Wisconsin Gov. Tony Evers (D), whose proposed state budget includes provisions to legalize both medical and adult-use marijuana, says he’s sick of seeing tax revenue from cannabis sales go to neighboring states that have already legalized.
“Frankly I’m kind of tired of talking to the governor from Illinois,” he said in a video posted to Twitter on Wednesday. “Whenever I get with him, he thanks me for having Wisconsinites cross the border to buy marijuana.”
Later in the day, Evers held a virtual town hall-style meeting where he and other members of the administration explained the legalization proposals and other elements of the budget plan, took public comments and urged constituents to pressure the Republican-controlled legislature to stop blocking cannabis reform.
Nearly 300 people attended the evening event, which featured comments from the governor, Lt. Gov. Mandela Barnes (D) and representatives of some state agencies, including the Department of Corrections.
A Twitter follower asked: "When will we hear about marijuana reform?"
— Governor Tony Evers (@GovEvers) April 14, 2021
Evers noted that among voters, members of both parties support the policy change even if that isn’t being translated into legislative action by lawmakers in the state’s GOP-led Senate and Assembly.
“In one of the rooms I work in at the Capitol, on the ceiling it says: ‘The will of the people is the law of the land,’” Evers said, “and I take that seriously. When people are passing referenda to say, ‘We believe that we should have recreational marijuana and/or medicinal marijuana,’ that’s what we should do as legislators and as leaders in the executive branch.”
At the local level, Wisconsin voters in three jurisdictions last year approved non-binding advisory questions in favor of marijuana legalization. That’s after Wisconsinites overwhelmingly embraced cannabis reform by supporting more than a dozen similar measures across the state during the 2018 election. Late last year, city officials in the state’s capital, Madison, voted to remove most local penalties for cannabis possession and consumption, effectively allowing use by adults 18 and older.
Evers said his office estimates that legalizing and taxing cannabis statewide could bring Wisconsin more than $165 million annually starting in 2022, an amount that would likely increase as the market matures.
Early last year, when Illinois Gov. J.B. Pritzker (D) gave his State of the State address, he quipped that the state’s legal cannabis program would attract buyers from nearby states. Legalization, which Pritzker signed into law in 2019, “gives us a chance to collect tax revenue from the residents of Wisconsin, Missouri, Iowa and Indiana,” he said.
Legal cannabis sales in Illinois, one of only a few U.S. states to have legalized the drug through its legislature, made the state more than $200 million last year, and so far this year consumers are on track to far exceed that mark. Average daily sales surpassed $3.5 million last month—and the state now takes in more tax revenue from cannabis sales than from alcohol.
Evers, in the video he posted to Twitter, said that because lawmakers in his state are refusing to end prohibition, “the sales tax goes to them [in Illinois], instead of us.”
Our #BadgerBounceback proposal also modifies criminal penalties for marijuana-related crimes, and creates an opportunity for repealing and reducing sentences of those previously convicted of nonviolent minor marijuana-related crimes.
— Governor Tony Evers (@GovEvers) April 14, 2021
Republicans in Wisconsin’s legislature are broadly opposed to legalization, and some have criticized the governor’s proposals as grandstanding. House Speaker Robin Vos (R) said the marijuana reform component of the budget request is an example of Evers demonstrating that he is “not serious about governing, he’s serious about politics.” Senate President Chris Kapenga (R) recently called adult-use legalization a nonstarter and said it’s “not in the best interest of Wisconsinites.”
During a section of Wednesday evening’s town hall meeting, participants split up into small breakout groups, and members of the administration took feedback on the plan and answered questions from the public. In one group, two separate commenters said they supported legalization but felt the provisions would be rejected by state’s Republican-controlled legislature.
“If we’re going to have a meaningful conversation, we need to address and recognize political realities that are going on,” said one person, “which is that a lot of the things that are proposed in this budget are not going to get through the legislature.”
Another commenter, who said he had reached out to his state representatives as well as local sheriffs in Wisconsin, asked what the governor’s plan is if lawmakers remove the legalization proposal from the budget. “The GOP is taking what law enforcement leaders tell them, and none of them are going to support this,” he said. “It’s not going to pass, so what is going to happen next?”
“I am certainly not an eternal optimist,” replied Maggie Gau, Evers’s chief of staff. “If they strip it out, which they probably will,” Gau added, the governor’s office hopes to continue to expand on recent local pushes to decriminalize cannabis.
“We see communities across the state are taking the steps to decriminalize locally,” she said. “Continuing to build on that momentum, as well, I think is another place where we can make some headway.”
Gau noted that some Republicans have expressed support for medical marijuana, saying the governor’s office plans to “really lean in on the legislature in terms of what we can do on medical” if the provision is stripped from Evers’s budget proposal.
Zach Madden, legislative affairs director for the governor, said there’s “a lot of chatter about the possibility to maybe get medical marijuana done,” adding that “there are still going to be folks who are very fired up and continuing to talk about recreational marijuana in the Capitol moving forward, as well.”
Evers urged all the attendees to ask lawmakers to support the proposal.
“We need your help,” he said, noting that his budget plan will soon be taken by the Joint Committee on Finance. “We need you to contact your local representatives and let them know why you support this budget, and help us get this budget over the finish line.”
Evers tried to legalize medical marijuana and decriminalize small-scale cannabis possession in his first budget proposal as governor, in 2019, but Republicans in the legislature stripped those provisions from the bill.
His current proposal would allow adults 21 and older, or qualifying patients, to purchase, possess and consume cannabis. Residents could buy and possess up to two ounces of marijuana, while out-of-state visitors could have up to one quarter-ounce. Adults could grow up to six plants for personal use.
The governor’s plan calls for a 15 percent wholesale excise tax on cannabis, in addition to a 10 percent retail excise tax on marijuana sales. Medical cannabis sales would not be subject to the sales tax.
Sixty percent of those funds would go to a new “community reinvestment fund” and the rest would be deposited in the state’s general fund.
Of the nearly $80 million of that revenue that’s expected to be set aside for community reinvestment, Evers proposed using $10 million for grants “to promote diversity and advance equity and inclusion,” $10 million for community health worker grants, $10 million for “equity action plan grants,” $5 million to support businesses in underserved communities and about $35 million in school sparsity grants.
Unlike some legalization laws in other states, the plan does not appear to set aside any licenses or provide extra scoring points for businesses run by people from communities most impacted by the war on drugs.
“Our budget legalizes marijuana and also creates a pathway for people who’ve been previously convicted of marijuana-related offenses to repeal or reduce their sentences, which is how we work to promote equity, and it also creates a community reinvestment fund to invest those dollars from legalization into equity grants,” Barnes, the lieutenant governor, said at Wednesday’s event.
“We know that we need systemic change in Wisconsin, we’ve needed it for a few decades now,” he continued, noting that the state’s criminal justice approach “has disproportionately impacted communities of color, particularly Black and Indigenous communities in Wisconsin.”
Black people in Wisconsin were nearly 4.2 times more likely than white people for simple marijuana possession, according to a 2020 ACLU report. Four counties—Ozaukee, Manitowoc, Washington and Waukesha, showed among the country’s worst racial disparities in cannabis arrests.
“When will this happen?” the governor said of legalization on Twitter Wednesday. “When your legislators agree with me on this issue. So feel free to contact them. I was just talking to a legislator yesterday, a Republican who indicated that he believes that legalizing recreational marijuana is the right thing to do. It’s not just a Democrat thing. It’s a thing that people of Wisconsin have said they want.”
Despite Republican leaders’ opposition to legalizing marijuana outright or to including any cannabis reforms in the budget, Vos and others have expressed openness to considering medical cannabis as a standalone matter. And other GOP lawmakers have filed bills to decriminalize marijuana possession. But none of those ideas have been given hearings or votes so far this session.
Photo by Sam Doucette on Unsplash
Top IRS Official Says Marijuana Banking Reform Would Help Feds ‘Get Paid’
The Internal Revenue Service (IRS) would like to get paid—and it’d help if the marijuana industry had access to banks like companies in other legal markets, an official with the federal department said. She also talked about unique issues related to federal tax deductions for cannabis businesses.
At an event hosted by UCLA’s Annual Tax Controversy Institute on Thursday, IRS’s Cassidy Collins talked about the “special type of collection challenge” that the agency faces when it comes to working with cannabis businesses while the product remains federally illegal.
While IRS isn’t taking a stand on federal marijuana policy, Collins said that the status quo leaves many cannabis businesses operating on a cash-only basis, creating complications for the agency, in part by making it harder for banks to “pay us.”
“The reason why [the marijuana industry is] cash intensive is twofold,” she said. “Number one, a lot of customers don’t want a paper trail showing that they’re buying marijuana, and number two, the hesitancy of banks to allow marijuana businesses to even bank with them.”
Of course, the reason why many financial institutions remain hesitant to take on cannabis companies as clients is because the plant is a strictly controlled substance under federal law.
“There’s been a number of legislative bills that have been introduced—and I am definitely not expressing any opinion personally or on behalf of the IRS about any pending or proposed legislation,” Collins, who is a senior counsel in the IRS Office of Chief Counsel, said. “But it is interesting to note that, if the law changed so that the marijuana businesses could have banks, that would make the IRS’s job to collect [taxes] a lot easier. As part of collection, we want the money. That’s our end goal there.”
A major part of what makes cannabis businesses unique is that they don’t qualify for traditional tax credits under an IRS code known as 280E. That policy “prohibits them from claiming deductions for business expenses because they’re technically being involved in drug trafficking,” Collins explained at the event, from which small excerpts of her comments were reported by Bloomberg.
There are some options available to lessen the burden on marijuana firms, however. At the end of the day, “IRS will work with marijuana companies because, again, we want to get paid,” Collins said.
One of the ways the agency works with marijuana business operators is to have them visit designated IRS “tax assistance centers” that accept cash payments in excess of $50,000. But the official warned businesses to “be prepared to be there for a little while” as the center checks—and double checks—the amount of cash being submitted.
“Revenue officers will assist the marijuana companies in paying us,” she said.
IRS officials could also help cannabis firms by having officials accompany them “to the bank in order to try to help the taxpayer secure a cashier’s payment to pay the IRS, as well as using money orders,” she said, adding that “our revenue officers are are wanting to work with the marijuana companies to help assist them to pay us.”
“When the revenue officers are there in person with the taxpayer, that could potentially help increase the likelihood that the bank will cooperate and help the taxpayer transition into a cashier’s check,” she continued. “And that has been a trend since this first became legal [at the state level], that more and more banks are allowing cannabis companies to bank with them.”
In a report published earlier this year, congressional researchers examined tax policies and restrictions for the marijuana industry—and how those could change if any number of federal reform bills are enacted.
IRS, for its part, said last month that it expects the cannabis market to continue to grow, and it offered some tips to businesses on staying compliant with taxes while the plant remains federally prohibited.
As it stands, banks and credit unions are operating under 2014 guidance from the Financial Crimes Enforcement Network (FinCEN) that lays out reporting requirements for those that choose to service the marijuana industry.
Leaders in both chambers of Congress are working on legalization bills to end federal marijuana prohibition. But stakeholders are hopeful that, in the interim, legislators will enact modest marijuana banking reform. Legislation to protect financial institutions from being penalized for working with cannabis businesses passed the House for the fifth time last month.
Rodney Hood, a board member of the National Credit Union Administration, wrote in a Marijuana Moment op-ed this month that legalization is an inevitability—and it makes the most sense for government agencies to get ahead of the policy change to resolve banking complications.
IRS separately hosted a forum in August dedicated to tax policy for marijuana businesses and cryptocurrency.
Earlier this year, IRS Commissioner Charles Rettig told Congress that the agency would “prefer” for state-legal marijuana businesses to be able to pay taxes electronically, as the current largely cash-based system under federal cannabis prohibition is onerous and presents risks to workers.
Former Treasury Secretary Steven Mnuchin said in 2019 that he’d like to see Congress approve legislation resolving the cannabis banking issue and he pointed to the fact that IRS has had to build “cash rooms” to deposit taxes from those businesses as an example of the problem.
IRS released updated guidance on tax policy for the marijuana industry last year, including instructions on how cannabis businesses that don’t have access to bank accounts can pay their tax bills using large amounts of cash.
The update appears to be responsive to a Treasury Department internal watchdog report that was released earlier in the year. The department’s inspector general for tax administration had criticized IRS for failing to adequately advise taxpayers in the marijuana industry about compliance with federal tax laws. And it directed the agency to “develop and publicize guidance specific to the marijuana industry.”
Luxembourg Set To Become First European Country To Legalize Marijuana Following Government Recommendation
Luxembourg is poised to become the first European country to legalize marijuana, with key government agencies putting forward a plan to allow the possession and cultivation of cannabis for personal use.
The ministers of justice and homeland security on Friday unveiled the proposal, which will still require a vote in the Parliament but is expected to pass. It’s part of a broader package of reform measures the agencies are recommending.
Under the marijuana measure, adults 18 and older could grow up to four plants. However, under the non-commercial model that is being proposed, possessing more than three grams in public would still be a civil offense, carrying a fine of €25-500 ($29-581). Currently, the maximum fine for possession is €2,500 ($2,908).
In terms of access, adults would be able to buy and trade cannabis seeds for their home garden.
Justice Minister Sam Tamson said the government felt it “had to act” and characterized the home cultivation policy change as a first step, The Guardian reported.
👉🏻élaboration du projet de loi usage privé du #cannabis : jusqu’à 4 plantes à domicile & décorrectionnalisation <3g
👉🏻renforcement de la prévention & de l’accompagnement
👉🏻⬆️des moyens de la police
👉🏻élaboration d’un projet de production/vente #Luxembourg pic.twitter.com/8yre0Udt8J
— Sam Tanson (@SamTanson) October 22, 2021
“The idea is that a consumer is not in an illegal situation if he consumes cannabis and that we don’t support the whole illegal chain from production to transportation to selling where there is a lot of misery attached,” he said. “We want to do everything we can to get more and more away from the illegal black market.”
While limited in scope, the reform would make Luxembourg the first country in Europe to legalize the production and possession of marijuana for recreational use. Cannabis has been widely decriminalized in certain countries in the continent, but it has remained criminalized by statute.
Government sources in Luxembourg told The Guardian that plans are in the works to develop a program where the state regulates the production and distribution of marijuana. Tamson said they are working to resolve “international constraints” before taking that step, however, referring to United Nations treaty obligations that multiple U.S. states and other countries like Canada and Uruguay have openly flouted.
The measures include:
🟢 Regulation of cannabis use and cultivation: adults will be able to legally cultivate up to four cannabis plants for their own use, provided the cultivation is happening at their place of residence.
— European Greens (@europeangreens) October 22, 2021
For now, the country is focusing on legalization within a home setting. Parliament is expected to vote on the proposal in early 2022, and the ruling parties are friendly to the reform.
This has been a long time coming, as a coalition of major parties of Luxembourg agreed in 2018 to enact legislation allowing “the exemption from punishment or even legalization” of cannabis.
Meanwhile in the U.S., congressional lawmakers are working to advance legalization legislation. A key House committee recently approved a bill to end marijuana prohibition, and Senate leadership is finalizing a separate reform proposal.
In Mexico, a top Senator said this week that lawmakers could advance legislation to regulate marijuana in the coming weeks. The Supreme Court has already ruled that adults cannot be criminalized over possession or cultivation, but there’s currently no program in place to provide access.
Photo courtesy of Mike Latimer.
New Bipartisan Marijuana Research Bill In Congress Would Let Scientists Study Dispensary Products
A bipartisan group of federal lawmakers introduced a bill on Thursday to remove barriers to conducting research on marijuana, including by allowing scientists to access cannabis from state-legal dispensaries.
The Medical Marijuana Research Act, filed by the unlikely duo of pro-legalization Rep. Earl Blumenauer (D-OR) and prohibitionist Rep. Andy Harris (R-MD), would streamline the process for researchers to apply and get approved to study cannabis and set clear deadlines on federal agencies to act on their applications.
“Congress is hopelessly behind the American people on cannabis, and the quality of our research shows why that is an urgent problem,” Blumenauer told Marijuana Moment. “Despite the fact that 99 percent of Americans live in a state that has legalized some form of cannabis, federal law is still hamstringing researchers’ ability to study the full range of health benefits offered by cannabis, and to learn more about the products readily available to consumers.”
“It’s outrageous that we are outsourcing leadership in that research to Israel, the United Kingdom, Canada, and others. It’s time to change the system,” he said.
Late last year, the House approved an identical version of the cannabis science legislation. Days later, the Senate passed a similar bill but nothing ended up getting to the president’s desk by the end of the last Congress. Earlier this year, a bipartisan group of senators refiled their marijuana research measure for the current 117th Congress.
Meanwhile, lawmakers are also advancing a separate strategy to open up dispensary cannabis to researchers. Large-scale infrastructure legislation that has passed both chambers in differing forms and which is pending final action contains provisions aimed at allowing researchers to study the actual marijuana that consumers are purchasing from state-legal businesses instead of having to use only government-grown cannabis.
The new bill filed this week by Blumenauer and Harris, along with six other original cosponsors, would also make it easier for scientists to modify their research protocols without having to seek federal approval.
Marijuana Moment is already tracking more than 1,200 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.
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It would additionally mandate that the Drug Enforcement Administration (DEA) license more growers and make it so there would be no limit on the number of additional entities that can be registered to cultivate marijuana for research purposes. It would also require the U.S. Department of Health and Human Services (HHS) to submit a report to Congress within five years after enactment to overview the results of federal cannabis studies and recommend whether they warrant marijuana’s rescheduling under federal law.
“The cannabis laws in this country are broken, including our laws that govern cannabis research,” Blumenauer said in remarks in the Congressional Record. “Because cannabis is a Schedule I substance, researchers must jump through hoops and comply with onerous requirements just to do basic research on the medical potential of the plant.”
The new legislation will “both streamline the often-duplicative licensure process for researchers seeking to conduct cannabis research and facilitate access to an increased supply of higher quality medical grade cannabis for research purposes,” he said, adding that expanded studies will help make sure “Americans have adequate access to potentially transformative medicines and treatments.”
For half a century, researchers have only been able to study marijuana grown at a single federally approved facility at the University of Mississippi, but they have complained that it is difficult to obtain the product and that it is of low quality. Indeed, one study showed that the government cannabis is more similar to hemp than to the marijuana that consumers actually use in the real world.
There’s been bipartisan agreement that DEA has inhibited cannabis research by being slow to follow through on approving additional marijuana manufacturers beyond the Mississippi operation, despite earlier pledges to do so.
In May, the agency finally said it was ready to begin licensing new cannabis cultivators. Last week, DEA proposed a large increase in the amount of marijuana—and psychedelics such as psilocybin, LSD, MDMA and mescaline—that it wants produced in the U.S. for research purposes next year.
Under the new House bill, the agency would be forced to start approving additional cultivation applications for study purposes within one year of the legislation’s enactment.
HHS and the attorney general would be required under the bill to create a process for marijuana manufacturers and distributors to supply researchers with cannabis from dispensaries. They would have one year after enactment to develop that procedure, and would have to start meeting to work on it within 60 days of the bill’s passage.
In general, the legislation would also establish a simplified registration process for researchers interested in studying cannabis, in part by reducing approval wait times, minimizing costly security requirements and eliminating additional layers of protocol review.
Read the full text of the new marijuana research bill below: