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What The Loss of Marijuana-Friendly Republicans Means For Federal Legalization

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Democrats reclaimed control of the House on Tuesday, in the process seizing some seats held by Republicans lawmakers who were leaders on marijuana reform on Capitol Hill. Advocates have mixed feelings about what that could mean for cannabis in the 116th Congress.

Marijuana-friendly Reps. Dana Rohrabacher (R-CA), Carlos Curbelo (R-FL), Scott Taylor (R-VA), Mike Coffman (R-CO) and Jason Lewis (R-MN) lost their reelection bids, among others. And while the Democratic victors of those midterm battles are generally supportive of efforts to reform federal marijuana laws, the loss of Republicans who’ve embraced cannabis reform could complicate efforts to move the ball forward on bipartisan legislation.

Here’s how the outgoing GOP congressmen contributed to marijuana reform:

Rohrabacher—Arguably the most vocal marijuana supporter on the Republican side of the House, Rohrabacher has sponsored an amendment that prohibits the Department of Justie from using federal funds to intervene in state legal medical marijuana programs since the early 2000s. He’s also introduced standalone legislation to amend the Controlled Substances Act to exempt individuals acting in compliance with state cannabis laws.

Curbelo—The congressman is the lead sponsor of a bill meant to amend an Internal Revenue Service code that bars marijuana businesses from making legitimate business deductions or receiving tax credits. This summer, Curbelo also became the lead GOP cosponsor of a bill that directs the federal government to study the impact of state legalization efforts on things like crime and public health.

Taylor—Though he’s taken less of a leadership role on the issue than Rohrabacher or Curbelo, Taylor has cosponsored a few marijuana reform bills, including the marijuana business tax legislation and another that would effectively end the federal prohibition of cannabis. He’s also said that legal marijuana can help lift rural Virginia communities out of poverty.

Coffman—Coffman, from legalized Colorado, has cosponsored numerous marijuana-related bills over the last seven years, including one to legalize industrial hemp and another to exempt individuals acting in compliance with state marijuana laws from the CSA and also federally reschedule cannabis.

Lewis—The congressman has criticized the war on drugs, believes that states should have the right to legalize medical cannabis and has cosponsored several bills aimed at reforming federal marijuana laws.

Don Murphy, director of federal policies at the Marijuana Policy Project and a former Republican state lawmaker from Maryland, is concerned about the loss of the GOP allies on Capitol Hill. He told Marijuana Moment that he expects House Democrats to “load up” cannabis legislation with “deal killing amendments the GOP Senate and President Trump won’t accept.”

He also said the message voters sent to pro-reform Republicans who lost on Election Day was that supporting cannabis reform alone isn’t enough to win the hearts of left-leaning reform advocates. It made it “difficult to suggest that drug policy is both good policy and good politics,” Murphy said. “Liberals will still hate you, but they’ll hate you less.”

That said, “Marijuana policy reform is still the right thing to do and is often more popular than the pols it shares the ballot with, so in that respect, it is also the right thing to do politically,” Murphy added.

Rep. Earl Blumenauer (D-OR), who’s worked with lawmakers on both sides of the aisle to promote marijuana reform and last month released a plan for Democrats to federally legalize cannabis in 2019, doesn’t think Tuesday’s losses will stop the bipartisan momentum that’s been building.

“I think we will continue to see more bipartisan progress because Republicans members of Congress, after the election results, I think are going to look for ways that they can support what their public wants and engage in bipartisan problem-solving,” Blumenauer told Marijuana Moment during a press call on Wednesday. “And we’ll give them opportunities for bipartisan problem-solving.”

“We’ve always embraced a bipartisan approach to this. I will continue to that—to reach out, to provide opportunities.”

Where Murphy, Blumenauer and others do agree, however, is that there will continue to be some Republican leadership on the issue, in spite of the fact that some of the more recognizable Republican faces of reform are leaving. Both pointed to Rep. David Joyce (R-OH), who earlier this year introduced an amendment to protect legal medical cannabis states from federal interference, as an example of someone who they expect to pick up the torch in a bigger way.

And having someone like Joyce lead the charge on marijuana from the GOP side of the aisle—as opposed to a lawmaker marred by controversy over Russia ties like Rohrabacher—could ultimately bolster reform efforts, giving Republicans a more palatable champion for cannabis legislation.

Blumenauer also said he expects new Republican faces to get behind federal cannabis reform now that anti-marijuana Rep. Pete Sessions (R-TX) has lost and will no longer control the House Rules Committee, where he’s repeatedly blocked votes on common sense marijuana legislation.

“I think when the House is able to have the Congress function in its role of oversight and legislation, more and more Republicans will take the opportunity to be on the side of their public,” he said.

Sessions’s loss in general represents one of the best pieces of news from the midterm elections for reform advocates, particularly for members of Congress on both sides who’ve been interested in passing legislation that would allow marijuana businesses to make valid tax deductions or extend protections against federal interference in legal medical cannabis states, for example.

It’s too early to tell how lawmakers will navigate marijuana reform after the new Congress is seated in January, but things could speed up quickly if outgoing Rohrabacher’s prediction comes true—that reform will be on the White House agenda now that the midterms are over. Blumenauer seemed to back up his colleague’s claim on the the call, telling another reporter that he’s also had “informal and formal” talks with White House officials that’s led him to a similar conclusion.

Marijuana Got More Votes Than These Politicians In The Midterms

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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Marijuana Banking Bill Would Save Federal Money, Congressional Budget Office Says

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The federal government would save money if a bipartisan bill to give marijuana businesses access to banks is approved, according to a report released by the Congressional Budget Office (CBO) on Friday.

The legislation, which cleared the House Financial Services Committee in a bipartisan vote of 45 to 15 in March, would change federal law to protect financial institutions that service the cannabis industry from being penalized by regulators. That reform would set off a chain of events, beginning with a likely increase in the number of banks accepting deposits from those businesses, CBO reasoned.

Assuming the bill takes effect near the end of the 2019 fiscal year, the office estimates that starting in 2022, banks would see a $1.2 billion increase in deposits, and credit union deposits would grow by $200 million. By 2029, the amounts “would rise to $2.1 billion and $350 million, respectively.”

Because those deposits would have to be insured through the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA), the CBO took into account the possibility that individual financial institutions will fail, and the estimated cost of resolving those failures is $5 million.

That said, those direct spending costs would be “offset by assessments levied on insured financial institutions,” which would amount to about $9 million.

“As a result, CBO estimates, H.R. 1595 would decrease net direct spending by $4 million over the 2019-2029 period,” the office reported.

Rep. Ed Perlmutter (D-CO), the bill’s chief sponsor, told Marijuana Moment that its enactment would have benefits beyond fiscal savings.

“Getting cash off our streets and making our communities safer will come at no cost to the federal government and actually save money while providing a much-needed long-term banking solution for legitimate marijuana businesses across the country,” he said.

Via CBO.

“This CBO score should only increase the significant momentum in Congress behind passing the SAFE Banking Act,” Neal Levine, CEO of the Cannabis Trade Federation, told Marijuana Moment. “It is now apparent that we can help diminish a serious threat to public safety at no net cost to the federal government. We look forward to the bill passing through the House and hope the Senate will follow suit.”

There are some implementation costs to take into account, CBO says. The administrative costs are estimated to be $3 million. But the FDIC and NCUA are able to charge premiums on the financial institutions they regulate to cover much of those costs. The total net administrative costs would, therefore, be about $1 million.

The Federal Reserve would also have to spend funds to implement the bill, and that would reduce remittances to the Treasury Department. Those remittances are considered revenue, which is expected to decrease by about $1 million if the legislation is implemented.

Then there are costs related to other provisions of the bill. Financial regulators would have to update and issue new guidance, which would “cost less than $500,000 over the 2019-2024 period.”

The legislation also requires the Government Accountability Office to study barriers to entry in the marijuana industry and to financial services for minority- and women-owned cannabis businesses. The costs are estimated to be less than $500,000 annually from 2020 to 2024.

The CBO also estimated that enacting the legislation “would not increase on-budget deficits by more than $5 billion in any of the four consecutive 10-year periods beginning in 2030.”

The CBO outlined “several noteworthy areas of uncertainty” that could change the calculus.

1. New guidance from federal financial regulators could be more or less stringent than existing guidance implemented under the Obama administration, which could impact the amount of deposits banks and credit unions will receive.

2. Data on cannabis-related deposits is currently “limited,” as federal restrictions have forced marijuana businesses to operate on a largely cash basis. That means CBO’s estimates on the amount of deposits financial institutions will see could end up being “greater or smaller.”

3. If those estimates do end up being different, costs associated with the bank and credit union insurance funds “could be higher or lower depending on the amount of premium collections and capital deposits and on changes in the resolution costs for financial institutions.”

Sahar Ayinehsazian, an associate attorney at Vicente Sederberg LLP who specializes in cannabis banking, told Marijuana Moment that most of the figures lined up with her expectations. However, given that many marijuana businesses have gravitated toward credit unions rather than banks, she said the estimate increase in deposits to those financial institutions may well end up being larger.

“Looking at the chances of this legislation passing from an economic standpoint, I think [the CBO score is] good news,” she said.

Other advocates agreed that the CBO estimate should help efforts to advance the bill.

“For years, cannabis advocates have been preaching the net benefits SAFE Banking would have on consumers, patients, financial institutions, regulators and taxpayers. This CBO cost estimate confirms that,” Michael Correia, director of government relations for the National Cannabis Industry Association, told Marijuana Moment. “The increase of insured deposits, coming from the added certainty this legislation brings, far outweighs the minor administrative costs to implement this bill.”

The House marijuana banking bill currently has 184 cosponsors, and a companion Senate version has 30 lawmakers signed on. The committee of jurisdiction in the upper chamber has not yet set a hearing or a vote, but pressure is increasing.

Banking associations from all 50 states urged the Senate to take up the legislation earlier this week. Other organizations that have called for a resolution to the cannabis banking dilemma include the National Association of Attorneys General, which has endorsed the bill, and the National Association of State Treasurers, representing state treasurers and finance officials, which adopted a resolution last week in favor of the legislation’s passage.

The new analysis is just the third time that the CBO, which is mandated to score bills that pass full committees, has issued a report on the economic impact of standalone cannabis legislation. The agency scored two marijuana research bills that cleared committees last year.

Federal Small Business Administration Pressed On Supporting Marijuana Industry

This story was updated to include comment from Perlmutter and Correia.

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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Federal Small Business Administration Pressed On Supporting Marijuana Industry

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Sen. Jacky Rosen (D-NV) pressed a federal official responsible for advocating for small businesses on Wednesday about whether existing laws and regulations are preventing the growth of state-legal marijuana markets.

The line of questioning comes as members of Congress are preparing legislation aimed at removing barriers to small business assistance for cannabis industry participants.

The senator said at a hearing of the Senate Small Business and Entrepreneurship Committee that her state’s legal industry is attracting small businesses and entrepreneurs who are selling millions of dollars of product each month. She asked Major Clark, acting chief counsel of the office of advocacy at the Small Business Administration (SBA), about the unique barriers these companies face under federal prohibition.

“Senator, that’s a difficult question,” Clark replied. “We have not actually studied the issue of marijuana in that regard, and we have not because the federal government has not yet legalized it.”

“We do, in conversations with a lot of businesses, get inquires as to what they can do and how they can do it. But to actually do an analysis of it, we have not yet done that,” he said. “I’m sure that as soon as the federal government decides to legalize this substance, we will begin to study its impact and the ability to use it in a more economical context within the state.”

Watch the conversation about small business assistance for cannabis operators at 35:50 in the video below:

Rosen followed up to get Clark’s opinion about whether marijuana companies would benefit from some of the guidelines and resources the SBA offers to small businesses in other industries.

“These types of businesses can benefit from some of these types of things, but again, because this issue is an issue that has not reached the surface of being legalized, we have actually stayed away from trying to advise these businesses on these particular aspects,” he said.

Sen. James Lankford (R-OK), chair of the committee, weighed in on the issue after the Rosen’s time expired, saying that he recognizes the difficulty that federal agencies face when it comes to regulating a controlled substance.

“It is a unique challenge dealing with a Schedule I drug on the federal side and to also know that some states, including my own, have said that they want to allow it,” Lankford said, referring to the medical cannabis law that Oklahoma voters approved in 2018. “And the federal government and the [Food and Drug Administration] continues to study it and say there’s no medicinal gain from this product.”

“It’s a Schedule I drug. I get it,” he said. “The science, and whether it is SBA or whoever it is continues to be able to deal with that.”

While lawmakers push to get marijuana businesses access to federally authorized financial services, industry advocates say that SBA-specific reform legislation may be on the horizon.

The day after Rosen questioned the SBA official about cannabis policy, Khurshid Khoja, a board member for the National Cannabis Industry Association, said at a press conference on Capitol Hill that a bill was being drafted to “essentially get SBA services for cannabis businesses and for cannabis businesses from disproportionately impacted communities.”

Watch the SBA reform discussion at about 32:15 in the video below:

“The House Small Business Committee is looking into the issue and is interested in holding a hearing and drafting legislation this summer that addresses these issues,” a cannabis policy lobbyist who didn’t wish to be named in order to discuss plans that are in development, told Marijuana Moment separately.

GOP Congressman Exposes Flaws In VA Marijuana Research Projects

Photo courtesy of Brian Shamblen.

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GOP Congressman Exposes Flaws In VA Marijuana Research Projects

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Rep. Matt Gaetz (R-FL) emphasized the importance conducting clinical trials on medical marijuana at the U.S. Department of Veterans Affairs (VA) on Tuesday, a topic on which he has often focused.

He also criticized the catch-22 of VA cannabis research, arguing that while the department is able to conduct clinical trials on marijuana, it doesn’t effectively publicize those studies, leaving veterans who might be interested in participating in the dark.

The congressman started by asking whether Mike Colston, director of mental health policy and oversight at the Department of Defense, felt that giving veterans access to medical cannabis could reduce suicides.

Colston said “there’s far more research to be done” and that there’s “insufficient evidence for or against that position.”

Gaetz cited research showing reductions in opioid use in states that have loosened cannabis laws, and he questioned whether “the current offramp for opioid addiction,” which typically involves prescribing long-term opioids that are less potent and less prone to abuse, “is a more effective offramp than medical cannabis.”

“I just think those are the three evidence-based therapies right now that meet the medical bar,” Colston said, referring to bupenehprine, methadone and naltrexone. “Obviously more research can change that.”

That prompted Gaetz to expand on VA policy as it pertains to medical cannabis. He asked for confirmation that the department’s doctors cannot currently recommend marijuana to veterans in states where it’s legal.

They can’t do that because “there’s a federal law against it right now,” Keita Franklin, national director of suicide prevention at the VA, claimed. (This has been a point of contention for legalization advocates, who argue that only the VA’s own internal administrative policies, and not an overarching federal law, blocks such recommendations.)

But VA officials can conduct clinical trials on marijuana, Franklin said.

“We have two ongoing research studies going on right now in this space,” she said. “I think we are open to research, yes.”

The congressman wanted to know if the VA publishes information about these studies and where to find it. The VA official wasn’t sure—and that was exactly Gaetz’s point.

“I don’t think anyone is clear, which is the source of my frustration because I think that there are a lot of these clinical trials that are seeking veterans,” he said. “The VA, due to a lack of clarity, won’t publicize that information or make it available, and then we’re unable to do the research that Captain Colston says is necessary to advance additional options for veterans trying to get off opioids and to stop them from killing themselves.”

Lawmakers have introduced legislation this session that would allow VA doctors to issue medical cannabis recommendations and require the department to conduct clinical trials on the plant’s potential therapeutic benefits for veterans, among other cannabis and veterans-related bills.

But if the VA is mandated to research the plant, Gaetz wants the department to better publicize the studies so that would-be participants actually know about them.

Trump Official Would Rather Discuss Marijuana Than President’s Tax Returns, He Says

Photo courtesy of YouTube.

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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