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.
Consumer spending in the cannabis industry is expected to hit $23 billion by 2022. Today, the Committee will question experts on how we can help ensure that small businesses can fully participate in this emerging legal industry. pic.twitter.com/bAybUfCgiB
— House Committee on Small Business (@HouseSmallBiz) June 19, 2019
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.”
ICYMI: In her opening statement at today’s hearing, Chairwoman @NydiaVelazquez spoke about the plight of small cannabis firms and the need for dialogue on how we can better support these entrepreneurs. pic.twitter.com/u1G1pIqizA
— House Committee on Small Business (@HouseSmallBiz) June 19, 2019
“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 hear from farmers in #NY19 about the need for new industries & opportunities to counter the down farm economy. In @HouseSmallBiz, I asked what steps the FDA should take to make it easier for dairy farmers to work in the hemp industry & spur economic growth in rural communities. pic.twitter.com/Ug87sMY8TI
— Congressman Antonio Delgado (@repdelgado) June 19, 2019
“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.”
Today, I shared this statement with Chair @NydiaVelazquez & Ranking Member @RepSteveChabot for @HouseSmallBiz hearing on cannabis industry.#Cannabis can create billions in economic potential and hundreds of thousands of jobs — that’s why we need Congress & federal govt onboard. pic.twitter.com/qeNTT2KCVq
— Commissioner Nikki Fried (@NikkiFriedFL) June 19, 2019
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.
This story was updated to include quotes from the hearing and written testimony.
Kansas Medical Marijuana Hearings Cancelled After Senate GOP Leader Reroutes House-Passed Bill
A House-passed bill to legalize medical marijuana in Kansas seems to be in jeopardy, with GOP Senate leadership moving the legislation out of a committee and into a different panel where it may sit in legislative limbo, resulting in the cancellation of hearings that were scheduled to be held this week.
Advocates are concerned about the decision by Senate President Ty Masterson (R), who withdrew the cannabis reform legislation from the Senate Federal and State Affairs Committee days before hearings were to be held on Tuesday and Wednesday. It was then re-referred to the Senate Interstate Cooperation Committee, which Masterson chairs and where the bill’s fate is unclear.
This doesn’t necessarily mean that medical marijuana legalization is off the table for Kansas in 2022, but it does seem to signal that the reform might need to be enacted through another vehicle, either in the legislature or at the ballot, as top Democratic lawmakers in the state are pursuing.
“We certainly hope that this action is just making sure that this bill meets any concerns that Senate leadership may have concerning this historic legislation,” Kevin Caldwell, a legislative manager at Marijuana Policy Project (MPP), told Marijuana Moment. “This bill had widespread bipartisan support in the House last session. We hope Senate President Masterson quickly holds a committee hearing and advances this legislation.”
When the proposal was being advanced in the House last year during the first half of the two-year session, members amended an unrelated bill that previously cleared the Senate to make it the chamber’s vehicle for the policy change. Because of that, it was ruled “materially changed” last May and sent to the Senate for committee consideration.
Now there’s a question of whether lawmakers will be motivated to introduce another separate bill and try to move it through both chambers, requiring another House vote. The Senate president seemed to temper expectations in recent remarks, telling The Kansas City Star that “not a single member” of his caucus has expressed that the issue “was important to them.”
That’s not how Kansas Democrats feel, however. House Minority Leader Tom Sawyer (D) and Assistant Minority Leader Jason Probst (D) said this month that they will be introducing proposals to let voters decide on legalizing medical and adult-use marijuana in the state. At the time, Sawyer said he was “hopeful” that the legislature might separately advance the House-passed legalization measure.
Marijuana Moment is already tracking more than 1,000 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 people of Kansas deserve to know if senators support the overwhelming majority of people who want to alleviate patients’ suffering with a medical cannabis program,” MPP’s Caldwell said. “Now is the time to show compassion to their fellow citizens and vote this bill out of committee.”
“Kansas is one of fourteen states left without a medical cannabis program,” he said. “We have faith that the Kansas Senate will pass this legislation this session and this is just another step in that process.”
Michael Pirner, Masterson’s communications director, told the Star that “medical marijuana legislation is not a priority of Senate leadership,” but did signal the issue may still be considered before the year is over.
“The subject matter has clearly matured and we expect it to be considered at some level this session,” he said. “There are many more pressing topics on the Senate agenda.”
The bill as drafted contains several significant restrictions, including a ban on smokeable cannabis. Members of the Senate Federal and State Affairs Committee did get a briefing on the issue at a meeting last week ahead of the expected, now-cancelled formal hearings before the panel.
Meanwhile, the constitutional amendment that the Democratic leaders are proposing would provide for a more comprehensive program that lawmakers would need to implement.
Gov. Laura Kelly (D), for her part, wants to see medical cannabis legalization enacted, and she said at a briefing with reporters on Friday that she “absolutely” thinks the bill could pass if “everything else doesn’t take up all the oxygen.”
She previously pushed a separate proposal that would legalize medical cannabis and use the resulting revenue to support Medicaid expansion, with Rep. Brandon Woodard (D) filing the measure on the governor’s behalf.
Kelly has she said she wants voters to put pressure on their representatives to get the reform passed.
The governor also said in 2020 that while she wouldn’t personally advocate for adult-use legalization, she wouldn’t rule out signing the reform into law if a reform bill arrived on her desk.
Photo courtesy of Philip Steffan.
Marijuana Banking Bill Sponsor Says He’s ‘Gonna Get That Darn Thing Passed’ Before Leaving Office
Rep. Ed Perlmutter (D-CO) is retiring from Congress at the end of this session, but he says that he’s going to work to pass his marijuana banking bill before his time on Capitol Hill comes to an end.
The congressman spoke to Colorado Public Radio last week about his decision not to run for reelection this November and his disappointment that, while the House has approved the Secure and Fair Enforcement (SAFE) Banking Act five times now in some form, the Senate has failed to advance it under both Republican and Democratic leadership.
“That one still has me pretty irritated,” Perlmutter said, referring to the fact that Senate Majority Leader Chuck Schumer (D-NY) has effectively blocked his bipartisan legislation. When there was a GOP Senate majority, he was told the bill was “too big and too broad.” Then with a Democratic majority, he’s told that it’s “too narrow and too limited.”
Schumer and his colleagues who are working on a federal legalization bill have repeatedly said that they do not want to see the SAFE Banking Act pass before comprehensive reform is enacted that addresses equity issues. Supporters of the banking bill argue that the incremental policy change is necessary for promote public safety and, importantly, it stands a much stronger chance of getting to the president’s desk with bipartisan support.
Nonetheless, Perlmutter said he plans to spend his remaining months in office pushing to get the job done.
“I have not given up on that one,” he said. “I’m gonna get that darn thing passed this year while I still serve out my term.”
Listen to Perlmutter discuss the marijuana banking legislation, starting around 10:24 into the audio below:
Asked whether he thinks President Joe Biden would be inclined to sign the measure if it did get to his desk, the congressman said “absolutely.”
“Treasury Secretary [Janet] Yellen is somebody who has been talking to me about this for years,” he said. “I feel very good that it would pass. We’re at 47 states that have some level of marijuana use, all the territories and District of Columbia, and they need to have legitimate banking services.”
“It’s just a no brainer in my opinion,” he said. “And yeah, I’m a little bit irritated, but we’re gonna keep working on it and get it passed this year.”
The last attempt that Perlmutter made to enact the reform was by adding its language to a must-pass defense bill, but it was ultimately sidelined following bicameral negotiations and did not make it into the final version. The congressman told Marijuana Moment last month that he sees other potential vehicles to advance the bill and has spoken with House Speaker Nancy Pelosi (D-CA) about it.
Even some Republicans are scratching their heads about how Democrats have so far failed to pass the modest banking reform with majorities in both chambers and control of the White House. For example, Rep. Rand Paul (R-KY) criticized his Democratic colleagues over the issue last month.
Top Federal Drug Official Says ‘Train Has Left The Station’ On Psychedelics As Reform Movement Spreads
A top federal drug official says the “train has left the station” on psychedelics.
National Institute on Drug Abuse (NIDA) Director Nora Volkow said people are going to keep using substances such as psilocybin—especially as the reform movement expands and there’s increased attention being drawn to the potential therapeutic benefits—and so researchers and regulators will need to keep up.
The comments came at a psychedelics workshop Volkow’s agency cohosted with the National Institute of Mental Health (NIMH) last week.
The NIDA official said that, to an extent, it’s been overwhelming to address new drug trends in the psychedelics space. But at the same time, she sees “an incredible opportunity to also modify the way that we are doing things.”
“What is it that the [National Institutes of Health] can do to help accelerate research in this field so that we can truly understand what are the potentials, and ultimately the application, of interventions that are bought based on psychedelic drugs?” Volkow said.
The director separately told Marijuana Moment on Friday in an emailed statement that part of the challenge for the agency and researchers is the fact that psychedelics are strictly prohibited as Schedule I drugs under the federal Controlled Substances Act.
“Researchers must obtain a Schedule I registration which, unlike obtaining registrations for Schedule II substances (which include fentanyl, methamphetamine, and cocaine), is administratively challenging and time consuming,” she said. “This process may deter some scientists from conducting research on Schedule I drugs.”
“In response to concerns from researchers, NIDA is involved in interagency discussions to facilitate research on Schedule I substances,” Volkow said, adding that the agency is “pleased” the Drug Enforcement Administration recently announced plans to significantly increase the quota of certain psychedelic drugs to be produced for use in research.
“It will also be important to streamline the process of obtaining Schedule I registrations to further the science on these substances, including examining their therapeutic potential,” she said.
At Thursday’s event, the official talked about how recent, federally funded surveys showed that fewer college-aged adults are drinking alcohol and are instead opting for psychedelics and marijuana. She discussed the findings in an earlier interview with Marijuana Moment as well.
Don't miss out on the @NIDAnews, @NIAAAnews, & @NIMHgov-sponsored virtual Workshop on Psychedelics as Therapeutics: Gaps, Challenges, and Opportunities, Jan. 12‒13, 2022. Learn more and register: https://t.co/S1zttkoYXq pic.twitter.com/C2Qrk6FN9a
— NIDAnews (@NIDAnews) January 10, 2022
“Let’s learn from history,” she said. “Let’s see what we have learned from the marijuana experience.”
While studies have found that marijuana use among young people has generally remained stable or decreased amid the legalization movement, there has been an increase in cannabis consumption among adults, she said. And “this is likely to happen [with psychedelics] as more and more attention is placed on these psychedelic drugs.”
“I think, to a certain extent, with all the attention that the psychedelic drugs have attracted, the train has left the station and that people are going to start to use it,” Volkow said. “People are going to start to use it whether [the Food and Drug Administration] approves or not.
There are numerous states and localities where psychedelics reform is being explored and pursued both legislatively and through ballot initiative processes.
On Wednesday—during the first part of the two-day federal event that saw nearly 4,000 registrants across 21 time zones—NIMH Director Joshua Gordon stressed that his agency has “been supporting research on psychedelics for some time.”
Tune in today and tomorrow for the @NIH workshop on Psychedelics as Therapeutics, which will examine findings on psychoplastogens for treating depression, post-traumatic stress, and substance and alcohol use disorders. https://t.co/Qzxte5xJt9
— Joshua A. Gordon (@NIMHDirector) January 12, 2022
“We can think of NIMH’s interests in studying psychedelics both in terms of proving that they work and also in terms of demonstrating the mechanism by which they work,” he said. “NIMH has a range of different funding opportunity announcements and other expressions that are priorities aimed at a mechanistic focus and mechanistic approach to drug development.”
Meanwhile, Volkow also made connections between psychedelics and the federal response to the coronavirus pandemic. She said, for example, that survey data showing increased use of psychedelics “may be a way that people are using to try to escape” the situation.
But she also drew a metaphor, saying that just as how the pandemic “forced” federal health officials to accelerate the development and approval of COVID-19 vaccines because of the “urgency of the situation,” one could argue that “actually there is an urgency to bring treatments [such as emerging psychedelic medicines] for people that are suffering from severe mental illness which can be devastating.”
But as Volkow has pointed out, the Schedule I classification of these substances under federal law inhibits such research and development.
The official has also repeatedly highlighted and criticized the racial disparities in drug criminalization enforcement overall.