input ahead of the measure’s introduction, called it the “best legalization bill in the country” at the time. It did not advance in that session, however.

Under the measure, social equity would be prioritized, in part by ensuring diverse licensing and preventing the market from being monopolized by corporate players. Prior marijuana records would also be automatically expunged.

Walz in January he called on lawmakers to pursue the reform as a means to boost the economy and promote racial justice. He did not include a request to legalize through his budget proposal, however.

The governor did say in 2019 that he was directing state agencies to prepare to implement reform in anticipation of legalization passing.

Winkler, meanwhile, said in December that if Senate Republicans don’t go along with the policy change legislatively, he said he hopes they will at least let voters decide on cannabis as a 2022 ballot measure.

Heading into the 2020 election, Democrats believed they had a shot of taking control of the Senate, but that didn’t happen. The result appears to be partly due to the fact that candidates from marijuana-focused parties in the state earned a sizable share of votes that may have otherwise gone to Democrats, perhaps inadvertently hurting the chances of reform passing.

In December, the Minnesota House Select Committee On Racial Justice adopted a report that broadly details race-based disparities in criminal enforcement and recommends a series of policy changes, including marijuana decriminalization and expungements.

California Senator Previews Next Steps For Psychedelics Bill And Says It’s A Step Toward Decriminalizing All Drugs

Photo courtesy of Mike Latimer.

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Maine Lawmakers Approve Bill To Decriminalize All Drugs On 50th Anniversary Of Nixon’s ‘War On Drugs’

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The Maine House of Representatives on Thursday approved a bill to decriminalize possession of all currently illicit drugs, delivering a victory to reform advocates on the 50th anniversary of President Richard Nixon’s declaration of the war on drugs.

The Senate also began consideration of the legislation on Thursday, but has not yet taken a vote.

The proposal, LD 967, was approved in 77-62 vote in the House. It would make possession of controlled substances for personal use punishable by a $100 fine, without the threat of incarceration. That fine could also be waived if a person completes a substance misuse assessment within 45 days of being cited.

“We are continually trying to criminalize a symptom of a disease. It hasn’t worked. It won’t work,” Rep. Charlotte Warren (D), who serves as the House chair of the legislature’s Criminal Justice and Public Safety Committee, said before the vote. “We have tried criminalizing this disease for decades, and 11 Mainers a week are dying.”

Rep. Anne Perry (D), sponsor of the bill, said that incarcerating people who are suffering from addiction “only proves to them that they are as bad as they think they are” and perpetuates the cycle of substance misuse. “Law enforcement is not the gateway to treatment and recovery. It’s a gateway to isolation and suicide.”

The measure’s passage flies in the face of Gov. Janet Mills (D), whose administration opposes the reform, as does the state attorney general. Coupled with opposition from Republican legislators, the bill faces an uphill battle to final passage.


Marijuana Moment is already tracking more than 1,100 cannabis, psychedelics and drug policy bills in state legislatures and Congress this year. Patreon supporters pledging at least $25/month get access to our interactive maps, charts and hearing calendar so they don’t miss any developments.

Learn more about our marijuana bill tracker and become a supporter on Patreon to get access.

The Senate also began consideration of the legislation on Thursday night, adopting a different committee report than the House approved, but setting it aside as unfinished business before taking a final vote on the bill. The version moving forward in that chamber would similarly impose a $100 fine for possession, but only for the first two offenses. Subsequent offenses would be considered Class E crimes that could carry jail time.

These actions come one month after a joint House and Senate committee advanced the decriminalization bill with several conflicting recommendations, as well as another measure to reform the state’s drug trafficking laws.

Supporters of the legislation include the American Academy of Pediatrics’s Maine Chapter, Maine Medical Association, Alliance for Addiction and Mental Health Services in Maine and Maine Council of Churches.

Thursday’s decriminalization vote represents a continuation of a national conversation about the need to reform laws criminalizing people over drugs and treat substance misuse as a public health issue, rather than a criminal justice matter.

For the first time ever, a congressional bill to federally decriminalize possession of controlled substances—and incentivize states to do the same—was formally introduced on Thursday.

Last year, Oregon voters elected to end criminalization of low-level drug possession at the ballot.

Vermont lawmakers also introduced a bill in March that would end criminal penalties for possessing small amounts of drugs in the state.

Also that month, a Rhode Island Senate committee held a hearing on decriminalization legislation to replace criminal penalties for possessing small amounts of drugs with a $100 fine.

Back in Maine, a bill was recently introduced that would legalize psilocybin mushrooms for therapeutic purposes.

Senators Publicly Pressure Key Chairman For Vote On Marijuana Banking Bill

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