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Senate Hearing Represents A Step Toward Providing Marijuana Banking Access

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A key Senate committee met on Tuesday to discuss legislative fixes that would allow banks to service state-legal marijuana businesses without the risk of being penalized by federal financial regulators, and the chair of the panel concluded that “a case has been made pretty strongly here” that the issue must get resolved but that it’s a “very important and complex issue that we need to get right.”

The Senate Banking, Housing and Urban Affairs Committee, chaired by Sen. Mike Crapo (R-ID), announced the hearing last week, which took some advocates by surprise given the senator’s previous statement that he wouldn’t commit to examining the cannabis financial services issue while the federal government still regarded marijuana as a controlled substance.

A bipartisan bill—the Secure And Fair Enforcement (SAFE) Banking Act—was a main focus of the conversation. The House version of the legislation cleared that chamber’s Financial Services Committee in March, and while advocates hoped it would go before the full chamber ahead of the August recess, expectations have shifted toward the fall for floor action.

When a Marijuana Moment reporter asked Crapo after the hearing if he’s spoken to Senate Majority Leader Mitch McConnell (R-KY) about the bill, the chairman replied that he’s “spoken to almost all of our colleagues about this.”

In response to questions from other reporters about next steps, he said that the committee is “trying right now to see if we can find a way to address the various issues” ahead of a potential markup on the cannabis banking legislation and that he doesn’t “intend to hold additional hearings on the issue.”

Sen. Sherrod Brown (D-OH), ranking member of the panel, said in his opening remarks at the hearing that “the legal cannabis industry is one of the fastest growing in the United States and employs hundreds of thousands of people.”

“No matter how you feel about marijuana itself, we have a duty to look about for the workers who work in this industry and the communities they represent,” he said.

Witnesses who testified before the Senate committee included SAFE Banking Act sponsors Sens. Cory Gardner (R-CO) and Jeff Merkley (D-OR), Credit Union National Association (CUNA) representative Rachel Pross, American Bankers Association (ABA) representative Joanne Sherwood, Smart Approaches To Marijuana (SAM) Vice President of Government Affairs Garth Van Meter and LivWell Enlightened Health CEO John Lord.

Watch the Senate’s marijuana banking hearing below:

Advocates argue that providing banking access to cannabis businesses will increase financial transparency and mitigate safety risks, since such companies are currently largely forced to operate on a cash basis that makes them targets of crime.

Gardner said in his testimony that “the states are leading on this issue, and the federal government has failed to respond. It has closed its eyes and plugged its ears and pretended the issue will go away. It won’t.”

“Keeping those dollars out of banks means we lose the ability to trace where the dollars go,” he added. “It also makes it harder to ensure all taxes are being paid. It makes it easier for criminals in the illicit market to pose as legitimate. And it leaves hundreds of millions of dollars of cash in the state.”

He recognized during the hearing that this “is a difficult hearing, a difficult topic. I know that.”

“But we were sent here to deal with the difficult topics,” he said. “It’s an important step forward. First hearing we’ve had on this issue as the federal government wakes up to the reality that the cannabis issue is not going to go away and we must have action.”

Following the hearing, Gardner told reporters that he was confident that there’s enough support in the Senate to pass not only the SAFE Banking Act but also another bipartisan bill he is cosponsoring to allow states to set their own cannabis policies without the risk of federal interference.

“[I]t would pass with majority support and I think it would have a majority of Republicans voting for it as well,” he said.

Notably, the senator told Marijuana Moment that he speaks to McConnell “constantly” about cannabis issues, as recently as Monday.

“If they want me to shut up then they can just pass this and the STATES Act and that’s the way I’ll shut up,” he said, referring to the banking and broader states’ rights bills.

But GOP attendance at the meeting was lacking overall, with only Crapo and Gardner appearing from the majority, raising questions about the extent to which Senate Republicans are interested in advancing cannabis banking legislation.

Merkley said in his testimony that the “lack of availability of financial services for cannabis-related businesses in states where it is legalized has created a scenario where businesses are forced to operate in all cash, leading to unsafe environments for all parties involved.”

“Financial institutions support legal clarity and certainty and a legislative hearing would provide an opportunity to address outstanding questions and ensure a better understanding of the proposed bipartisan legislation,” he said, adding that he hopes the hearing “will give members the opportunity to hear directly from witnesses who have direct experience with the challenges facing the financial sector, the cannabis industry, and law enforcement.”

During the hearing, Merkley said there’s “nothing good about forcing the world to operate on cash.”

“It is an invitation to money laundering. It is an invitation to organized crime. It is an invitation to robbery. It is an invitation to cheat on your taxes or cheat your employees,” he said. “Let’s fix this. Let’s honor the states’ rights vision of all of the states that have said this makes sense here in our location for our citizens.”

“Although the SAFE Banking Act does not cure all of the cannabis-related banking challenges, it would help the 33 states that have legalized cannabis in some form to make their communities safer, collect their taxes, and regulate their cannabis markets effectively,” Sherwood, who is president and CEO of Citywide Banks, said in written testimony on behalf of ABA. “It would also help banks and their customers in states without legal cannabis regimes by addressing the unintended consequences for unrelated businesses that provide products and services to the cannabis industry, their employees or service providers, without undermining each state’s ability to prohibit cannabis sales and use within their borders.”

The Oregon senator also introduced into the record more than 100 stories from people who have been affected by the lack of marijuana industry banking access.

Pross, chief risk officer for Maps Credit Union, said that her association does “not have a position on the federal legalization of cannabis” but that “many credit unions operate in states and communities that have made cannabis usage or growth legal for medicinal and/or recreational purposes” and that CUNA strongly believes that “financial institutions should be permitted to lawfully serve businesses that engage in activities that are authorized under their state laws, even when such activity may be inconsistent with federal law.”

“On behalf of America’s credit unions and their 115 million members, we urge both Congress and the Administration to work towards turning this legislation into the law and providing financial institutions with the certainty needed to better serve our communities.”

Prohibitionist group SAM’s Van Meter said that members of the committee were being tasked with addressing “whether we want to promote and increase drug use during an addiction crisis or discourage drug use and help people find recovery and healing” by debating whether to provide access to banking to cannabis businesses.

“By skipping ahead to a technicality over banking rules, the marijuana industry is hoping to gain many of the benefits of federal legalization without a debate over the public health effects,” he said in testimony.

Attached to SAM’s submission is a letter expressing concern about the potential consequences of passing the SAFE Banking Act, signed by former heads of the Drug Enforcement Administration and Office of National Drug Control Policy.

Sen. Brian Schatz (D-HI) spoke about research barriers for marijuana, noting that he cosponsored bipartisan legislation introduced last week that would address the issue alongside Sens. Chuck Grassley (R-IA) and Dianne Feinstein (D-CA).

Van Meter jumped in to say that “if the marijuana industry was concerned about research, then I don’t think they would be selling some of these extremely high potency” products.

“Well hang on, I’m concerned about research,” Schatz said. “I’m going to allow you to answer the questions, but I’m not going to allow you to take a pot shot at the people that you’re testifying with.”

Lord, who is chairman of the industry association Cannabis Trade Federation, said that “due to the significant compliance costs associated with serving cannabis customers under existing policies, financial institutions charge cannabis businesses substantial monthly fees.”

“Our company pays in excess of $3,000 per month for the mere privilege of having an account,” he said of LivWell Enlightened Health. “The current situation is especially challenging for small businesses. While we, due to our size, are able to absorb the additional costs associated with cash management and exorbitant bank fees, many small businesses are not.”

“Furthermore, resolving the banking issue could significantly aid cannabis businesses in securing business loans. This is critical to small business owners who may not have access to other sources of capital. It should be noted that these small businesses are also being squeezed by Section 280E of the Internal Revenue Code, which prevents all cannabis companies from deducting standard business expenses when they calculate their taxes. If there is any hope in helping small businesses – including minority—and women-owned companies—survive and thrive, we must fix the banking situation and amend Section 280E so that cannabis businesses are taxed like any other business.”

Sen. Bob Menendez (D-NJ) discussed challenges that cannabis businesses face in securing loans and touted separate legislation he introduced on Monday that would give such companies access to insurance.

Sen. Tina Smith (D-MN) argued that federal marijuana reform should not stop at banking access.

“I think we need to realize that as we’re looking at criminal penalties for involvement of businesses with marijuana, we can’t forget the thousands of individuals who have spent time behind bars for their involvement with marijuana,” she said. “Communities of color, particularly African-American men, have paid a disproportionate price for generations of aggressive enforcement of marijuana laws.”

Brown, the ranking Democrat, made a similar point, saying that the financial services hearing is “just one piece of the conversation Congress must have on marijuana policy.”

“People should not be thrown in jail or have their futures jeopardized by a criminal record over non-violent marijuana offenses,” he said.

Other topics brought up during the meeting include the lack of access to financial services for hemp businesses since the crop was federally legalized under the 2018 Farm Bill, barriers to marijuana research and how providing banking access to the industry can help regulators better identify illicit financial activity.

Banking associations representing all 50 states have voiced support for the SAFE Act. Other advocates for a legislative resolution to the banking issue include a coalition of 20 bipartisan governors, the National Association of State Treasurerstop financial regulators in 25 statesand a majority of state attorneys general.

On the House side, the legislation has 206 cosponsors. The bill has 31 cosponsors in the Senate.

The banking hearing marks the sixth congressional hearing on marijuana policy this Congress, including a historic meeting of the House Judiciary Crime, Terrorism and Homeland Security Subcommittee on pathways to end the federal prohibition of cannabis. Another committee is scheduled to discuss hemp production on Wednesday.

Aaron Houston contributed reporting for this story from Washington, D.C.

Senate Schedules Second Cannabis Hearing For Next Week

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.

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Andrew Yang Peddles Marijuana-Themed Presidential Campaign Merchandise

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2020 candidate Andrew Yang announced on Saturday that his campaign for the Democratic Party’s presidential nomination is rolling out a line of marijuana-themed merch.

The limited edition products blend Yang’s love of mathematics with his support for cannabis reform. A t-shirt being offered for $30 simply says, “Math. Money. Marijuana.” And a now-sold-out baseball cap says “Math” on the front and displays a cannabis leaf on back. There’s also a bumper sticker that says, “Legalize Marijuana.”

Please visit Forbes to read the rest of this piece.

(Marijuana Moment’s editor provides some content to Forbes via a temporary exclusive publishing license arrangement.)

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Buttigieg Pledges To Decriminalize Possession Of All Drugs In First Term As President

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South Bend, Indiana Mayor Pete Buttigieg released a comprehensive plan on Friday that calls for “decriminalizing all drug possession” in his first presidential term as a means to combat the opioid epidemic and treat addiction as a public health, rather than criminal justice, issue.

Decriminalization is just one action the 2020 Democratic presidential candidate said he’d pursue in order to reform the country’s mental health care system and bolster substance abuse treatment. His plan also includes proposals to reduce sentences for drug offenses other than possession, increase access to the opioid overdose reversal drug naloxone and make it easier to implement syringe exchange programs.

Buttigieg’s “Healing and Belonging in America” plan emphasizes the need to divert people suffering from addiction away from prisons and into treatment. He said he’d accomplish that by expanding diversionary programs and evidence-based training “for drug courts, mental health courts, and other alternatives to incarceration for justice-involved persons.”

The goal of decriminalization and diversion is to reduce “the number of people incarcerated due to mental illness or substance use by 75 percent in the first term.”

Under his plan, sentencing reform for drug offenses other than possession would be applied retroactively and coupled with expungements for past convictions. Buttigieg pointed to research demonstrating that “incarceration for drug offenses has no effect on drug misuse, drug arrests, or overdose deaths” and instead “actually increases the rate of overdose deaths.”

“We cannot incarcerate ourselves out of this public health problem.”

“To ensure that people with a mental illness or substance use disorder can heal, we will decriminalize these conditions,” the proposal states. “When someone is undergoing a crisis or is caught using a drug, they should be treated by a health professional rather than punished in a jail cell.”

“All presidential candidates should join Pete Buttigieg in recognizing that the criminalization of people for their drug use is wrong and simply bad policy,” Maria McFarland Sánchez-Moreno, executive director of the Drug Policy Action, said in a press release. “Possession of drugs for personal use is the single most arrested offense in the United States, eclipsing arrest rates for any other offense. With overdose numbers skyrocketing and entire communities, disproportionately black or brown, suffering from criminalization, it’s time for policymakers to shift gears. Taking an evidence-based, health-centered approach to address this crisis is not only true leadership – it’s common sense.”

The mayor also made harm reduction policies a key component of his strategy. He said take-home naloxone programs would be expanded to all 50 states by 2024 and that harm reduction services would be expanded “to reduce overdose deaths and the spread of infectious diseases related to needle sharing.”

The plan would make naloxone “broadly available in order to reverse overdoses” and remove “legislative and regulatory restrictions on the use of federal funds for syringe service programs.”

Buttigieg said the federal government should provide funding for state and local health departments to purchase the medication, make sure that it’s “available in public spaces and workplaces” similar to first aid kids and encourage “co-prescribing of naloxone with opioids, either by individual physicians or direct dispensing by pharmacists.”

Existing federal law makes it difficult to establish syringe exchange programs, in part because federal funds can’t be used to buy needles. The restrictions “hamper state and local responses, both because they limit resources and because they convey a negative message about the value of these programs, despite overwhelming scientific evidence that they can prevent transmission of HIV and hepatitis.”

In addition to lifting those barriers, the candidate said the Centers for Disease Control and Prevention “would also work with states to remove any criminal liability for those participating in” syringe exchange programs.

“Harm reduction programs are a critical part of any effective response to the opioid and injection drug use crisis. They minimize the negative impact of drug use without encouraging it, while reducing other side effects of drug use. In particular, this means access to syringe service programs for people who inject drugs, that link them to treatment, and provides access to sterile syringes. These programs help prevent transmission of HIV, viral hepatitis, and other infectious diseases associated with needle sharing, and reduce overdoses by deploying medication such as naloxone that help reverse the effects of opioids.”

One harm reduction policy that didn’t make the cut in Buttigieg’s plan is safe injection sites, where people could use illicit drugs under the supervision of medical professionals who could reverse overdoses and recommend treatment options. Sens. Bernie Sanders (I-VT) and Elizabeth Warren (D-MA), who are also running for the Democratic nomination, both proposed legalizing such facilities as part of criminal justice reform plans they released this month.

“Decades of failed mental health and addiction policy, coupled with mass incarceration that criminalized mental illness and drug use, have left us with a mental health and addiction care system so broken that today there are more people with serious mental illness in prisons than in treatment facilities,” Buttigieg said.

The candidate also made ending incarceration for drug possession—as well as legalizing marijuana—central principles of his previously released criminal justice reform plan, which he released last month.

But while the prior plan did not explicitly describe the move as “decriminalizing” drugs, even though advocates commonly use that word to refer to policies that remove the threat of being imprisoned for possession, the new document does use that terminology—signaling a shift in clarity as Buttigieg continues to develop his campaign messaging.

In other instances, he borrowed language from his criminal justice reform plan, specifically as it concerns how criminalizing drug use can increase rates of overdose, for his mental health proposal.

“Despite equal rates of use, Black Americans are nearly four times as likely to be arrested for using marijuana,” the criminal justice plan states. “Research shows that incarceration for drug offenses has no effect on drug misuse, drug arrests, or overdose deaths. In fact, some studies show that incarceration actually increases the rate of overdose deaths.”

Buttigieg mentioned that, as with drug offenses, black people are also more likely to die from overdoses. And that’s due to “the current broken system that criminalizes mental illness and addiction” that was “built during the crack epidemic of the 1980s.”

Elizabeth Warren’s Criminal Justice Plan Involves Legalizing Marijuana And Safe Injection Sites

This story was updated to include comment from the Drug Policy Action.

Photo courtesy of Flickr/Gage Skidmore.

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.
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White House Drug Officials Say Legal Marijuana Is Up To States

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Two top federal drug officials, including the White House drug czar, recently said that marijuana legalization should be left up to states.

The comments stand out coming from the Office of National Drug Control Policy (ONDCP), which has historically played a central role in defending blanket federal prohibition.

Jim Carroll, the Trump-appointed drug czar who directs the administration’s drug policies, told Fox 59 reporter Kayla Sullivan that he considers legalization a states’ right issue. He added that he’d like to see targeted education campaigns concerning cannabis use during pregnancy and underage usage as well as research into impaired driving.

It’s a particularly notable position given that federal law stipulates that the drug czar is required to “take such actions as necessary to oppose any attempt to legalize the use of a substance” listed as Schedule I under the Controlled Substances Act, including marijuana.

Even if Carroll’s remarks arguably don’t directly violate that statute, they are significant in that he doesn’t seem to have taken the opportunity to proactively oppose state legalization efforts when asked by a reporter.

Anne Hazlett, senior advisor at ONDCP, also weighed in on cannabis legalization on Wednesday, telling CentralIllinoisProud.com that marijuana legalization is “a state decision.”

“Marijuana is an ongoing challenge that is being addressed in many of our states,” she said. “This is a state decision, and we would like to see additional research done so that these decisions being made at a state level are being made in a manor that is fully informed.”

Though the comments from Carroll and Hazlett seem to reflect an evolving understanding of the federal government’s role in imposing prohibition on the states, the ONDCP director has previously made clear he’s not enthusiastic about the burgeoning legal market.

During a House Committee on Oversight and Reform hearing in May, Carroll raised concerns about THC potency in marijuana products, saying “the marijuana we have today is nothing like what it was when I was a kid, when I was in high school.”

“Back then the THC, the ingredient in marijuana that makes you high, was in the teens in terms of the percentage,” he said. “Now what we’re seeing is twice that, three times that, in the plant.”

He also said that more research is needed and that the Drug Enforcement Administration as well as the Department of Health and Human Services are “working hard to make sure that we understand the impact of legalization of marijuana on the body.”

Federally Funded Journal Exposes How Marijuana Prohibition Puts Consumers At Risk

Photo courtesy of Philip Steffan.

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