House Passes the SAFE Banking Act

On September 25, 2019, the Democrat-controlled U.S. House of Representatives passed the SAFE Banking Act by a vote of 321 in favor and 103 opposed. As we’ve previously posted, the Act would prohibit federal bank regulators from penalizing financial institutions that provide services to state-legal cannabis businesses and will result in greater access to financial services for the cannabis industry. Given the 91 Republicans who voted in favor, it appears that cannabis banking reform may be poised to become a bipartisan issue, although only time will tell.

The Act will now move on to the Republican-controlled Senate, where commentators agree that passage is far less certain. Historically, Senate Majority Leader Mitch McConnell has publicly opposed cannabis even while supporting the legalization of hemp. In any event, even if ultimately adopted, the protections granted to financial institutions under the SAFE Banking Act will only apply to state-law compliant cannabis customers, so it will continue to be vitally important for financial institutions to adopt robust marijuana-related business compliance policies and procedures and engage in continuous monitoring of cannabis customer compliance with relevant state laws.

Maine Takes Another Step Toward Becoming a Marijuana Tourism Destination—But Are We Moving Fast Enough?

Maine’s cannabis tourism program might be hitting its stride. The Office of Marijuana Policy has reached “instant reciprocity” arrangements with 23 states which allow medical cannabis patients from those states to also use their patient cards in Maine. Here’s the announcement from the OMP. Consistent with state law, the visiting qualifying patient can purchase up to 2.5 oz of medical marijuana and marijuana products every 15 days while visiting Maine. 

Adult use tourism will obviously be of a different cloth, since the hope is that it will attract consumers who can’t legally purchase marijuana products in their home state. There is some evidence that Massachusetts’ rec program is attracting New Yorkers, and the hope is that Maine’s program will bring folks from New Hampshire and New York, etc. Of course, in an industry where there’s a massive "first mover" advantage, it’s not clear that Maine will really open the floodgates to adult use marijuana in time to reap many of the benefits that earlier states are seeing.

Is This the Beginning of Another Maine Crackdown on CBD?

Maine regulators are going after CBD food products again, it appears. Inspectors from the Department of Agriculture, Conservation and Forestry have been handing out the letter pasted below to retailers and others in Maine over the past week. According to these "guidelines," the State is interpreting LD 630 to require that any CBD edibles contain CBD derived from Maine-grown hemp. Given the language in LD 630, this approach seems like it could cause more problems than it prevents, and could be putting the state on the fast track to litigation. Especially since the State is promising to begin enforcing this new policy on August 1, less than three weeks from now.

Congress Takes Another Step Toward Reforming U.S. Cannabis Laws. A Good Sign for the SAFE Banking Act?

Yesterday the U.S. House of Representatives, Committee on the Judiciary held a first-ever hearing which, essentially, advocated for significant reforms of our nation’s marijuana laws. The hearing was titled "Marijuana Laws in America: Racial Justice and the Need for Reform," and you can watch it on YouTube here, if that’s the sort of thing you’re into. 

At least a majority of the committee seemed to start from the premise that marijuana should not be a Schedule I controlled substance. Even the Republican minority offered a witness who supports significant marijuana reforms, including passage of the STATES Act which, for those who may have forgotten, would protect state-legal cannabis businesses from federal prosecution. 

Hopefully, this hearing is also a positive sign for the future of the SAFE Banking Act, which would further open the door to federally chartered banks working with cannabis businesses (our previous posts on this Act are available here). The SAFE Banking Act is still waiting for a vote on the House floor, after being approved by the House Financial Services Committee last March. 

These federal reforms, even the discrete ones, really will matter to New England’s marijuana industry. Even if Congress acts piecemeal, a little bit of reform here and little bit there could quickly give a massive boost to the industry by opening the door to things like banking and credit card processing, and eliminating the constant looming threat of federal enforcement against state-legal businesses.

The Latest USDA Guidance on Hemp Law

The United States Department of Agriculture (USDA) Office of General Counsel issued some guidance last week on its view of the current legal status of hemp. The takeaways are:

1. Hemp is no longer a Schedule I Controlled Substance under federal law.
2. At the moment, states cannot prohibit the interstate transport of hemp (or hemp products) lawfully produced under the 2014 Farm Bill. Why the 2014 Farm Bill, when the 2018 Farm Bill just became law, you might ask? Well, point 3 gets to this.
3. The 2018 Farm Bill loosened the requirements for hemp to be grown legally, but this more relaxed regime only takes effect after the USDA publishes the necessary regulations. Once these regulations are published, then states and tribes may not prohibit the interstate transport of hemp produced under a state or tribal plan or under a license issued by the USDA.
4. While states and tribes cannot prohibit the commerce of hemp legally grown elsewhere, they can enact and enforce laws which prohibit the growth of hemp within their territory.
5. The Food and Drug Administration (FDA) retains authority to regulate hemp under applicable FDA laws. In other words, the FDA can and will continue to crack down on those who make unapproved therapeutic claims related to CBD, and may continue to regulate the addition of CBD to food products.

Overall, this guidance is probably good news for those who are growing or sourcing their product legally, and want to reach a national market. It could also be interpreted as another baby step in the direction of nationwide legalization of one species of cannabis.

Federal Efforts to Relax, Just a Little Bit, About Marij(h)uana

Former Attorney General Jeff Sessions was famous for (among other things) his heavy opposition to marijuana legalization. His approach flew in the face of the dozens of states that have legalized medical and/or adult use marijuana, and seemed like it was leading toward a Wild West-style showdown. But Jeff Sessions is gone now, that excitement has dwindled for the time being, and Congress is even trying to take a baby step toward aligning federal law with legalization at the state level. 

The STATES (Strengthening the Tenth Amendment Through Entrusting States) Act is old news at this point, but it could be important and this is a new blog, so I’m going to briefly write about it anyway. This bill, currently before Congress, states that enforcement of the federal prohibition on marijuana “shall not apply to any person acting in compliance with State law relating to manufacture, production, possession, distribution, dispensation, administration, or delivery of marihuana.” (Side note: What’s up with the feds spelling "marijuana" with an "h"? If you know, please tell us!) 

The STATES Act is bipartisan, with co-sponsors including Senator Cory Gardner (R – Colorado) and Senator Elizabeth Warren (D – Massachusetts). And, in perhaps the most controversial moment of his short tenure as Attorney General, Bill Barr has offered at least tepid support for the legislation. So stay tuned.

Adult-use Rulemaking Is Underway in Maine – This Is Your Chance to Comment

After releasing pre-draft proposed rules for unofficial comment to gauge the initial reaction of the public, Maine's Office of Marijuana Policy (OMP) has now released the official no-longer-in-draft-form proposed rules for real comment. In other words, rulemaking has begun. With a public hearing scheduled for May 23 in Portland, and all public comment due by 5:00 pm on Sunday, June 2, perhaps we can expect rulemaking to be complete and these major substantive rules to be back in front of the Maine Legislature for approval sometime in June, during this session?

The OMP has conveniently posted all of the unofficial comments received in response to the draft rules, and their responses, online here. This provides some interesting insights, and some very predictable ones, into what the different stakeholders care about, and how the State plans to deal with these concerns. Also, kudos to the OMP for using Google Docs – very practical and mainstream for government!

Welcome to Our Blog (and, What We’re All About)

Welcome to the Cannabis Law and Policy Update! You can expect updates and commentary on a potpourri of marijuana and hemp happenings at the state and federal level. We will be primarily focused on the law (since we’re lawyers), but in the broadest sense. Think everything from court decisions to legislation to regulation to enforcement, with our reactions and some practical advice sprinkled throughout.

At the moment, every week seems to bring some significant development in the world of cannabis law and policy. Maine’s rulemaking process for adult use marijuana is heating up, which means that a (legal) adult use industry is just around the corner; the legality of hemp and CBD is a complete rollercoaster ride; the Legislature is continuing to fix and tinker with Maine’s medical and adult use marijuana laws; and the feds remain curmudgeons all around. We’ll be hitting on specific angles in this arena all the time, so check back frequently and subscribe.