Business
Marijuana banking among reforms on the table in upcoming lame-duck Congress
The months ahead could be shaping up to be the most wonderful time of the year for the U.S. marijuana industry, although insiders warn legislative movement isn’t a sure bet.
In addition to President Joe Biden’s surprise announcement about a marijuana scheduling review and MJ possession pardons as well as the likelihood of more states voting Nov. 8 to legalize adult-use cannabis, this year’s lame-duck session – the stretch of post-election time before newly elected members of Congress take their seats in the new year – could bring even more positive news for the legal industry.
While Democrats caution there’s a long list of legislation to bring to the floor while they still control both chambers of Congress, marijuana reform is on the agenda.
Democrat lawmakers and stock analysts are optimistic that long-standing issues such as cannabis banking reform and restorative justice will finally be addressed. But that will depend on cooperation from Republicans on the issues, which has thus far proved to be difficult.
“Given the momentum, the comments made, the expectations created, and the heavy lobbying from various advocacy groups, we think Senate Democrats want to get this done,” Pablo Zuanic, managing partner at New York-based investment banking firm Cantor Fitzgerald, wrote in an Oct. 3 note after Biden’s announcement.
“So, in that context, the leverage may be held by Republicans.”
SAFE Banking Plus
U.S. Sen. Cory Booker co-sponsored Senate Majority Leader Chuck Schumer’s Cannabis Administration and Opportunity Act, a sweeping federal legalization bill introduced in July that would remove marijuana from the Controlled Substances Act, instruct the U.S Food and Drug Administration to regulate MJ and allow states to retain or create their own laws around the plant.
In an interview with NJ.com, Booker acknowledged the bill as it stands will not be voted on.
Instead, SAFE Banking Plus, an updated version of the Secure and Fair Enforcement (SAFE) Banking Act, will be in play.
While details are vague so far, the measure is believed to include:
- The core components of the SAFE Banking Act – introduced in the House of Representatives by Colorado Democrat Rep. Ed Perlmutter in 2019 – which would protect financial institutions from federal punishment should they work with regulated cannabis companies. The measure has passed the House seven times but hasn’t made it to the Senate floor.
- Allowing small business loans and assistance for veteran access to medical marijuana (in the form of the Department of Veterans Affairs helping with the process of accessing MMJ).
- Restorative-justice components, which could include nonviolent-criminal-record expungement as well as reinvesting marijuana tax revenue in economic opportunities for communities disproportionately impacted by the war on drugs.
“I think it has a good chance, because our Republican allies also understand that if one of the houses of Congress shifts to Republican, it will be very hard to do anything on marijuana,” Booker told NJ.com.
“We’ve got a good shot. I wouldn’t say it’s a great shot, but it’s on a good path.”
Last week, Perlmutter – who is retiring – told The Hill that there’s “a lot of activity” surrounding Safe Banking Plus.
“I think this thing’s going to get passed this cycle, so I’ve got my fingers crossed,” he said, adding that Biden’s rescheduling review added momentum to the discussions.
Public support grows for banking reform
Americans and advocacy groups not even focused on cannabis are also joining the chorus for banking reform.
Recent survey results collected by Morning Consult in partnership with the American Bankers Association (ABA) showed that 66% of respondents “support Congress passing legislation that allows cannabis businesses to access banking services such as checking accounts and business loans in states where cannabis is legal.”
Only 16% of respondents opposed passing banking reform legislation.
“Americans firmly believe that now is the time to resolve the ongoing conflict between state and federal law to allow banks to serve legal cannabis and cannabis-related businesses,” ABA President and CEO Rob Nichols said in a statement, noting the safety risks involved with cash-only operations.
“We urge Congress to pass the SAFE Banking Act this year to enhance public safety in the … states where cannabis is legal in some form.”
In a resolution passed Oct. 20, the NAACP called for the “immediate passage” of SAFE Banking on the basis it would create a more equitable marijuana industry.
According to the resolution, “The SAFE Banking Act could enable cannabis businesses with social equity licenses, diverse ownership licenses, or other licenses made available by states with medical- and adult-use cannabis laws that aim to foster a diverse and equitable industry, to better compete in the industry if it was coupled with the federal descheduling of marijuana and explicitly provided for fair terms and rates for Black-owned and social equity licensed cannabis businesses.”
What it means
If passed, SAFE Banking Plus, or some version of SAFE Banking, could transform the industry once it’s implemented.
Notably, retailers and other businesses would be relieved of cash-only operations, which have created safety and accounting challenges.
Traditional bank loans and other financial services such as accounting could eventually be accessed.
According to Zuanic, while it’s a long shot, if language from the Capital Lending and Investment for Marijuana Businesses (CLIMB) Act is included in SAFE Plus, it also means publicly owned cannabis companies could uplist to major stock exchanges.
Zuanic also believes it’s unlikely that Section 280E of the federal tax code, which prevents marijuana operators from taking traditional business-related deductions, will be included in SAFE Plus because of how it would negatively impact tax revenue.
There’s limited time left, but SAFE Plus might contain enough social justice elements to win over Democrats.
The question is, according to Zuanic, whether enough Republicans will support it.
Source: https://mjbizdaily.com/marijuana-banking-among-reforms-on-table-in-upcoming-lame-duck-congress/
New Mexico regulators fined a cannabis operator nearly $300,000 and revoked its license after the company allegedly created fake reports in the state’s traceability software.
The New Mexico Cannabis Control Division (CCD) accused marijuana manufacturer and retailer Golden Roots of 11 violations, according to Albuquerque Business First.
Golden Roots operates the The Cannabis Revolution Dispensary.
The majority of the violations are related to the Albuquerque company’s improper use of BioTrack, which has been New Mexico’s track-and-trace vendor since 2015.
The CCD alleges Golden Roots reported marijuana production only two months after it had received its vertically integrated license, according to Albuquerque Business First.
Because cannabis takes longer than two months to be cultivated, the CCD was suspicious of the report.
After inspecting the company’s premises, the CCD alleged Golden Roots reported cultivation, transportation and sales in BioTrack but wasn’t able to provide officers who inspected the site evidence that the operator was cultivating cannabis.
In April, the CCD revoked Golden Roots’ license and issued a $10,000 fine, according to the news outlet.
The company requested a hearing, which the regulator scheduled for Sept. 1.
At the hearing, the CCD testified that the company’s dried-cannabis weights in BioTrack were suspicious because they didn’t seem to accurately reflect how much weight marijuana loses as it dries.
Company employees also poorly accounted for why they were making adjustments in the system of up to 24 pounds of cannabis, making comments such as “bad” or “mistake” in the software, Albuquerque Business First reported.
Golden Roots was fined $298,972.05 – the amount regulators allege the company made selling products that weren’t properly accounted for in BioTrack.
The CCD has been cracking down on cannabis operators accused of selling products procured from out-of-state or not grown legally:
- Regulators alleged in August that Albuquerque dispensary Sawmill Sweet Leaf sold out-of-state products and didn’t have a license for extraction.
- Paradise Exotics Distro lost its license in July after regulators alleged the company sold products made in California.
Golden Roots was the first alleged rulebreaker in New Mexico to be asked to pay a large fine.
Source: https://mjbizdaily.com/new-mexico-cannabis-operator-fined-loses-license-for-alleged-biotrack-fraud/
Four marijuana companies, including a multistate operator, have filed a lawsuit against U.S. Attorney General Merrick Garland in which they allege the federal MJ prohibition under the Controlled Substances Act is no longer constitutional.
According to the complaint, filed Thursday in U.S. District Court in Massachusetts, retailer Canna Provisions, Treevit delivery service CEO Gyasi Sellers, cultivator Wiseacre Farm and MSO Verano Holdings Corp. are all harmed by “the federal government’s unconstitutional ban on cultivating, manufacturing, distributing, or possessing intrastate marijuana.”
Verano is headquartered in Chicago but has operations in Massachusetts; the other three operators are based in Massachusetts.
The lawsuit seeks a ruling that the “Controlled Substances Act is unconstitutional as applied to the intrastate cultivation, manufacture, possession, and distribution of marijuana pursuant to state law.”
The companies want the case to go before the U.S. Supreme Court.
They hired prominent law firm Boies Schiller Flexner to represent them.
The New York-based firm’s principal is David Boies, whose former clients include Microsoft, former presidential candidate Al Gore and Elizabeth Holmes’ disgraced startup Theranos.
Similar challenges to the federal Controlled Substances Act (CSA) have failed.
One such challenge led to a landmark Supreme Court decision in 2005.
In Gonzalez vs. Raich, the highest court in the United States ruled in a 6-3 decision that the commerce clause of the U.S. Constitution gave Congress the power to outlaw marijuana federally, even though state laws allow the cultivation and sale of cannabis.
In the 18 years since that ruling, 23 states and the District of Columbia have legalized adult-use marijuana and the federal government has allowed a multibillion-dollar cannabis industry to thrive.
Since both Congress and the U.S. Department of Justice, currently headed by Garland, have declined to intervene in state-licensed marijuana markets, the key facts that led to the Supreme Court’s 2005 ruling “no longer apply,” Boies said in a statement Thursday.
“The Supreme Court has since made clear that the federal government lacks the authority to regulate purely intrastate commerce,” Boies said.
“Moreover, the facts on which those precedents are based are no longer true.”
Verano President Darren Weiss said in a statement the company is “prepared to bring this case all the way to the Supreme Court in order to align federal law with how Congress has acted for years.”
While the Biden administration’s push to reschedule marijuana would help solve marijuana operators’ federal tax woes, neither rescheduling nor modest Congressional reforms such as the SAFER Banking Act “solve the fundamental issue,” Weiss added.
“The application of the CSA to lawful state-run cannabis business is an unconstitutional overreach on state sovereignty that has led to decades of harm, failed businesses, lost jobs, and unsafe working conditions.”
Alabama regulators are targeting Dec. 1 to award the first batch of medical cannabis business licenses after the agency’s first two attempts were scrapped because of scoring errors and litigation.
The first licenses will be awarded to individual cultivators, delivery providers, processors, dispensaries and state testing labs, according to the Alabama Medical Cannabis Commission (AMCC).
Then, on Dec. 12, the AMCC will award licenses for vertically integrated operations, a designation set primarily for multistate operators.
Licenses are expected to be handed out 28 days after they have been awarded, so MMJ production could begin in early January, according to the Alabama Daily News.
That means MMJ products could be available for patients around early March, an AMCC spokesperson told the media outlet.
Regulators initially awarded 21 business licenses in June, only to void them after applicants alleged inconsistencies with how the applications were scored.
Then, in August, the state awarded 24 different licenses – 19 went to June recipients – only to reverse themselves again and scratch those licenses after spurned applicants filed lawsuits.
A state judge dismissed a lawsuit filed by Chicago-based MSO Verano Holdings Corp., but another lawsuit is pending.
Source: https://mjbizdaily.com/alabama-plans-to-award-medical-cannabis-licenses-dec-1/
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