Higher Law: Cannabis Banking Goes to Washington | Michigan Marijuana Law Drums Up Work | Plus: The Latest from NY
ALM Media
Welcome back to Higher Law, our weekly briefing on all things cannabis. I'm Cheryl Miller, reporting for Law.com from Sacramento, where the state of the state is strong and our governor probably wishes he hadn't made such a grandiose Super Bowl bet with Massachusetts Gov. Charlie Baker.
This week, we look at a "historic" congressional hearing on cannabis-business banking coming up next week. Is real change on the horizon? Plus, the Cannabis Trade Federation has a new lobbyist well-known to the marijuana industry. And plans to enact recreational regulations by spring hit a snag in New York.
Thanks as always for reading. I appreciate your feedback and tips on what we should be covering. Drop me a lineat cmiller@alm.com or you can call me at 916-448-2935. Follow me on Twitter at @capitalaccounts.
A Solution for Marijuana Banking?
Could protections for marijuana banking actually be on the horizon? The U.S. House Committee on Financial Services, now led by California Democrat Maxine Waters, announced this week that its Consumer Protection and Financial Institutions Subcommittee will convene a hearing Feb. 13 on "Challenges and Solutions: Access to Banking Services for Cannabis-Related Businesses.”
The committee had not released the hearing agenda or scheduled speakers as of Thursday morning. But the National Cannabis Industry Association has already sent out a "breaking news" alert, urging legalization advocates to call their congressional representatives in support of this "historic" hearing and to submit written testimony to the committee.
The hope is that, with Democrats controlling the House, backers of legislationproviding a safe harbor to banks and credit unions accepting cannabis clients will finally get a full hearing on the issue. Rep. Earl Blumenauer, D-Oregon, has saidcannabis banking access is the first issue he wants to address in his session-long legalization agenda.
"The announcement of this hearing has symbolic as well as substantive importance," said John Vardaman, executive vice president and general counsel at Hypur Inc., a banking and technology platform company serving highly regulated industries, including the licensed marijuana sector.
"Symbolically it underscores the importance of the marijuana banking issue and the need for congressional action," Vardaman told me in an email. "Substantively, giving marijuana banking such prominence in the new Congress suggests that it may be one of the few issues that could enjoy bipartisan support. At a time of deep political polarization, marijuana banking legislation could pull together a coalition of marijuana supporting liberals, state’s rights conservatives, and small government libertarians."
Although then-Attorney General Jeff Sessions rescinded the Cole Memo last year, other Trump administration officials have signaled that they would support protections for banks serving state-sanctioned marijuana businesses. U.S. Treasury Secretary Steve Mnuchin assured Congress last year that "we don't want bags of cash" dominating the marijuana economy and that "we're sensitive to dealing with public safety and also making sure that the IRS and others have ways of collecting taxes without taking in cash."
U.S. Attorney General nominee William Barr also told Congress that he would not go after companies that relied on Cole Memo guidance.
"Just from a purely pragmatic standpoint, well over 60 percent of congressional representatives now come from states that have legalized marijuana in some form," Vardaman said. "We are fast approaching the point, if we’re not there already, when opposing marijuana legislation could have significant political risk."
The Consumer Protection and Financial Institutions Subcommittee hearing starts at 2 p.m. EST on Feb. 13.
Who Got the Work
• Dozens of Michigan municipalities have contacted attorneys at Dickinson Wright for guidance on the state's new recreational marijuana laws. Jessica Wood, of counsel in the firm's Grand Rapids office, told the Associated Press that a majority of those municipalities were seeking help with ordinances that would at least temporarily bar recreational operations in their borders. More than 250 Michigan communities have already banned recreational activities. The AP has more.
• Steve Fox of VS Strategieshas registered to lobby for the Cannabis Trade Federation. The new disclosure, effective Jan. 15, said the advocacy would focus on "removal of marijuana/cannabis from the Controlled Substance Act; exempting state-legal cannabis-related activity from the Controlled Substances Act; banking for the cannabis industry; reform of Section 280E of the Internal Revenue Code; facilitating research on the medical benefits of cannabis; matters related to a legal federal cannabis market." The Cannabis Trade Federation, a 501(c)(4) advocacy group whose founding members include CannaCraft,TILT Holdings and iAnthus Capital Holdings. announced last week that Fox would be joining its leadership team.
• Joining Fox at the Cannabis Trade Federation is Heather Azzi, who has been named general counsel. Azzi was previously an attorney at the Marijuana Policy Project for 11 years.
• Stoel Rives attorneys are representing CBD wholesaler Big Sky Scientific in a lawsuit challenging Idaho seizure of what the Colorado company says is 6,700 pounds of industrial hemp. Idaho State Police stopped a driver carrying the Oregon-bound load at the East Boise port of entry and arrested him on suspicion of transporting marijuana. A state police spokesman told the Idaho Statesman that products containing any amount of THC—hemp's content is usually 0.3 percent or less—are illegal in the state. Big Sky's lawsuit, filed in Idaho federal court, seeks return of the product and a judicial finding that the state's seizure was illegal. The Idaho Statesman has more.
• Todd Goffmanhas been named general counsel and secretary of Massachusetts-based Curaleaf Holdings Inc., which runs dispensaries, cultivation sites and processing operations in 13 states. Goffman was most recently partner and general counsel at blockchain consulting firm Coinscape Advisors. He succeeds Curaleaf general counsel Peter Clateman, who was named the company's executive vice president for business development.
• Holly Bell, a Tennessee consultant and banker, will be Florida's new cannabis czar. State agriculture commissioner Nikki Fried named Bell the state's first director of cannabis, a position that will oversee rule-making for edibles and manage Fried's department's work with Florida's medical marijuana program. Not everyone was pleased Fried looked outside of Florida to fill the job. “It’s a slap in the face,” dispensary adviser Bill Monroe told the Tampa Bay Times. “You spend years and years trying to build something up. You have people in power who seem to be on the advocate side, but then you go pick an outsider who has done no work in Florida.”
In the Weeds...
>> Time out. Hold the phone on recreational marijuana in New York. Assembly Speaker Carl Heastie, D-Bronx, has put the brakes on Gov. Andrew Cuomo's push to enact adult-use cannabis regulations in the state budget due in April. Heastie told reporters that lawmakers already have a full plate of issues to deal with. “Being honest and saying six weeks may not be enough time to come up with regulations, deal with economic impact on communities and the criminal justice aspects, somehow gets reactions of outrage instead of understanding and acknowledgement of the commitment to get this done,” Heastie tweeted.Law.com
>> California should hold off on trimming marijuana taxes. That's the opinion of the Los Angeles Times' editorial board, which says high taxes aren't the only reason the black market is flourishing. Cutting the state excise tax from 15 percent to 11 percent, as some lawmakers proposed last week, "would not affect local marijuana taxes, which can run from 5% to 15%," the board writes. "Nor would the bill stop localities from raising their taxes even more if lawmakers lower the state tax rates." The state should wait until a mandated analysis of California's marijuana tax structure is ready next January, the board concludes. Los Angeles Times
>> A judge has struck down Florida's cap on medical marijuana dispensaries—again. Leon County Circuit Judge Karen Gievers sided with dispensary chain Trulieve, finding that the statutory cap "erects barriers that needlessly increase patients’ costs, risks, and inconvenience, delay access to products, and reduce patients’ practical choice, information, privacy and safety." Gievers criticized state leaders for failing to properly enact the voter initiative legalizing medical marijuana. “Regrettably, they have not complied, ignoring the citizens’ clear mandate and the FACT that compliance with the constitutional medical marijuana amendment is mandatory, not merely a citizen suggestion or request," she wrote. Daily Business Review
> Could an organ transplant candidate get booted off a waitlist for using medical marijuana? Robin Socherman of West Linn, Oregon told state lawmakers that's what happened to her husband. "While my husband had been told that he was the perfect candidate for transplant, he was kicked out of the program," she said. "The medical doctor shamed us and treated my husband like a street junkie, telling us how disappointed he was that my husband was a drug user." Lawmakers are now considering a bill that would stop transplant centers from disqualifying candidates for using pot. Statesman Journal
What's Next: All the Calendar Things
Feb. 12-13: The National Cannabis Industry Association hosts its Seed to Sale Showin Boston. Scheduled speakers include Karen Bernstein of Bernstein IP; Steven Hoffman, chairman of the Massachusetts Cannabis Control Commission; and Jordan Wellington, chief compliance officer for cannabis software company Simplifya.
Feb. 12-13: CannaTech Panama takes place in San Felipe, Casco Antigua. Charles Feldmann, managing partner of Feldmann Nagel Cantafio Margulis Gonnell in Denver, and Mauricio Agudelo, CFO of Bedrocan International, are slated to speak at the event.
Feb. 16-17: The Cannabis Business Licensing Boot Camp, sponsored in part by Minorities for Medical Marijuana, will be held in St. Louis, Missouri. The event will focus on helping women, minorities, veterans and small business owners interested in obtaining a medical marijuana license in Missouri.
