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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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Bipartisan Lawmakers Tell DEA To Let Researchers Study Marijuana From Dispensaries

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A bipartisan coalition of lawmakers from the House and Senate sent a letter to the Justice Department on Friday, requesting a policy change allowing researchers to access marijuana from state-legal dispensaries to improve studies on the plant’s benefits and risks.

The letter, led by Rep. Harley Rouda (D-CA) and Sen. Brian Schatz (D-HI), cites feedback from federal health agencies, which have said that existing restrictions on cannabis have inhibited research. One problem in particular is that there’s only one federally authorized manufacturer of research-grade marijuana.

While the Drug Enforcement Administration (DEA) said that it is in the process of approving additional manufacturers, it’s been more than three years since they first announced that applications for more growers would be accepted and, more recently, the agency said it would have to develop alternative rules to approve proposals that have been submitted.

“At the same time, the status quo does not address a barrier to research raised by both [the National Institutes of Health] and [the Food and Drug Administration],” the lawmakers wrote in the new letter. That barrier is a ban on researchers being able to obtain marijuana from dispensaries.

“Both agencies recommended that researchers should be able to obtain cannabis from state-legal sources,” the letter states.

Further, the lawmakers said that there are “problems in industry development of licensed drugs with data from products obtained from third-parties, such as the University of Mississippi.”

“In many states, cannabis law and regulations already provide for licensing of industrial manufacturing activities, and products are available for medical use in those states, but not for research leading to FDA licensure,” they wrote.

“There is a need for a greater diversity of cannabis products so that research on benefits and risks reflects the realities of what consumers and patients are using. NIH and FDA have strongly recommended streamlining the process for conducting research and product development activities with cannabis and other Schedule I substances, and that the DEA take action to assure that interpretations of processes and policies are universally applied in local DEA jurisdictions.”

The lack of chemical diversity in the federal government’s cannabis supply has been repeatedly pointed out. One study found that the research-grade cannabis is more similar to hemp than marijuana in commercial markets.

To resolve the research issues, the coalition made two recommendations: 1) to amend internal policy “so as to allow researchers with Schedule I licenses to obtain cannabis-derived products from state authorized dispensaries for research purposes” and 2) issue guidance clarifying that hemp researchers do not need a DEA license to obtain and study hemp because it was federally legalized under the 2018 Farm Bill.

The letter requests a response from DEA by December 20.

A total of 21 members of Congress signed the letter, including Sens. Kamala Harris (D-CA) and Cory Gardner (R-CO), along with Reps. Earl Blumenauer (D-OR), Barbara Lee (D-CA) Matt Gaetz (R-FL) and Joe Kennedy (D-MA).

“Our nation’s cannabis research laws are archaic,” Rouda said in a press release. “Forty-seven states have legalized some form of cannabis consumption—we must ensure our federal agencies and other licensed institutions can comprehensively study the benefits and risks of cannabis products.”

“I thank Senator Schatz, and my colleagues on both sides of the aisle, for joining me to make this common-sense request,” he said. “It’s time to bring our drug research policies into the 21st century.”

Attorney General William Barr received a similar letter from lawmakers about the need to expand the number of federally authorized marijuana cultivators in April.

Read the lawmakers’ full letter on expanding marijuana research below:

FINAL Letter to DOJ Re. Can… by Marijuana Moment on Scribd

People Are Skipping Sleep Aids In Favor of Marijuana, Study Reports

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Oregon Activists Begin Signature Gathering For 2020 Drug Decriminalization Initiative

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Oregon activists have begun collecting signatures for a statewide initiative to decriminalize possession of all drugs.

Three months after petitioners quietly submitted the proposed ballot measure—titled the “Drug Addiction Treatment and Recovery Act” (DATRA)—the signature gathering process has started, with organizers deployed to Portland to raise support.

A long road lies before the activists, who need to collect 112,020 valid signatures from voters in order to qualify for the 2020 ballot. Funding and polling will decide whether they mount a full push for the decriminalization measure in the months to come.

To that end, their efforts are being helped by David Bronner, CEO of the soap company Dr. Bronner’s, who told Marijuana Moment on Thursday that he will be investing $250,000 in the decriminalization campaign. An additional $500,000 will go to a separate Oregon initiative to legalize psilocybin for therapeutic purposes.

The Drug Policy Alliance (DPA), which backed Oregon’s successful marijuana legalization initiative in 2014, is also supporting this new effort to make low-level drug possession an infraction punishable by a $100 fine with no jail time, rather than a misdemeanor. It remains to be seen how involved in the campaign DPA will be, however.

Peter Zuckerman, a chief petitioner for the decriminalization initiative, told OregonLive on Thursday that it’s not guaranteed that the campaign will proceed and that much rides on how much money the group can raise, whether there’s public support for the reform move and how staff recruitment comes together.

He said the main thrust of the measure is to take a “health-based approach to drug addiction rather than a criminal justice-based approach.”

The proposal caught the attention of Oregon’s teachers’ union, which said that it supports decriminalizing drug possession but wrote in a comment submitted to the secretary of state in October that it was not taking an official position because it’s concerned about another provision that would shift cannabis tax revenue away from schools.

DATRA would make it so most of that revenue would be used to fund addiction treatment programs.

At the same time that activists are collecting signatures and weighing whether to move ahead with the broad decriminalization initiative, another advocacy group is pushing for a measure to legalize psilocybin for therapeutic use, allowing individuals to receive treatment with the psychedelic fungus at licensed health facilities. The group launched its signature drive in September.

Advocates in Portland are also hoping to advance a local measure to decriminalize psilocybin and other psychedelics such as ayahuasca and ibogaine.

Bronner wrote in a blog post that the decriminalization and therapeutic psilocybin legalization campaigns are “already coordinating closely and conserving resources on the statewide signature drive.”

He told Marijuana Moment that “we see this as the perfect one two punch in Oregon, legalizing psilocybin therapy that has so much promise for treating drug addiction, at the same time Oregon shifts to a treatment not jail approach.”

“And 100 percent confident it’s coming together,” he said.

All of this comes amid a national movement to decriminalize psychedelics, with activists in almost 100 cities across the U.S. considering pushing for reduced penalties for substances such as psilocybin and ayahuasca. Decriminalize Nature, which is aiding in and tracking these efforts, is also receiving donations from Bronner, he said.

Decriminalization is also gaining traction on the national stage, with two presidential candidates—South Bend, Indiana Mayor Pete Buttigieg and Rep. Tulsi Gabbard (D-HI)—voicing support for the policy change. Former Housing and Urban Development Secretary Julián Castro, another candidate, recently said that he’s open to broad decriminalization, while entrepreneur Andrew Yang backs decriminalizing opioids.

Scientist Talks Benefits Of Psychedelics At Federal Health Agency Event

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North Dakota Activists Submit Measure To Legalize Marijuana In 2020

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North Dakota activists submitted a measure to legalize marijuana for adult use to state officials on Thursday, an organizer confirmed to Marijuana Moment.

Legalize ND, the group behind the proposed statutory initiative, delivered the measure to the secretary of state’s office. It’s expected to be validated within days, after which point petitions will be distributed to collect signatures in support of qualifying for the 2020 ballot.

It’s been about a year since organizers began working on the measure, which would allow adults 21 and older to possess and purchase cannabis for personal use. The proposal is more narrowly tailored than a legalization initiative from the same organization that voters rejected in 2018, however.

The previous version didn’t include any restrictions on cultivation or possession, and it didn’t involve a licensing scheme. By contrast, the new measure would prohibit home cultivation, limit possession to two ounces, impose a 10 percent excise tax and establish a regulatory body to approve licenses for marijuana businesses.

“One of the largest complaints from last time was the mantra of ‘poorly written,'” Legalize ND’s David Owen told Marijuana Moment in a phone interview. “They targeted the lack of legal experience from our team and they targeted a lack of ‘qualified lawyers’ to be drafting language that would go into the state’s statutory law.”

But he said he’s confident the campaign will be successful this time around, in part because they spent months drafting the language with the North Dakota Legislative Council.

Asked what he’d say to voters still on the fence about legalization, Owen replied that it would depend on what their initial concerns were:

“If it’s a concern over home grow, well it’s simple, we don’t have that anymore. If it’s a concern of people having too much, we have a reasonable possession limit now—in their eyes, I still think possession limits are fundamentally arbitrary, but they wanted a possession limit so we have that now. If people go, ‘well what about the quality of the language?’ I can point to how it’s literally written by Legislative Council, so either every attorney who works for the state of North Dakota is incompetent or this is well written.”

In order to qualify for next year’s ballot, the group must collect 13,452 valid signatures from voters before July 6, 2020.

“I think the most important thing isn’t what it would do, but what it would stop from happening,” Owen told local radio station KFGO on Wednesday. “We currently have a system where people are unable to find a job because of a criminal record, we have a system where people are continuing to get marijuana charges and lose their housing, we have families being separated because of parents losing custody over their children for marijuana charges. That all stops when this is legalized.”

Listen to Owen’s radio interview about the new marijuana ballot measure below:

Internal polling that received outside funding, which Owen said cannot be publicly released because of the wishes of the donor, shows the initiative is “slightly ahead” among voters.

In an earlier interview with Marijuana Moment in February, Owen said that it’s “very probable that we can do it” this time around, but much of that depended on the extent to which opposition campaigns are involved and how much funding outside groups are able to offer.

Currently, North Dakota has a medical cannabis program, and the governor signed legislation in May decriminalizing low-level marijuana possession.

Marijuana Summit Will Give Virginia Governor ‘More Tools’ To Back Legalization, Attorney General Says

Photo courtesy of Philip Steffan.

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