[Editor’s Note: Keeping cannabis businesses out of the Federal banking system is not helping anyone. It’s the sane next step, if the U.S. is truly about protecting its people.]
Congressional Democrats are already moving ahead with plans to consider broad changes to federal marijuana laws in 2019.
Whereas the Republican-controlled House for the past several years had blocked votes on most cannabis-related measures, the chamber’s new Democratic majority on Wednesday announced it has scheduled a hearing for next week to examine the difficulties that marijuana businesses face in opening and maintaining bank accounts.
Titled, “Challenges and Solutions: Access to Banking Services for Cannabis-Related Businesses,” the hearing will take place on February 13 before a subcommittee of the House Financial Services Committee.
Although a growing number of states are moving to legalize marijuana for medical or recreational use, cannabis remains federally prohibited. As a result, and despite a 2014 guidance memo released on the topic by the Obama administration aimed at clearing up the issue, many financial services providers remain reluctant to work with the industry out of fear of violating money laundering or drug laws.
“When we introduced this bill six years ago, we warned that forcing these businesses to deal in cash was threatening public safety. No hearing was given,” Rep. Denny Heck (D-WA) said in an email, referring to marijuana banking legislation he and Rep. Ed Perlmutter (D-CO) have filed for the past several Congresses.
He lamented that Republican leadership didn’t schedule a hearing on the proposal even after a security guard at a Colorado dispensary was killed during a robbery.
“Chairwoman Waters has made it one of her first priorities to address this urgent and overdue issue, demonstrating that she understands the threat to public safety and the need for Congress to act,” Heck said of the committee’s new leader. “We have a bipartisan proposal to allow well-regulated marijuana businesses to handle their money in a way that is safe and effective for law enforcement to track. I am eager to get to the work of refining it and passing it into law.”
That a hearing on the issue was in the works was first noted earlier this week by Politico, and Marijuana Moment reported that the full committee is also actively planning to vote on a marijuana banking bill in the coming months.
The newly scheduled marijuana hearing is a signal that Democrats intend to move cannabis legislation this year, and is likely to be the first in a series of committee-level actions across the House on the issue.
“The upcoming hearing presents a real opportunity for the Democratic Party to assert their leadership by finally beginning the conversation on how we end the failed policy of marijuana criminalization,” Justin Strekal, political director for NORML, said.
While two limited medical cannabis research bills were able to advance out of House committees last year, they never made it to the floor for votes. Meanwhile, Republican leaders consistently prevented members from offering marijuana-related amendments—including ones on banking issues—to larger legislation.
In contrast, Rep. Earl Blumenauer (D-OR) suggested in a memo to party leaders late last year that they pursue a step-by-step approach to legalize marijuana in 2019. His plan recommends that Financial Services and other committees first begin holding hearings on incremental reforms like banking access, research expansion and medical cannabis for military veterans before passing bills on those issues as part of a lead up to ultimately approving broader legislation to formally end federal marijuana prohibition by the end of the year.
A House bill to protect banks from being punished for working with state-legal marijuana businesses that Heck and Perlmutter introduced garnered 95 cosponsors in the last Congress, and 20 senators signed onto a companion bill, but neither were given hearings or brought up for votes.
“Depriving state-legal cannabis businesses of basic banking services and forcing them to operate entirely in cash presents a significant safety risk, not just to those businesses and their employees, but to the public,” Don Murphy, director of federal policies for the Marijuana Policy Project, said in an email. “Support for addressing the cannabis banking problem is strong and bipartisan, and it appears Congress may be ready to adopt a real, commonsense solution. Members concerned about public safety should be jumping at the chance to express their support for this legislation.”
Congress has held only a handful of hearings on marijuana reform issues in recent years, and never before has any come at a time when broad cannabis reform legislation seemed to be conceivably on its way to passage.
“This hearing is historic for cannabis policy reform advocates, business owners and the banking sector, and could directly lead to the first in what is hopefully a series of positive changes in the 2019 legislative cycle,” Morgan Fox, media relations director for the National Cannabis Industry Association, said in an email. “Allowing banks to work with cannabis businesses more easily will benefit public safety, increase transparency, provide more financing options for small businesses and communities that have been targeted by prohibition, and help companies thrive so they can further displace the illicit market.”
Outside of the two committee markups of cannabis research legislation last year, which were not preceded by formal hearings on the relevant issues, Senate panels have on a few occasions held lengthy discussions on marijuana.
In 2013, for example, the Senate Judiciary Committee convened a hearing to dig into the fact that a growing number of states were legalizing marijuana in contrast with federal law.
The Senate Caucus on International Narcotics Control, which is not a formal standing committee of the body, hosted a discussion on federal marijuana enforcement in 2016. Its two cochairs, Sens. Charles Grassley (R-IA) and Dianne Feinstein (D-CA), have long been among Congress’s most vocal opponents of cannabis reform, though Feinstein began to shift her position last year.
Also in 2016, the Senate Judiciary Committee’s Subcommittee on Crime and Terrorism held a hearing on the risks and potential benefits of medical cannabis, but it did not lead to votes on any marijuana legislation.
Meanwhile, pressure to address cannabis banking has been growing. Several top Trump administration officials have indicated they support clarifying the issue.
Treasury Secretary Steven Mnuchin, for example, suggested in testimony before a House committee early last year that he supports letting marijuana businesses store their profits in banks.
“I assure you that we don’t want bags of cash,” he said. “We do want to find a solution to make sure that businesses that have large access to cash have a way to get them into a depository institution for it to be safe.”
In a separate hearing Mnuchin revealed that addressing the issue is at the “top of the list” of his concerns.
Federal Reserve Chairman Jerome Powell said that the growing gap between state and federal marijuana laws “puts federally chartered banks in a very difficult situation… It would great if that could be clarified.”
And last month, Comptroller of the Currency Joseph Otting called on Congress to “act at the national level to legalize marijuana if they want those entities involved in that business to utilize the U.S. banking system.”
Meanwhile, although many major financial institutions are staying away from the cannabis industry, federal data does show that an increasing number of banks are beginning to work with marijuana growers, sellers, processors and related businesses.
It hasn’t yet been announced who will be testifying at next week’s cannabis banking hearing before the Consumer Protection and Financial Institutions Subcommittee.
[Editor’s Note: The Windy City’s mayor has finally come out of the woodwork asking to legalize weed. Not surprising, politicians have discovered the world doesn’t end when cannabis is legal, and it represents a new revenue stream.
Tax revenue from legal marijuana sales should be earmarked to fund pension programs, the mayor of Chicago said on Wednesday. “Illinois legislators will be taking a serious look next year at legalizing recreational marijuana,” Mayor Rahm Emanuel (D) said in a speech to the City Council. “Should they follow that course, a portion of that revenue could go toward strengthening our pension funds and securing the retirement of the workers who depend on them.” The comments stop short of the outright endorsement of legalization previewed by the Chicago Tribune, which reported in a Tuesday article that Emanuel would “call for state lawmakers to legalize marijuana.” In fact, the mayor said during the speech that he believes “recreational marijuana has social costs that must also be considered.”
“And like a casino, revenue would take time to be realized. But if the state goes down that path, those resources can and should be used to further solidify our pensions without, again, asking anything more of Chicago taxpayers in general.” Emanuel’s thoughts on how potential legal cannabis revenue should be spent come roughly a month before Gov.-elect J.B. Pritzker (D), who campaigned on ending marijuana prohibition, is set to take office. He has pledged to get to work on legalization “right away.”
Emanuel, who previously served as President Barack Obama’s White House chief of staff, had a mixed record on marijuana while a member of Congress. He reversed his position several times on an amendment to protect state medical cannabis laws from federal interference, voting no on the measure in 2003 and 2004, before flipping to a yes vote in 2005. Then, in 2006, he reversed himself again to oppose the amendment before changing his mind one more time to support it in 2007. As Chicago mayor, Emanuel oversaw the implementation of a 2012 local policy to avoid arrests for many low-level marijuana possession offenses. While his new comments don’t explicitly call for the state to legalize marijuana, his focus on where revenues should be directed help to highlight the fiscal impact of doing so, and help feed a narrative that the end of prohibition in Illinois is all but certain in the near future.
A University of Illinois study released last month projected that legalizing cannabis in Illinois would create 24,000 jobs, generate more than $500 million in tax revenue and infuse about $1 billion into the state economy overall by 2020.
Ed. Note: We’re not sure what really changed his mind, but glad he did. Now he just needs to bring his relative, Patrick Kennedy, along.
The last remaining young Democrat in Congress to vocally oppose the legalization of marijuana has changed his mind.
“I believe legalization is our best chance to actually dedicate resources toward consumer safety, abuse prevention, and treatment for those who need it,” Rep. Joe Kennedy III (D-MA) wrote in an op-ed published on Tuesday. “It is our best chance to ensure that addiction is treated as a public health issue — not a criminal justice one.”
As a member of Congress, Kennedy, 38, not only opposed his home state of Massachusetts’s move to legalize marijuana, but has consistently voted against House amendments to shield state medical cannabis laws from federal interference, allow military veterans to access medical marijuana and protect children who use non-psychoactive cannabidiol extracts to treat severe seizure disorders.
Most other Democratic lawmakers—and a growing number of Republicans—are supporting policy changes like the ones Kennedy has opposed. And in the latest national Gallup poll, solidly two out of three Americans—including 75 percent of Democrats and even 53 percent of Republicans—now say it is time to legalize marijuana outright.
As such, Kennedy has been an outlier in his caucus when it comes to cannabis, something he admitted in an interview earlier this year.
“That’s a tough issue for me. I come at it a little bit differently, obviously, than the vast majority of my colleagues,” he said. “I hear their position. I really do. I’m in a state that voted for [legalization].”
In a separate interview he conceded that “the party is clearly moving in that legalization direction. It might already be there.”
Beyond any legitimate policy-based concerns underlying Kennedy’s shift, it would seem that opposing marijuana legalization has become a politically untenable position for a young lawmaker who many have floated as a potential future presidential candidate.
In the new op-ed, published on the health website STAT, Kennedy said that his longtime reluctance to embrace marijuana reform stems from his “ongoing work with the mental health and addiction communities.”
But now he says he realizes that “federal policy on marijuana is badly broken, benefiting neither the elderly man suffering from cancer whom marijuana may help nor the young woman prone to substance use disorder whom it may harm.”
Rep. Joe Kennedy III: Time to legalize marijuana at the federal level – STAT
So Kennedy is calling for the removal of cannabis from the Controlled Substances Act (CSA), a move commonly referred to as descheduling. In the op-ed, he cites racial disparities in prohibition enforcement, cannabis businesses’ lack of access to banks and jeopardized public housing opportunities for people who consume marijuana as reasons the policy change is needed.
“As long as marijuana remains regulated by the CSA, the federal government is barred from rectifying these failures or acting with any oversight authority as states move ahead with reform at record pace. So a broken, patchwork system flourishes in our country today with no federal guardrails — like the ones we have for alcohol and tobacco — to protect public health and safety and ensure equal justice.”
“Legalization would restore the federal government’s ability to regulate a powerful new industry thoroughly and thoughtfully,” he writes. “It would allow us to set packaging and advertising rules, so marketing can’t target kids. It would help set labeling requirements and quality standards, so consumers know exactly what they’re buying. It would ensure that we can dedicate funding to encourage safe use and spread awareness about the risks of impaired driving. And it would create tax revenue for research on mental health effects, safe prescription drugs, and a reliable roadside test.”
It remains to be seen whether Kennedy’s new position on cannabis will be matched with actions to cosponsor legislation to end federal prohibition.
“My concerns about the public health impact of marijuana remain. But it has become clear that prohibition has wholly failed to address them.”
Either way, his new op-ed is one of the clearest signals yet that the politics of marijuana have shifted. And it is sure to disappoint his relative and former Rep. Patrick Kennedy (D-RI), who is a cofounder of prohibitionist organization Smart Approaches to Marijuana (SAM) and continues to be a leading voice against legalizing cannabis.
SAM released a statement saying that while the congressman’s op-ed “articulates an understandable frustration” about federal marijuana laws, the group’s leaders “do not agree” with his decision to back legalization.
The announcement of the younger Kennedy’s shift comes on the same day legal recreational marijuana sales began in his home state of Massachusetts, where voters overwhelmingly approved a cannabis legalization ballot measure despite his objections in 2016.
The congressman began to reconsider his position earlier this year, he indicated in an interview with WGBH radio.
“The federal government policy on this is incoherent, and the federal government needs to get far more coherent on this,” he said at the time, while stopping short of endorsing legalization. “For states that have put in place the proper safeguards and procedures, I’d be inclined to support those states.”
But he received criticism when, during a separate interview with Vox’s Ezra Klein suggested that marijuana should be kept illegal in order to make it easier for police to search people’s vehicles.
“If you smelled [marijuana] in a car, you could search a car,” he said. “When it became decriminalized, you couldn’t do that.”
Kennedy’s grandfather, former U.S. Attorney General Bobby Kennedy, criticized the hypocrisy underlying marijuana criminalization during a television interview 50 years ago.
Candidates in one of the most contentious U.S. Senate races in the country this year clashed about the issues of marijuana legalization and drug policy reform during a debate on Friday night.
“I want to end the war on drugs and specifically want to end the prohibition on marijuana,” Democratic Congressman Beto O’Rourke said in response to an attack on his drug policy record from Republican Sen. Ted Cruz, whom he is seeking to unseat in November.
During one of the most heated exchanges of the hour-long debate, the GOP incumbent slammed O’Rourke for sponsoring an amendment as an El Paso city councilman in 2009 that called for a debate on legalizing drugs as a possible solution to violence along the Mexican border.
“I think it would be a profound mistake to legalize all narcotics and I think it would hurt the children of this country,” Cruz argued.
He also criticized a bill the Democrat filed in Congress to repeal a law that reduces highway funding for states that don’t automatically suspend drivers licenses for people convicted of drug offenses. “That’s a real mistake and it’s part of pattern,” he said.
Calling the issue “personal to me,” Cruz spoke about his older sister, who died of a drug overdose.
“To be clear, I don’t want to legalize heroin and cocaine and fentanyl,” O’Rourke countered.
“What I do want to ensure is that where, in this country, most states have decided that marijuana will legal at some form—for medicinal purposes or recreational purposes or at a minimum be decriminalized—that we don’t have another veteran in this state, prescribed an opioid because the doctor at the VA would rather prescribe medicinal marijuana but is prohibited by law from doing that,” he said.
Enumerating other potential beneficiaries of cannabis reform, the Democrat also referenced an “older woman with fibromyalgia” and “an African-American man, because more likely than not, that’s who will be arrested for possession of marijuana, to rot behind bars, instead of enjoying his freedom and the opportunity to contribute to the greatness of this country.”
Cruz, who called O’Rourke, “one of the leading advocates in the country for legalizing marijuana,” said that he thinks ending cannabis prohibition “is actually a question on which I think reasonable minds can differ.”
“I’ve always had a libertarian bent myself,” he said. “I think it ought to be up to the states. I think Colorado can decide one way. I think Texas can decide another.”
But despite his support for letting states set their own cannabis laws, which he also voiced during his failed candidacy for the 2016 Republican presidential nomination, Cruz hasn’t cosponsored a single piece of legislation during his time in the Senate that would scale back federal marijuana prohibition.
Earlier in the debate, the two sparred over the killing this month of Botham Jean, an African-American man shot in his own apartment by a Dallas police officer, a subject about which O’Rourke recently made headlines by calling out in a fiery speech to a black church.
The U.S. Food and Drug Administration (FDA) has denied a request from an anti-legalization group to place marijuana and its derivatives on a list of restricted substances that are not “generally recognized as safe and effective.”
The move is “not necessary for the protection of public health,” Janet Woodcock, the director of FDA’s Center for Drug Evaluation and research wrote on Monday in a letter to the group, Drug Watch International.
The organization had filed its petition requesting the cannabis crackdown in December, writing that the move would “send an industry-wide warning to the estimated 33,000 marijuana businesses in the U.S., many of which are making unsupported medical claims for marijuana and THC drug products sold as ‘medical marijuana.'”