Sunday, February 17, 2019
Sunday, February 10, 2019
The First Marijuana Hearing Of The New Congress Has Been Scheduled
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.
Source
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.
Source
Monday, February 4, 2019
Beware of bail-ins
In a speech yesterday, in Stockholm Sweden, Vice Chairman of the Federal Reserve and former governor of the Bank of Israel and former chief economist at the World Bank, Stanley Fisher noted:
“As part of this approach, the United States is preparing a proposal to require systemically important banks to issue bail-inable long-term debt that will enable insolvent banks to recapitalize themselves in resolution without calling on government funding–this cushion is known as a “gone concern” buffer.”
Mr. Fisher gave no details as to whom in the United States was preparing the bail-in proposal and what “bailinable long term debt” is.
It Happened in Cyprus, But Can It Happen Here?
In spring of 2013 the failing European Bank of Cyprus performed a bail-in that required depositors to help save the bank by foregoing a large portion of the money they had deposited in the bank. In return for their forebearance, depositors were given equity shares in the failing bank.
Customers who deposit money in banks are lending that money to the bank. Depositors are in effect, unsecured creditors. If the bank fails, depositors get in line with other unsecured creditors to see how many cents on the dollar, if any, they can retrieve.
In the United States to offset this result, the Federal Deposit Insurance Corporation (FDIC) since 1933 insures bank deposits up to $250,000*. THe FDIC, however, is woefully underfunded to handle payouts in the event of a large bank failure. The new proposal is designed to allow failing banks to get back on their feet “without calling on government funding.”
Under the proposed bail-in scenario, the faiure of a “sytematically important bank” (a.k.a. “too big to fail”) will receive no government funding to stay afloat. In order to keep their casino doors open, a too big to fail bank will just call on their loyal depositors to help out by taking whatever percentage of the depositors’ money they need to stabilize the bank.
After $4 trillion of quantitative easing by the Federal Reserve over the past five years, and record profits at the largest U.S. banks, it would seem that the U.S. banks should be sound and talk of bailing them in, unnecessary. Apparently, not as Mr. Fischer’s comments make clear.
With banks already paying close to zero interest on deposits and the real possibility that a depositor could actually lose money by keeping it in a too big to fail bank, what incentive do depositors have in keeping their cash in such banks?
*At the time of the Cypriot bail-in, EU depositor insurance was in place.
Source
“As part of this approach, the United States is preparing a proposal to require systemically important banks to issue bail-inable long-term debt that will enable insolvent banks to recapitalize themselves in resolution without calling on government funding–this cushion is known as a “gone concern” buffer.”
Mr. Fisher gave no details as to whom in the United States was preparing the bail-in proposal and what “bailinable long term debt” is.
It Happened in Cyprus, But Can It Happen Here?
In spring of 2013 the failing European Bank of Cyprus performed a bail-in that required depositors to help save the bank by foregoing a large portion of the money they had deposited in the bank. In return for their forebearance, depositors were given equity shares in the failing bank.
Customers who deposit money in banks are lending that money to the bank. Depositors are in effect, unsecured creditors. If the bank fails, depositors get in line with other unsecured creditors to see how many cents on the dollar, if any, they can retrieve.
In the United States to offset this result, the Federal Deposit Insurance Corporation (FDIC) since 1933 insures bank deposits up to $250,000*. THe FDIC, however, is woefully underfunded to handle payouts in the event of a large bank failure. The new proposal is designed to allow failing banks to get back on their feet “without calling on government funding.”
Under the proposed bail-in scenario, the faiure of a “sytematically important bank” (a.k.a. “too big to fail”) will receive no government funding to stay afloat. In order to keep their casino doors open, a too big to fail bank will just call on their loyal depositors to help out by taking whatever percentage of the depositors’ money they need to stabilize the bank.
After $4 trillion of quantitative easing by the Federal Reserve over the past five years, and record profits at the largest U.S. banks, it would seem that the U.S. banks should be sound and talk of bailing them in, unnecessary. Apparently, not as Mr. Fischer’s comments make clear.
With banks already paying close to zero interest on deposits and the real possibility that a depositor could actually lose money by keeping it in a too big to fail bank, what incentive do depositors have in keeping their cash in such banks?
*At the time of the Cypriot bail-in, EU depositor insurance was in place.
Source
Sunday, February 3, 2019
Cannabis Magna Carta
William Barr, President Trump's nominee to serve as the next U.S. attorney general, made headlines earlier this month when he pledged during his Senate confirmation hearing not to "go after" marijuana companies that comply with state laws.
Now, in response to written questions from senators, Barr is putting that pledge on paper, in black and white. He's also calling for the approval of more legal growers of marijuana for research, and is acknowledging that a recent bill legalizing hemp has broad implications for sale of cannabis products.
"As discussed at my hearing, I do not intend to go after parties who have complied with state law in reliance on the Cole Memorandum," he wrote, referring to Obama-era cannabis enforcement guidance that then-Attorney General Jeff Sessions rescinded last year.
That said, Barr isn't committing to formally replacing the Cole Memo, which generally directed federal prosecutors not to interfere with state marijuana laws, with new guidance reiterating the approach.
"I have not closely considered or determined whether further administrative guidance would be appropriate following the Cole Memorandum and the January 2018 memorandum from Attorney General Sessions, or what such guidance might look like," he wrote in response to a question from Sen. Cory Booker (D-NJ). "If confirmed, I will give the matter careful consideration."
And Barr, who previously served as attorney general under President George H. W. Bush, says it would be even better if Congress got around to addressing the growing gap between state and federal marijuana laws.
"I still believe that the legislative process, rather than administrative guidance, is ultimately the right way to resolve whether and how to legalize marijuana," he wrote in a compilation of responses delivered to the Senate Judiciary Committee on Sunday.
But even as Barr reiterated that he wouldn't go after people and businesses that benefited from the Cole memo, he voiced criticism of policy directives like it and of the idea of legalization in general.
"An approach based solely on executive discretion fails to provide the certainty and predictability that regulated parties deserve and threatens to undermine the rule of law," Barr wrote in response to a question from Sen. Dianne Feinstein (D-CA). "If confirmed, I can commit to working with the Committee and the rest of Congress on these issues, including any specific legislative proposals. As I have said, however, I do not support the wholesale legalization of marijuana."
Nonetheless, legalization advocates were happy to see the nominee reiterating his non-enforcement pledge when it comes to state-legal businesses.
"It’s positive to see Barr make the same commitments on marijuana enforcement in writing as he did in the hearings," Michael Collins, director of national affairs for the Drug Policy Alliance, said. "My hope is that he sends this message to all federal prosecutors so that states are given space to reform their outdated, broken, racist marijuana laws, and the country can turn the page on prohibition."
Elsewhere in the 247-page document, Barr says that he supports expanding the number of institutions that are allowed to grow marijuana to be used in scientific research.
"I support the expansion of marijuana manufacturers for scientific research consistent with law," he wrote in response to a question from Sen. Charles Grassley (R-IA). "If confirmed, I will review the matter and take appropriate steps."
A single facility at the University of Mississippi has for half a century maintained a monopoly on the cultivation of cannabis for research, but due to concerns about the availability and quality of its products, the Drug Enforcement Administration in 2016 announced a process to license additional manufacturers. However, under Sessions, the Department of Justice has blocked the agency from acting on any of the several dozen applications it has received from would-be growers.
"I am not familiar with the details of these applications or the status of their review," Barr wrote. "If confirmed, I can commit to reviewing the matter."
Barr also acknowledged that, due to the passage of the Farm Bill and its hemp legalization provisions late last year, hemp-derived cannabidiol (CBD) and other components and products made from low-THC cannabis plants are legally distinct from those that come from marijuana.
"Products derived from hemp, including CBD, are therefore subject to different legal and regulatory restrictions than those derived from non-hemp marijuana plants under certain circumstances," he wrote.
He also pledged to "look into" pending medical and scientific evaluations of CBD, which could lead to its formal rescheduling under the Controlled Substances Act.
All told, the cannabis comments indicate that if Barr is confirmed by the Senate, the Justice Department would be poised to take a very different approach to marijuana issues than it did under Sessions, who has long been a vocal legalization opponent.
"After decades of failed drug war, it’s difficult to grasp the progress we’ve made in just the past couple of years. From a hawkish attorney general who sent a chill through the industry and threatened to escalate enforcement to a nominee who put his hands-off federalist approach to prohibition in writing," said Don Murphy, director of federal policies for the Marijuana Policy Project. "William Barr didn’t just wave the white flag, he signed a peace agreement."
NORML Political Director Justin Strekal said Barr is "incredibly wise to acknowledge that the genie is out of the bottle when it comes to the marijuana reform movement."
"Now is the time for the Department of Justice to work in good faith with the Senate Judiciary Committee on legislative solutions that address the senseless waste of law enforcement's precious time and resources due to the failed federal policy of prohibition," he said.
Source
Now, in response to written questions from senators, Barr is putting that pledge on paper, in black and white. He's also calling for the approval of more legal growers of marijuana for research, and is acknowledging that a recent bill legalizing hemp has broad implications for sale of cannabis products.
"As discussed at my hearing, I do not intend to go after parties who have complied with state law in reliance on the Cole Memorandum," he wrote, referring to Obama-era cannabis enforcement guidance that then-Attorney General Jeff Sessions rescinded last year.
That said, Barr isn't committing to formally replacing the Cole Memo, which generally directed federal prosecutors not to interfere with state marijuana laws, with new guidance reiterating the approach.
"I have not closely considered or determined whether further administrative guidance would be appropriate following the Cole Memorandum and the January 2018 memorandum from Attorney General Sessions, or what such guidance might look like," he wrote in response to a question from Sen. Cory Booker (D-NJ). "If confirmed, I will give the matter careful consideration."
And Barr, who previously served as attorney general under President George H. W. Bush, says it would be even better if Congress got around to addressing the growing gap between state and federal marijuana laws.
"I still believe that the legislative process, rather than administrative guidance, is ultimately the right way to resolve whether and how to legalize marijuana," he wrote in a compilation of responses delivered to the Senate Judiciary Committee on Sunday.
But even as Barr reiterated that he wouldn't go after people and businesses that benefited from the Cole memo, he voiced criticism of policy directives like it and of the idea of legalization in general.
"An approach based solely on executive discretion fails to provide the certainty and predictability that regulated parties deserve and threatens to undermine the rule of law," Barr wrote in response to a question from Sen. Dianne Feinstein (D-CA). "If confirmed, I can commit to working with the Committee and the rest of Congress on these issues, including any specific legislative proposals. As I have said, however, I do not support the wholesale legalization of marijuana."
Nonetheless, legalization advocates were happy to see the nominee reiterating his non-enforcement pledge when it comes to state-legal businesses.
"It’s positive to see Barr make the same commitments on marijuana enforcement in writing as he did in the hearings," Michael Collins, director of national affairs for the Drug Policy Alliance, said. "My hope is that he sends this message to all federal prosecutors so that states are given space to reform their outdated, broken, racist marijuana laws, and the country can turn the page on prohibition."
Elsewhere in the 247-page document, Barr says that he supports expanding the number of institutions that are allowed to grow marijuana to be used in scientific research.
"I support the expansion of marijuana manufacturers for scientific research consistent with law," he wrote in response to a question from Sen. Charles Grassley (R-IA). "If confirmed, I will review the matter and take appropriate steps."
A single facility at the University of Mississippi has for half a century maintained a monopoly on the cultivation of cannabis for research, but due to concerns about the availability and quality of its products, the Drug Enforcement Administration in 2016 announced a process to license additional manufacturers. However, under Sessions, the Department of Justice has blocked the agency from acting on any of the several dozen applications it has received from would-be growers.
"I am not familiar with the details of these applications or the status of their review," Barr wrote. "If confirmed, I can commit to reviewing the matter."
Barr also acknowledged that, due to the passage of the Farm Bill and its hemp legalization provisions late last year, hemp-derived cannabidiol (CBD) and other components and products made from low-THC cannabis plants are legally distinct from those that come from marijuana.
"Products derived from hemp, including CBD, are therefore subject to different legal and regulatory restrictions than those derived from non-hemp marijuana plants under certain circumstances," he wrote.
He also pledged to "look into" pending medical and scientific evaluations of CBD, which could lead to its formal rescheduling under the Controlled Substances Act.
All told, the cannabis comments indicate that if Barr is confirmed by the Senate, the Justice Department would be poised to take a very different approach to marijuana issues than it did under Sessions, who has long been a vocal legalization opponent.
"After decades of failed drug war, it’s difficult to grasp the progress we’ve made in just the past couple of years. From a hawkish attorney general who sent a chill through the industry and threatened to escalate enforcement to a nominee who put his hands-off federalist approach to prohibition in writing," said Don Murphy, director of federal policies for the Marijuana Policy Project. "William Barr didn’t just wave the white flag, he signed a peace agreement."
NORML Political Director Justin Strekal said Barr is "incredibly wise to acknowledge that the genie is out of the bottle when it comes to the marijuana reform movement."
"Now is the time for the Department of Justice to work in good faith with the Senate Judiciary Committee on legislative solutions that address the senseless waste of law enforcement's precious time and resources due to the failed federal policy of prohibition," he said.
Source
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