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.
Federal law prevents legal marijuana business owners from getting comprehensive and affordable insurance coverage.
Without it, they can’t protect their property, employees, or customers.
— Senator Bob Menendez (@SenatorMenendez) July 23, 2019
These small businesses also need to be able to open a bank account, pay employees, take out credit cards, & write checks.
The SAFE Banking Act is a game changer. It gives cannabis businesses access to basic banking services, making the industry safer and the future brighter. pic.twitter.com/wsgVwyu1YR
— Senator Bob Menendez (@SenatorMenendez) July 23, 2019
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 Treasurers, top 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.
Trump Says Marijuana Makes People “Lose IQ Points” In Secret Recording
President Trump could be heard saying that using marijuana makes people “lose IQ points” in a secretly recorded conversation released on Saturday.
“In Colorado they have more accidents,” the president said in the clip captured by Lev Parnas, an associate of Trump attorney Rudolph Giuliani, who is at the center of the Ukraine scandal that led to the president’s impeachment. “It does cause an IQ problem.”
(Marijuana Moment’s editor provides some content to Forbes via a temporary exclusive publishing license arrangement.)
Photo courtesy of YouTube/White House.
Austin Police Chief Says Marijuana Arrests Will Continue Despite City Council Vote
Chief Brian Manley said he would continue to enforce marijuana laws the day after the city council unanimously approved stopping arrests and tickets for low-level cases.
The day after the Austin City Council approved a resolution to stop arresting or ticketing people for most low-level marijuana possession offenses, the police chief made clear he had no plans to do so.
“[Marijuana] is still illegal, and we will still enforce marijuana law if we come across people smoking in the community,” Chief Brian Manley said during a news conference Friday afternoon.
Though cracking down on those in possession of small amounts of marijuana has never been a priority for the department, he said, police will continue to either issue tickets under the city’s “cite-and-release” policy or arrest people if officers “come across it.”
The difference, according to City Council member and resolution sponsor Greg Casar, is that the council’s move now guarantees those actions will come with no penalty. Tickets will be meaningless pieces of paper and any arrests will result in a quick release with no charges accepted from prosecutors, he told The Texas Tribune after the news conference.
“What has changed since yesterday is that enforcement, almost in virtually all cases, is now handing someone a piece of paper with no penalty or no court date,” Casar said.
The move by the City Council came as a direct result from Texas’ new hemp law which complicated marijuana prosecution across the state. Last summer, when lawmakers legalized hemp, they also changed the definition of marijuana from cannabis to cannabis that contains more than 0.3% THC, the psychoactive ingredient in the plant.
Many prosecutors, including those in Austin’s Travis County, now won’t accept pot cases based on look and smell alone, requiring lab testing to determine THC levels before accepting a case. Such testing is not yet available in public crime labs, though some counties and cities have spent money to obtain test results from private labs.
The council’s resolution prohibited using city funds or personnel to conduct such testing in non-felony marijuana cases. It also directed the elimination, to the furthest extent possible, of arrests or citations for cannabis possession. As Manley also noted, the resolution clarifies it can’t technically decriminalize marijuana, since that is state law.
The resolution gave the city manager until May 1 to report back to the council on how police were trained in this new resolution, and Casar said he hopes Manley reviews his policies before then.
Manley said in the news conference that he would continue to review the resolution, as well as police policies.
But, he assured, “a City Council does not have the authority to tell a police department not to enforce a state law.”
The Texas Tribune is a nonprofit, nonpartisan media organization that informs Texans — and engages with them — about public policy, politics, government and statewide issues.
Andrew Yang Wants To Legalize Psychedelic Mushrooms For Military Veterans
Andrew Yang says he wants to legalize psilocybin mushrooms for military veterans to help them combat mental health conditions such as post-traumatic stress disorder (PTSD).
During a town hall event at an Iowa college on Thursday, the 2020 Democratic presidential candidate was asked whether he would take initiative and allow veterans to access medical marijuana if elected. Yang replied he “will be so excited to be that commander-in-chief” that he would not only end federal cannabis prohibition but would go one step further by legalizing the psychedelic fungus for veterans as well.
“We need to get marijuana off of the Controlled Substances Act and legalize it at the federal level, make it freely available,” he said. “I say this because I’ve talked to hundreds of veterans and other Americans who benefit from marijuana as a pain relief treatment, and it’s much less deadly than the opiates that many, many people are using for the same conditions.”
“I’ve talked to veterans who’ve also benefited from psilocybin mushrooms,” he added. “They said it was the only thing that actually has helped combat their PTSD. I’m for legalizing psilocybin mushrooms for veterans as well. Pretty much if it’s going to help a veteran, we should make it easier, not harder, for them to get access to it.”
Yang’s drug policy reform platform is unique in that respect. While the majority of Democratic candidates support marijuana legalization, he’s pushed unique proposals such as decriminalizing possession of opioids and making psilocybin mushrooms “more freely available” for therapeutic purposes. The candidate also wants to invest federal funds in safe injection facilities where individuals can use prohibited drugs in a medically supervised environment and receive help getting into treatment.
He hasn’t gone so far as embracing the decriminalization of all drugs, as former South Bend, Indiana Mayor Pete Buttigieg has, however.
That said, Yang did signal that he’s open to legalizing and regulating “certain drugs” beyond cannabis, which he argued would disrupt international drug cartels. Rep. Tulsi Gabbard (D-HI) recently said she backs “legalizing and regulating” currently illegal controlled substances to protect public safety and combat the illicit market.
At the Iowa town hall, Yang went on to say that he’s particularly interested in legalizing marijuana, and he again pledged to “pardon everyone who’s in jail for a non-violent marijuana-related offense because they shouldn’t be in jail for something that’s frankly legal in other parts of the country.”
“And I would pardon them all on April 20, 2021, high-five them on the way out of jail and be like, ‘things got a lot better in the last year,'” he said, referencing the unofficial cannabis holiday 4/20.
Photo element courtesy of Gage Skidmore.