U.S. Senators May Introduce “SAFE Banking Plus” By End of Year

After finally introducing the comprehensive Cannabis Administration and Opportunity Act (CAOA) in the U.S. Senate last month,  last week Sen. Cory Booker (D-N.J.) softened his prior position on a separate, narrower cannabis banking bill when he said that he would now consider the banking bill with modifications. As we previously reported, the SAFE Banking Act would allow cannabis businesses to access the federal banking system and service providers to the cannabis industry such as attorneys, accountants, bankers and landlords would be permitted to accept payment from cannabis businesses without the risk of violating federal law. SAFE Banking has passed the House of Representatives seven times in recent years but so far has not been taken up in the Senate.

Since the introduction of the CAOA last month, which would not only permit cannabis companies to access the banking system but would legalize and decriminalize recreational cannabis with an eye toward supporting communities that have been most impacted by the war on drugs, Sens. Booker and Schumer (D-N.Y.) have said they would be willing to consider more incremental cannabis reform such as SAFE Banking with added equity provisions.  Many are referring to the as-yet proposed bill as “SAFE Banking Plus,” which would ensure equitable access to financial services for minority-owned cannabis businesses and require financial institutions to prove compliance with anti-discrimination laws, among other things.

Schumer and Booker have been meeting with other lawmakers to work on a compromise bill, and Booker said a proposal might come after the November elections and before the new Congress starts in January.

Long-Awaited Marijuana Legalization Bill Introduced in the U.S. Senate

More than a year after introducing a first draft, U.S. Senators Chuck Schumer (D-N.Y.), Cory Booker (D-N.J.) and Ron Wyden (D-OR) finally introduced their proposed marijuana legislation, the Cannabis Administration and Opportunity Act (CAOA) on Thursday, July 21.

The CAOA is a comprehensive bill that would not only permit cannabis companies to access the banking system but would legalize and decriminalize recreational cannabis with an eye toward supporting communities that have been most impacted by the war on drugs. The CAOA also provides for cannabis industry workers’ rights, a federal responsibility to set an impaired driving standard, expungements of criminal records and penalties for possessing or distributing large quantities of marijuana without a federal permit. It would also create a new federal definition for hemp that would increase the permissible THC by dry weight to 0.7 percent from the current 0.3 percent, and the definition would include all THC isomers, not just delta-9 THC. Other features of the bill include grant programs for small business owners hoping to enter the industry who come from communities that were disproportionately affected by the war on drugs, increased funding for law enforcement for illegal cultivation, and cannabis marketing restrictions.

Under the proposal, the Drug Enforcement Administration would no longer have jurisdiction over cannabis and would be regulated by the U.S. Food and Drug Administration and the Alcohol and Tobacco Tax and Trade Bureau (TTB) within the Treasury Department. The bill proposes a 5% to 12.5% excise tax for small and mid-sized cannabis producers. It would charge an initial tax of 10% on larger cannabis businesses and gradually increase it to 25%.

The Senate Judiciary Subcommittee on Crime and Terrorism chaired by Booker scheduled a hearing for Tuesday, July 26 titled, “Decriminalizing Cannabis at the Federal Level: Necessary Steps to Address Past Harms.”

While the bill is unlikely to garner the required 60 votes to pass in the Senate, many see it as a first step toward opening the cannabis debate on Capitol Hill and passing incremental reform that could finally end the federal prohibition on cannabis.

As we have previously reported, the U.S. House of Representatives has passed legislation multiple times in the past few years that would decriminalize cannabis and allow cannabis businesses to access the federal banking system. However, none of those measures have yet made it to the Senate floor.

 

U.S. Mayors Call on Congress to Pass Cannabis Reform

This week, the U.S. Conference of Mayors – which represents the 1,400 U.S. cities with populations of 30,000 or more – passed a resolution urging Congress to pass the SAFE Banking Act of 2021, the MORE Act and the Cannabis Administration and Opportunity Act (CAOA), which has yet to be formally introduced.

The House of Representatives has passed both the bipartisan SAFE Banking Act and the MORE Act at least six times in recent years but the Senate has yet to take these bills to a vote. Per the resolution, the SAFE Banking Act would “provide financial security for cannabis dispensaries and related companies and enhance public safety” while the MORE Act and/or the CAOA would “legaliz[e] the medicinal use of cannabis and the adult use of recreational cannabis.” Continue reading “U.S. Mayors Call on Congress to Pass Cannabis Reform”

California Governor Proposes a Cannabis Tax Reduction in an Effort to Shore Up the Legal Market

On Friday, May 13, California Gov. Gavin Newsom introduced proposed revisions to his 2022-2023 budget proposal, which would eliminate the cannabis cultivation tax rate beginning July 1, 2022.

The 15% excise tax on cannabis sales would remain, and the collection and remittance of that tax would be limited to retail sales beginning January 1, 2023. Currently, the cultivation tax rates are $10.08 per ounce of flower, $3.00 per ounce of trim, and $1.41 per ounce of fresh cannabis plant, and these taxes are paid on all recreational and medicinal cultivation of cannabis. Continue reading “California Governor Proposes a Cannabis Tax Reduction in an Effort to Shore Up the Legal Market”

New York’s “Seeding Opportunity Initiative” Opens up Adult-Use Cultivator License Applications to Hemp Farmers on March 15 and Introduces Proposed Regulations that Will Favor Those With Past Marijuana Convictions for Retail Dispensary Licenses

On March 10, New York State’s cannabis regulators filed proposed regulations for conditional adult-use retail dispensary regulations.  The public will have 60 days to provide comment on the proposed regulations before the Cannabis Control Board votes on them.

The proposed regulations place “justice-involved” individuals – those who have been convicted for a marijuana-related offense and their family members – at the front of the line for retail dispensary applications.  To assist those applicants, Gov. Kathy Hochul has proposed a $200 million budget that, if approved by the Legislature next month, would be used to help find, secure and renovate storefronts for the dispensaries.  The state’s goal is for the dispensaries operated by “justice-involved” individuals to open by the end of 2022, with other dispensaries to follow in early 2023.  New York’s approach differs from other states that have legalized cannabis in that it is attempting to address head-on the struggles that social equity license applicants often face in raising capital and starting a business in a highly-regulated industry.  Chris Alexander, the executive director of the state’s Office of Cannabis Management, said he expects 100-200 licenses to go to “justice-involved” individuals.

Under the “Farmers First Program,” the application period for adult-use cultivator licenses will also open up on Tuesday, March 15 and end on June 30, 2022.  Gov. Hochul signed legislation last month that created a new Adult-Use Conditional Cultivator License, authorizing eligible hemp growers to apply for a license to grow cannabis containing over 0.3% THC for the upcoming adult-use market.  To be eligible to apply, the hemp grower must have been authorized to grow hemp under the Department of Agriculture and Markets Industrial Hemp Research Pilot Program and meet certain other requirements.  These conditional licenses make it possible for farmers to grow cannabis in the 2022 growing season.

With these moves, the Seeding Opportunity Initiative seeks to establish a supply chain from New York State farmers to social equity retailers.

The general regulation package for cannabis licenses is expected to be released in May.

New York Cannabis Chief Reiterates Social Equity Focus in Speech at Cannabis Trade Show

Tremaine Wright delivered her first public speech since being appointed Chair of the New York State Cannabis Control Board at the CWCBExpo (Cannabis World Congress & Business Exposition) at the Javits Center on November 4.  Wright leads the five-member board charged with approving a regulatory framework for New York’s cannabis industry and will oversee licensing of cannabis businesses.  In her remarks before 400 people at the business-to-business cannabis industry trade show, Wright reiterated that New York will support social equity licenses for people from communities historically affected by the War on Drugs.  “We’re about to create the most equitable cannabis program in the country,” she said.  Wright also said that New York will prevent social equity licenses from being sold to large companies by requiring that they be sold to other social equity licensees.  However, the regulations are currently being written and there are few details about how the state will help social equity applicants raise capital to start cannabis businesses.  Wright also said that all license applicants will be required to share their ESG (Environmental, Social, and Corporate Governance) frameworks to operate in the state.  The Board has a goal of issuing licenses within 18 months.  Members of New York’s Office of Cannabis Management were also in attendance at the Expo.

House Passes Bill To Legalize Marijuana at the Federal Level

Deanna Lucci

Seth Goldberg
Seth A. Goldberg

Today, the House of Representatives passed the groundbreaking MORE Act – legalizing marijuana at the federal level.  The bill passed by a vote of 228 to 164. 

As we previously discussed in our November 10th and September 4th blog posts, the MORE Act (Marijuana Opportunity Reinvestment and Expungement Act of 2019 – H.R. 3884) legalizes marijuana and cannabis at the federal level, by removing them from the Controlled Substances Act and eliminates some cannabis criminal records.

While the bill represents a first step toward legalizing cannabis, states would need to adopt similar measures to fully decriminalize its use – currently, 15 states and the District of Columbia have legalized (or recently voted to legalize) cannabis for adult recreational use, and 35 states and the District of Columbia have legalized medical cannabis.

The bill also makes other changes, including:

  • Replaces statutory references to marijuana and marihuana with cannabis,
  • Requires the Bureau of Labor Statistics to regularly publish demographic data on cannabis business owners and employees,
  • Establishes a trust fund to support various programs and services for individuals and businesses in communities impacted by the war on drugs,
  • Imposes a 5% tax on cannabis products and requires revenues to be deposited into the trust fund,
  • Makes Small Business Administration loans and services available to entities that are cannabis-related legitimate businesses or service providers,
  • Prohibits the denial of federal public benefits to a person on the basis of certain cannabis-related conduct or convictions,
  • Prohibits the denial of benefits and protections under immigration laws on the basis of a cannabis-related event (e.g., conduct or a conviction), and
  • Establishes a process to expunge convictions and conduct sentencing review hearings related to federal cannabis offenses.

While Sen. Kamala D. Harris (D-CA), the Vice President-Elect, introduced a counterpart bill (S.2227) in the U.S. Senate, its passage in the chamber is unlikely this Congress as Senate Majority Leader Mitch McConnell (R-KY) has declined to endorse the bill.

While this legislation is unlikely to pass the Senate this Congress, proponents of cannabis legalization have hailed the House vote as historic, and an important first step toward generating the momentum and support needed to favorably position the measure for future congressional consideration.  And whether the measure would be approved by the next Congress likely depends on the outcome of the two Georgia Senate runoff elections scheduled for January 5, 2021.  If both Democratic Senate candidates, Jon Ossoff and Rev. Raphael Warnock, win the runoffs, then the Democrats will control both the House and Senate, with Vice President-Elect Kamala Harris casting the tie-breaking vote.

However, it is unclear if President-Elect Joe Biden would sign the bill since he has proposed rescheduling cannabis as a schedule II drug so researchers can study its positive and negative impacts as opposed to removing it entirely from the list of scheduled substances.  While Biden has expressed support for decriminalization of marijuana, expungement of prior cannabis use convictions, and legalizing cannabis use for medical purposes – he has said he wants to leave decisions regarding adult recreational use to the individual states.  Nonetheless, marijuana legalization advocates believe this symbolic vote on the legislation could send a strong signal to the Biden administration that this is a Democratic priority.

Even though federal legalization may not be on the immediate horizon, the passage of the MORE Act in the House, and the legalization of adult-use and/or medical marijuana in five more states on November 3, 2020, could influence a Biden-appointed attorney general’s views on enforcement of marijuana related activities. While AG Sessions attempted to reverse the liberal Obama administration marijuana policies set forth in the Cole Memorandum, and AG Barr has reluctantly acknowledged that the Cole priorities have been relied on and should thus be followed, an AG appointed by Biden, given the current pro-legalization wave, Biden’s favoring of state’s rights on this issue, and Kamala Harris’s favoring of decriminalization, might endorse an approach consistent with, if not even more liberal than, the Cole priorities.   Thus, while the appointment of AG Sessions sent shockwaves through the cannabis industry, market participants and those who have been standing on the sidelines eager to get on the field seem to have a lot to look forward to.

 

 

 

Update: House to Vote on Historic MORE Act in December

As an update to our September 4th blog post, the House of Representatives was scheduled to vote on the historic MORE Act on September 21.  However, days before that vote House Democrats postponed the vote indefinitely.  It was reported that moderate Democrats expressed concern about voting on the MORE Act before voting on a second Coronavirus relief package.  House Judiciary Committee Chairman Jerry Nadler (D-N.Y.), the bill’s sponsor, suggested the vote could be delayed until after the November elections. However, House Majority Leader Steny Hoyer (D-Md.) said in an emailed statement that Democratic leaders were “committed” to scheduling a vote on the bill before the end of the year.

On Monday, November 9, Hoyer wrote in a letter to colleagues that the House would vote on the MORE Act in December.  Hoyer’s letter did not specify which week the vote will take place, but the House is scheduled to be in session Dec. 1-4 and Dec. 7-10.

As discussed previously on this blog, if enacted The MORE Act (Marijuana Opportunity Reinvestment and Expungement Act of 2019 – H.R. 3884) would legalize marijuana and cannabis at the federal level, by removing them from the Controlled Substances Act and eliminate some cannabis criminal records.  As Hoyer wrote in his letter this week, the MORE would “decriminalize cannabis and expunge convictions for non-violent cannabis offenses that have prevented many Americans from getting jobs, applying for credit and loans, and accessing opportunities that make it possible to get ahead in our economy.”

While it is unlikely that this legislation would pass in the Republican-controlled Senate – ensuring it will die this Congress – proponents of cannabis legalization have hailed the House vote as historic, and an important first step toward generating the momentum and support needed to favorably position the measure for future congressional consideration. And whether the measure would be approved by the next Congress likely depends on the outcome of the two Georgia Senate runoff elections set to take place on January 5, 2021.  If both Democratic Senate candidates, Jon Ossoff and Rev. Raphael Warnock, win the runoffs, then the Democrats will control both the House and Senate.

However, it is unclear if President-Elect Joe Biden would sign the bill since he has proposed rescheduling cannabis as a schedule II drug so researchers can study its positive and negative impacts as opposed to removing it entirely from the list of scheduled substances.  While Biden has expressed support for decriminalization of marijuana, expungement of prior cannabis use convictions, and legalizing cannabis use for medical purposes, he has said he wants to leave decisions regarding adult recreational use to the individual states.  Nonetheless, marijuana legalization advocates believe even a symbolic vote on the legislation could send a strong signal to the Biden administration.

 

 

 

 

 

House to Vote on Marijuana Legalization Bill This Month

For the first time ever, the U.S. House of Representatives will vote this month on legislation that if enacted would legalize marijuana and cannabis at the federal level, by removing them from the Controlled Substances Act and eliminate some cannabis criminal records.

The MORE Act (Marijuana Opportunity Reinvestment and Expungement Act of 2019 – H.R. 3884) would decriminalize marijuana at the federal level by removing it from the list of scheduled substances under the federal Controlled Substances Act, and would further eliminate criminal penalties for an individual who manufactures, distributes, or possesses marijuana.  While the bill represents a first step toward legalizing cannabis, states would need to adopt similar measures to fully decriminalize its use – currently, 11 states and the District of Columbia have legalized cannabis for adult recreational use, and 33 states and the District of Columbia have legalized medical cannabis.

The bill also makes other changes, including:

  • Replaces statutory references to marijuana and marihuana with cannabis,
  • Requires the Bureau of Labor Statistics to regularly publish demographic data on cannabis business owners and employees,
  • Establishes a trust fund to support various programs and services for individuals and businesses in communities impacted by the war on drugs,
  • Imposes a 5% tax on cannabis products and requires revenues to be deposited into the trust fund,
  • Makes Small Business Administration loans and services available to entities that are cannabis-related legitimate businesses or service providers,
  • Prohibits the denial of federal public benefits to a person on the basis of certain cannabis-related conduct or convictions,
  • Prohibits the denial of benefits and protections under immigration laws on the basis of a cannabis-related event (e.g., conduct or a conviction), and
  • Establishes a process to expunge convictions and conduct sentencing review hearings related to federal cannabis offenses.

The bill, which is expected to be brought to the floor for a vote and pass sometime this month, was originally introduced last year by Rep. Jerrold Nadler, D-N.Y. and approved by the House Judiciary Committee in November. While a counterpart bill (S.2227) has been introduced in the U.S. Senate by Sen. Kamala D. Harris (D-CA) – the Democratic Vice Presidential nominee – its passage in the chamber is unlikely as Senate Majority Leader Mitch McConnell (R-KY) has declined to endorse the bill, making its chances of successfully moving through committee and to the Senate floor for a vote virtually impossible. Without action in the Senate, the bill will die this Congress. However, proponents of cannabis legalization – as well as civil rights and civil liberties organizations, and criminal justice reform advocates – are still hailing the House vote as historic, and an important first step toward generating the momentum and support needed to favorably position the measure for future congressional consideration.

Prospects for the successful consideration and approval of the measure by the next Congress will likely hinge on the outcome of the November election.

Vice President Joe Biden, the Democratic presidential nominee, has proposed rescheduling cannabis as a schedule II drug so researchers can study its positive and negative impacts.  Biden has expressed support for decriminalization of marijuana, expungement of prior cannabis use convictions, and legalizing cannabis use for medical purposes – but wants to leave decisions regarding adult recreational use to the individual states. If elected, Biden and Harris would likely seek to decriminalize cannabis but stop short of advocating for federal adult use legalization, allowing the individual states to decide.

© 2009- Duane Morris LLP. Duane Morris is a registered service mark of Duane Morris LLP.

The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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