Advocates ask Pelosi, Hoyer to press pause on cannabis banking

Welcome to the POLITICO Pro Cannabis preview newsletter. Free access to the preview newsletter is available through Sept. 30, 2019.

Quick Fix

— Legalization advocacy groups sent a letter to House leaders calling for a postponement of the floor vote on cannabis banking legislation, expected next week. Their primary concern: that the legislation fails to address criminal justice reform.


— Meanwhile in the Senate, many senators don’t have any idea what might be added to the cannabis bill that Sen. Mike Crapo plans to markup in the Senate Banking Committee.

— New York state Sen. Liz Krueger says the vaping crisis won’t deter marijuana legalization efforts in the legislature, though concerns about vaping are already shaping proposals.

BUT FIRST…

IT’S WEDNESDAY, SEPTEMBER 18. WELCOME TO POLITICO’S DAILY CANNABIS NEWSLETTER. Banned on TikTok for hemp content? You’re not alone. At least you have our newsletter. Be sure to keep sending us cannabis news, tips or feedback – and spotify recommendations — at [email protected] or @natsfert. And follow us on Twitter: @POLITICOPro. Read about our mission in our inaugural issue.

Driving the Day

FIRST IN POLITICO: LEGALIZATION ADVOCATES CALL FOR POSTPONEMENT OF BANKING VOTE — Criminal justice reform organizations sent a letter to House Speaker Nancy Pelosi and Majority Leader Steny Hoyer calling for the postponement of a vote on the SAFE Banking Act — which would provide protections for banks working with cannabis-related businesses — until comprehensive marijuana legislation that includes criminal justice reform gets a vote on the House floor.

The letter from Drug Policy Alliance, Center for American Progress, the ACLU, Human Rights Watch and other groups — first reported by POLITICO — comes after Hoyer's office said he planned to bring the bill to the House floor next week. The groups support the MORE Act, a comprehensive marijuana legalization bill sponsored by Judiciary Chairman Jerry Nadler (D-N.Y.) that includes social equity provisions and criminal justice reform. It would also address the issues the banking bill targets.

"We are concerned that if the House approves this bill, it will undermine broader and more inclusive efforts to reform our country’s marijuana laws," the letter says.

What’s the broader context? The tension between the two bills is longstanding. Some advocates see the SAFE Banking Act as a first step to larger cannabis legislation, especially for moderate Democrats or Republicans who just aren't ready to vote for full legalization yet. But other advocates including the Drug Policy Alliance and the Center for American Progress want to hold off on an industry-focused bill and focus on comprehensive legislation.

"[The SAFE Banking Act] only allows really for industry folks to flourish while people are still in jail for marijuana,” CAP's Maritza Perez said.

Legalization advocates are divided on banking legislation: NORML Policy Director Justin Strekal said his organization "tactically disagree[s]" with CAP and DPA, despite their common support of the MORE Act.

"This is going to be the first vote on the floor of the House of Representatives on standalone cannabis-associated legislation," Strekal said. "It would allow small and medium-sized businesses a much more level playing field to compete with the much more well-financed interests who are moving into the cannabis economy."

On The Hill

SENATORS ON BANKING — Following last week’s announcements that cannabis banking legislation is heading to the House floor and a Senate committee markup, Natalie went to Capitol Hill to see what the Senate version could look like. Banking Committee Chairman Mike Crapo (R-Idaho) has said it could be quite different from the proposed SAFE Banking Act. Every co-sponsor we spoke with, including Sens. Cory Gardner (R-Colo.), Kevin Cramer (R-N.D.) and Jeff Merkley (D-Ore.) seemed pleased that the issue of cannabis banking is progressing but didn't know specifics.

“You have more fresh news than I have on it,” said Merkley, as he hurried to a committee hearing.

And Gardner said he hasn’t seen any of the changes, but added “we know some of the areas of work that we have to do.” He declined to elaborate or say when the markup might happen.

— Meanwhile, SAFE has a new cosponsor: Sen. Tina Smith (D-Minn.). She brings the total number of sponsors to 32: 25 Democrats, five Republicans and two Independents. Smith told POLITICO she decided to co-sponsor the bill after speaking “with Minnesota banks, credit unions, business owner and constituents.”

“We cannot forget that as we seek to address the financial issues associated with the rapidly evolving cannabis industry, we need to also address the thousands of individuals who have spent time behind bars for involvement with marijuana,” Smith said.

SPEAKING OF SPONSORS — New York Democratic Reps. Jerry Nadler (D-N.Y.) and Jose Serrano (D-N.Y.) signed on to the VA Medicinal Cannabis Research Act. Nadler is also the lead sponsor of the MORE Act, the comprehensive marijuana legalization bill gaining support in the House. Veterans research, though, is another avenue the cannabis caucus and lobbying/advocacy circles say could gain some momentum on Capitol Hill this year. Nadler’s co-sponsorship has some weight, because most cannabis bills have to pass through the House Judiciary Committee, which he chairs.

And in completely un-banking-related news…

$2 MILLION PROPOSED FOR CBD RESEARCH — A Senate Appropriations subcommittee earmarked the funds Tuesday. The language was added by Merkley, ranking member on the agriculture subcommittee. The addition would provide $2 million for the Food and Drug Administration to research, evaluate and create regulations for hemp-based CBD. From here, the appropriations bill heads to a markup in the full Senate Appropriations Committee on Thursday.

And one quick note: On Tuesday, we wrote about a Wikileaf story that said Sen. Catherine Cortez Masto (D-Nev.) was advocating for a crackdown on THC vaping products. Her aides clarified that position with POLITICO, saying “The senator supports banning flavored e-cigarettes. She also believes vaping products must have more rigorous testing and verification by the Food and Drug Administration.”

The State of Marijuana

NEW YORK LAWMAKERS CONSIDER VAPING IN MARIJUANA LEGISLATION — State Sen. Liz Krueger told POLITICO New York’s Shannon Young this week that the vaping crisis won’t deter marijuana legalization proponents in the legislature from taking another shot in 2020. But concerns about vaping are already shaping a new version of the MRTA, the legalization bill that failed to pass earlier this year. We caught up with Krueger at the Cannabis Private Investment Summit in New York City on Tuesday. Here are some excerpts from our conversation:

What were some of the issues that held up legalization last session?

Krueger: Where the money was going. Executives always want to control all the money. [And] with alcohol you just do a breathalyzer. With THC, there's not an exact parallel. There were some concerns by suburban legislators, primarily because urban legislators don't actually think about intoxicated driving very often. We continue to discuss how to address those concerns. And I really feel that we can get past that with [district attorneys] and with suburban legislators.

Do you think all this news about the vaping crisis is going to make advancing marijuana legislation more difficult?

Krueger: I think it raises a new issue we need to confront, but frankly, we need to confront it. If you are in the vaping business, you better figure out how to make that a safe product or you’ll probably be regulated out of business.

Even though I've been told that I will never be able to get this legislation passed, I think we should combine outlawing tobacco with legalizing cannabis. There's enough research out there showing cannabis is less dangerous than alcohol or tobacco for me to believe that it's ridiculous to have it in the criminal system and that we should tax and regulate it like alcohol.

Are you hopeful about legalization passing next session?

Krueger: In order for this to pass, we need a serious commitment from the governor. Yes, you can get bills passed every once in a while when the governor doesn’t love them. But the legalization of cannabis, establishing a regulatory model for hemp and CBD, changing criminal justice laws — these are really actually very government-heavy responsibilities. We need to create a whole new state agency to oversee cannabis. We need the coordination with [several state agencies]. They report to him, not the legislature.

NEW YORK ENACTS EMERGENCY BAN ON FLAVORED E-CIGS — New York state health officials approved emergency regulations that ban the sale of most flavored e-cigarettes amid a spike in youth vaping and a growing number of lung illnesses tied to illicit devices, POLITICO New York’s Shannon Young and Amanda Eisenberg report. The rules make it illegal for anyone to possess, manufacture, distribute, sell or offer for sale any flavored e-liquid or devices containing the product. The emergency regulations take effect immediately and will last for 90 days unless extended.

The rules don’t affect THC-vaping devices, even though New York health officials are investigating 74 cases of severe pulmonary illness among individuals who used at least one cannabis-containing vape product prior to getting sick.

UTAH MEDICAL MARIJUANA BILL PASSES HOUSE TOO — After passing unanimously in the state Senate, a bill that scraps a state-run medical cannabis distribution system passed unanimously in the House, too. The Deseret News reports that the bill’s co-sponsor Sen. Evan Vickers has received assurances that the governor will sign it.

ERRATA: CALIFORNIA GOV. DID ADDRESS MARIJUANA VAPES — Tuesday's newsletter said that California Gov. Gavin Newsom’s actions to deter vaping failed to address marijuana. In fact, Newsom’s executive order called for a public health campaign warning about potential risks from using both e-cigarettes and THC vapes. The governor ordered the state health department to spend $20 million from tobacco and marijuana taxes on advertising targeting teens, young adults and parents.

By the Numbers

$29 billion: That’s projected cannabis revenues in 2025, up from $10.3 billion last year, according to New Frontier Data’s 2019 U.S. Cannabis Report, the source for all of today’s numbers. That estimate assumes annual growth of 16 percent but does not account for any additional states authorizing medical or recreational sales or any changes to federal law.

$57.3 billion: That’s the projected volume of illicit cannabis sales in 2025, down from $64.3 billion last year.

17 percent: That’s the share of legal cannabis sales nationwide that California’s market is expected to account for in 2025. Florida is projected to be the next biggest market, with 12 percent of sales.

46.6 million: That’s the anticipated number of cannabis consumers in 2025, with projected 3 percent annual growth.

Movers and Shakers

Bruce Linton is joining Michigan medical marijuana company Gage Cannabis as executive chairman, and animal health CBD company Better Choice Company as a special adviser. He was previously the CEO of Canadian cannabis producer Canopy Growth. Meanwhile, the chairman of Canopy Growth expects the company to complete a search for the new CEO by the end of the year.

Hemp bio-tech company Trait Biosciences appointed its advisory board, which includes Keith Levy, former president of Mars Wrigley’s Global Business Development; Pete Carr, the president of Bacardi North America; and Genève Stewart, vice president of Natural Strategic Sales at Coca-Cola.

On the Calendar

The American Bar Association hosts a cannabis law conference for the first time Thursday and Friday. The two-day Chicago event From Regs to Riches: Navigating the Rapidly Emerging Fields of Cannabis and Hemp Law is sponsored by the ABA’s Tort Trial and Insurance Practice Section.

Pot-Pourri

— Chicago Mayor Lori Lightfoot proposed marijuana zoning rules that would ban public consumption and bar cannabis retailers from the city’s Central Business District. Lightfoot penned an op-ed on the zoning ordinance, explaining how her approach could benefit different communities.

— Despite marijuana’s federal illegality, universities across the U.S. are developing marijuana programs to prepare their students to work in the industry. Researchers hope to “identify where scientific gaps are and influence policy-making in state governments.”

— A St. Petersburg court released an American woman who was detained after bringing marijuana into Russia. She argued that she was a medical marijuana patient, but police said her doctor’s recommendation wasn’t valid in Russia.

Follow us on Twitter Paul Demko @pauldemko



Natalie Fertig @natsfert



Mona Zhang @zhangmona