(Photo by Ethan Miller/Getty Images)

Policy, politics and progressive commentary

The Nevada Supreme Court heard arguments Tuesday on whether a referendum on public funding for the proposed A’s stadium in Las Vegas should be allowed on the November ballot, and whether the Board of Pharmacy’s listing of cannabis as a Schedule 1 substance is at odds with the Nevada Constitution. 

Attorney Bradley Schrager, representing former union officials Danny Thompson and Thomas Morley and other backers of the baseball stadium, argued a ballot initiative from Schools Over Stadiums (SOS), a political action committee tied to the Nevada State Education Association, inadequately describes what it intends to achieve. The initiative asks voters to disapprove up to $380 million in publicly financed bonds and tax credits pledged by lawmakers to build the stadium.  

Judge James T. Russell of Carson City ruled in November the petition’s explanation must include the entire text of Senate Bill 1, which state legislators passed last year in a special session. The measure facilitates the relocation of the Oakland A’s baseball team to a new stadium, built in part with public funds. Russel enjoined the SOS PAC from circulating the petition, which requires 102,000 signatures by June 26 to be eligible for the November ballot.  

The Supreme Court must decide whether the petition’s explanation, which cites only sections of the law to be eliminated, is sufficient or must include the entire statute it seeks to change.

 Justice Lidia Stiglich likened SB 1 to a car. “Don’t the voters need to know the whole car to know how many wheels you’re taking off?” 

“People need to be informed of what this excision would do,” said Bradley Schrager, the attorney arguing on behalf of the stadium supporters.

Nevada law limits the explanation on an initiative petition to no more than 200 words. How much time is a registered voter standing in a grocery store parking lot likely to spend reading an initiative petition explanation? 

“I personally have gathered thousands of petition signatures over the years,” Chris Daly of NSEA said after the hearing. “Maybe one out of 100 folks that come along would read a 200 word paragraph. I have never had a person read the entire petition.” 

Daly says the lawsuit’s backers are doing whatever they can to derail the petition.

Oakland A’s owner “John Fisher does not pay Bradley Schrager because he cares about the finer points of constitutional law in Nevada,” Chris Daly of NSEA said in an interview after the hearing. “That’s not what’s happening here. That’s the meat of what the Supreme Court justices need to decide, and hopefully quickly. What this has been about from the beginning is delay, driving up our bills, and keeping this off the ballot.” 

The real issue, Daly says, is whether SOS PAC will have time to collect 102,000 signatures to qualify for the November ballot. 

“If the ruling is in our favor we have maybe three weeks. If it’s against us we need it very soon,”  Daly said, adding the PAC can refile the petition, based on the Court’s ruling. 

“Part of the reason we didn’t do that after the District Court case is we got no guidance on what would work,” he said. “What we did not want to do is refile and a month later be in the same place.” 

Emerson College Polling reported this week that 52% of likely Las Vegas voters oppose the use of public money for the baseball stadium while 32% were in support and 16% were uncertain. 

Daly says support is likely even weaker in Northern Nevada and rural counties. “There’s almost no benefit for other parts of the state. If we qualify for the ballot we’re going to win.” 

Cannabis conundrum 

Marijuana is legal in Nevada, for both medicinal and recreational purposes, but the state’s Board of Pharmacy is still clinging to the drug’s federal designation as a Schedule 1 substance, meaning it has a high potential for abuse and no recognized medical benefit.  

Justice Kris Pickering noted that designation is inconsistent with the Constitution, which voters amended in 2000 to allow for medical use of marijuana. 

The Board of Pharmacy, an executive branch agency, regulates pharmacies, which do not dispense cannabis. The board cannot license anyone to sell or use marijuana. In 2019, lawmakers approved the creation of the Cannabis Compliance Board to regulate the drug. 

Pharmacy board counsel argued that in other states where medical marijuana is legal, lawmakers have directed the board to remove the drug from Schedule 1, adding Nevada lawmakers have not done so. 

“Fundamentally, it’s about the executive branch engaging in a legislative function – basically regulating in a place where it shouldn’t be regulating anymore,” Chris Peterson, legal director of the American Civil Liberties Union of Nevada said after the hearing. “The board regulated cannabis for a long time, fighting the war on drugs. But there have been a lot of changes in the law in the last 20 years and the board has stayed back in the 90s.” 

Attorneys for the Board of Pharmacy are asking the Supreme Court to reverse Clark County District Judge Joe Hardy’s order to remove cannabis from Schedule 1 and to rule on whether the board must pay the ACLU’s legal fees, as ordered by Hardy.  

The Court took both cases under advisement. 

Note: This story was updated to correct the attribution of a quote made by Justice Lidia Stiglich that was originally credited to Chief Justice Elissa Cadish. 

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(Photo: Claudia Weingart/EyeEm/Getty Images)

Policy, politics and progressive commentary

Hundreds of pages of recently released documents provided by the Department of Health and Services affirm what the overwhelming majority of the public has known for decades: Marijuana is therapeutically useful. And its harms are not on par with those of heroin — which federal regulations currently consider it akin to — or even alcohol.

Those were the explicit conclusions of the nation’s top federal health agency, along with the Food and Drug Administration and the National Institute on Drug Abuse, in a letter calling on the Drug Enforcement Administration to remove “botanical cannabis” from its Schedule I prohibitive status in the federal Controlled Substances Act.

By definition, Schedule I substances are federally criminalized because they possess “no currently accepted medical use in the United States,” a “high potential for abuse,” and “lack accepted safety under medical supervision.” Since 1970, Congress and other federal bureaucracies have insisted cannabis remain in this strict category. But now the nation’s top federal health agencies are changing their tune.

Health and Human Services, which was tasked by the Biden administration in 2022 to review the federal designation of cannabis, based its conclusions in part on the real-world experiences of over “30,000 health care practitioners authorized to recommend marijuana” under state law and the more than 6 million state-registered cannabis patients they serve.

“The vast majority of individuals who use marijuana are doing so in a manner that does not lead to dangerous outcomes to themselves or others,” the agency concluded. “No safety concerns were identified in our review that would indicate that the medical use of marijuana poses unacceptably high safety risks for the indications where there is some credible scientific evidence supporting its therapeutic use.”

Department officials added, “The risks to the public health posed by marijuana are low compared to other drugs of abuse,” such as benzodiazepines — a Schedule IV drug — or alcohol, which isn’t scheduled at all.

Of course, the public has long been aware of this reality. Thirty-eight states regulate medical cannabis access and 24 states — home to 53 percent of the U.S. population — have legalized adult-use marijuana markets. Most of these statewide policy changes were enacted by voters at the ballot box.

Nationally, 70 percent of Americans say that cannabis ought to be legal for those age 21 or older. And the majority agree that “alcohol is more harmful to a person’s health than marijuana.”

Nonetheless, for more than five decades, the federal government and its  agencies have steadfastly refused to budge on this issue. As recently as 2016, the DEA — which has the final say on cannabis’s federal drug designation — said that there’s no compelling reason to remove marijuana from its Schedule I prohibitive status.

Now, the ball is in the DEA’s court once again. Will the agency continue to cling to its long-held “flat Earth” position? Or will it finally take steps to move marijuana policy into the 21st century?

Time will tell. But regardless of the outcome, it’s clear the American public has already made up its mind.

This column was originally published in OtherWords.

The post Will the DEA finally abandon its ‘flat earth’ cannabis policy? appeared first on Nevada Current.

James Humm (Photo: Governor's Office of Economic Development)

Policy, politics and progressive commentary

Gov. Joe Lombardo announced Tuesday that James Humm will be the new Executive Director of the Cannabis Compliance Board. 

The position is currently held by Tyler Klimas, who is leaving to start a cannabis and hemp consulting company. Klimas is bound by a one-year cooling off period during which he cannot represent certain establishments in the state. 

“I approached the governor’s office in September and let them know I’d be transitioning out,” Klimas said via phone. “So we’ve worked over the last couple of months to put a transition plan in place and he appointed Jimmy Humm, who I’m with right now and who’s going to take over the role.”  

“Jimmy has done exemplary work at the Governor’s Office of Economic Development, and I look forward to Jimmy bringing his nuanced understanding of state government and industry issues to his new role,” Lombardo said in a news release. 

Humm has worked at GOED since 2019, first as Director of Compliance and Regulatory Affairs, and most recently as Director of Public Policy and Government Affairs. 

“During his tenure at GOED, Humm served as the agency’s point person in the Nevada Legislature, where he successfully passed several economic development related bills and contributed to the approval and signage of several others,” the news release said.

He previously served as the Deputy Chief of Staff and Legislative Liaison for the Office of Attorney General. He also worked as Director of Operations for a Las Vegas law firm. 

“I am humbled and honored to be appointed by Governor Lombardo to serve in this role,” Humm said. “I look forward to joining the incredible team at the Cannabis Compliance Board and executing the Governor’s agenda to ethically regulate this burgeoning industry.”

The post Klimas out, Humm in at Cannabis Compliance Board  appeared first on Nevada Current.

“Was there diversity or was it just people the governor wanted to invite?” asked Democratic Sen. Roberta Lange. (Photo: Trevor Bexon, Nevada Current)

Policy, politics and progressive commentary

State senators on Friday questioned the gender and ethnic diversity of a working group requested by Gov. Joe Lombardo to weigh in on legislation and address cannabis industry complaints about the state’s regulatory apparatus and competition from the illegal trade.

“From day one of Governor Lombardo’s administration, there has been, and this is no criticism of the regulators, but it is what it is – there’s been one issue after another,” Lombardo’s general counsel, Chris Nielsen, told the Senate Committee on Commerce and Labor of Lombardo’s formation of a working group just weeks ago to address provisions of Senate Bill 69.   

“Was there diversity or was it just people the governor wanted to invite?” Sen. Roberta Lange asked Nielsen. 

“From our perspective it was diversity in that we wanted to get a cross section of industry or individuals that represent growers, retailers, the whole gamut of the cannabis industry,”  Nielsen responded. 

“Was there diversity in gender?” Sen. Pat Spearman, chairperson of the Senate Committee on Commerce and Labor, asked Nielsen, who named two women who participated in the working group. 

Members of the group included Nielsen of the governor’s office; Sen. Scott Hammond; David Goldwater, a former lawmaker and dispensary owner; Brett Scolari of Strategies 360, which represents licensees; Will Adler of the Sierra Cannabis Coalition; Layke Martin, executive director of the Nevada Cannabis Association and the organization’s attorney, Chelsea Capurro. 

The cannabis “industry’s business plan was perfected by people who are now in jail, or had felonies and could never qualify to buy a license,” Spearman asserted, referring to pioneers of the illegal trade. “If you look at the licensees, there’s very little diversity.” 

Hammond, a Republican, says he was asked “who should be in the group,” and thought of “the ones that I see here often in these meetings around cannabis,” adding he wanted to keep it small, given time limitations.  

Lombardo’s spokesperson did not respond to requests for comment.

“I’m not calling you racist,” Spearman said to those who participated in the governor’s work group. “I’m saying we have got to be intentional about diversity, equity, and inclusion, and if we’re not, we’re gonna keep doing the same thing over and over again. There’s always going to be a small group, pulled together at the last minute, and, oh, we just pulled folks together but it never occurs to anybody about diversity.”

“The people who were born in privilege, really have no idea what I’m talking about,” Spearman said.

Goldwater says Spearman’s concerns are misplaced because the Nevada Cannabis Association, which represents a variety of licensees, took part in the working group.  

“The working group makes suggestions. The Legislature, which is diverse in gender, as Sen. Spearman pointed out, has the final say and can accept or reject the group’s ideas,” he said. 

An amendment offered by Lombardo’s working group would reduce the amount of cannabis excise tax awarded to local governments each year from $5 million to $2.5 million. The other $2.5 million would be diverted to rooting out illegal weed growers and dealers.  

Organizations representing local governments testified in opposition to the diversion. 

“NACO (the Nevada Association of Counties) was not asked or involved in the working group on this legislation,” testified Vinson Guthreau, executive director.

“Like NACO, we were not involved in the discussions this time but are looking forward to that,” said Steven Woods of the Nevada League of Cities and Municipalities.

The working group’s amendment would also give the governor the ability to appoint the CCB’s executive director, who is currently chosen by the board. 

The committee took no action on the measure.

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"...we’re trying to up the possession limit and allow folks to be able to engage in that kind of bulk buying if they’d like, whether it be for medical reasons or for none of our damn business," said state Sen. Dallas Harris. (Photo: Trevor Bexon / Nevada Current)

Policy, politics and progressive commentary

Lawmakers in Carson City are considering a measure that would more than double the amount of cannabis recreational users can possess and dispensaries can sell at one time. It would also eliminate a blanket ban on employment in the industry for certain felons and give regulators discretion on their applications. 

“At some point you’ve served your time,” Democratic Sen. Dallas Harris told the Senate Commerce and Labor Committee Monday, adding the inability of ex-felons to find work often commits “them to another life of crime…” 

Democratic Sen. Melanie Scheible noted current law does not prohibit all felons from employment, but only those with the most serious charges, and those with more than one felony conviction. Scheible, a former prosecutor, noted drug offenses are often stacked, resulting in multiple convictions for a single event. 

Tyler Klimas, executive director of the Cannabis Compliance Board, said of the 40,000 work card applications processed in the last three years, 16 have been denied, and another 164 individuals canceled their applications after background checks prompted questions from regulators. 

Harris noted it’s impossible to know how many convicted felons were dissuaded from applying for work cards because of the law’s restrictions. 

Senate Bill 277 would allow all dispensaries to serve medical and recreational clients.

It would also permit adults, both recreational and medical users, to possess up to 2.5 ounces of cannabis, more than twice the current one ounce limit for recreational buyers, a threshold that prevents buyers from taking advantage of sales, like consumers of other products. 

By comparison, Oregon has a two-ounce limit on possession. Registered patients can buy up to 24 ounces.  

“There’s no assumption that if I’m buying a 48-pack of beer, I must be doing something illicit with it afterwards,” Harris said. 

Testimony in opposition to the measure suggested a cannabis buyer can purchase multiple ounces by visiting more than one dispensary. 

“Please do not do that,” Harris responded. “That is currently a felony. …hence why we’re trying to up the possession limit and allow folks to be able to engage in that kind of bulk buying if they’d like, whether it be for medical reasons or for none of our damn business.”  

Harris suggested the ability to take advantage of deals and stock up, is “going to make you less likely to try and go to the proverbial corner boy, so that you can get your two ounces because you don’t want to have to go back and shop over the next month.”

The committee took no action on the measure.

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Growers say the sales price has fallen but the state's calculated "Fair Market Value" on which wholesale taxes are based has not. (Photo by Ethan Miller/Getty Images)

Policy, politics and progressive commentary

Nevada’s marijuana growers say they are being overtaxed and on the brink of going out of business, thanks to a tax formula that relies on the state’s calculation of the fair market value of a pound of cannabis, rather than its actual wholesale price. Competing proposals to tweak the calculation would each cost the state millions of dollars a year in tax revenue designated in part for education. 

“Put simply, growers are selling a pound for $1,000 and paying taxes as if they sold it for $2,000,” Assemblywoman Shea Backus told her colleagues on the Assembly Revenue Committee Tuesday, as she presented the committee-sponsored bill. 

The Department of Taxation publishes the Fair Market Value (FMV) of cannabis products twice a year, based on data that may be three months old at the time it’s released. Cannabis prices have plummeted rapidly in recent years, leaving the state to rely on stale data. 

The FMV is currently $1,944 for a pound of cannabis flower. The actual wholesale price is half of that according to testimony from John Ackell of Zenway Corp, a cultivation facility in North Las Vegas.

“However, the ‘Fair Market Value’ price has not dropped a similar amount. As a result, our effective tax rate has averaged between 25% and 30%,” Acklell testified. “On some individual sales, the tax has been as high as 60%. With effective tax rates as high as this, it has not been possible to meet all our other obligations.” 

Ackell says Zenway is behind on its taxes and has a payment plan with the state. He says basing the Wholesale Cannabis Tax on actual sales rather than an amount set by the state would give cultivators an effective tax rate of 15%.

Safi Boyajian, a former licensee of Flower One, a cultivation company that recently underwent bankruptcy proceedings in Canada, told the committee the company has paid approximately $30 million in wholesale marijuana taxes in Nevada since 2019. 

“That represented 24% of our revenue. If the intent was to truly charge us 15% of our wholesale sales, that would have equated to about $18 million of taxes collected, meaning we technically overpaid by over $11 million dollars,” she said. “This amount would have been able to potentially save the company and prevent all of these people including myself from losing a very large amount of money.”

Gold mine or money pit? 

Nevada’s legal marijuana industry was expected to generate an endless stream of profit for the individuals granted highly-coveted licenses by the state. The reality in recent years, with the exception of a Covid-era boom, has been sobering for the fledgling industry.

In 2021, sales totaled more than $1 billion, but fell 16% last year and are down 19.5% in 2023.  

“Our largest competition being the unlicensed illicit market, which doesn’t have tax obligations, doesn’t have the cost of compliance, doesn’t have cost of testing, they can sell for much, much cheaper,” testified Layke Martin, executive director of the Nevada Cannabis Association, formerly the Nevada Dispensary Association. 

A presentation from the NCA noted the cost of regulation, including “excessive fines, fees and time and effort charges” has skyrocketed in recent years. The state’s time and effort billings to licensees totaled $388,300 in 2019, $1.7 million in 2022, and are projected at $2.54 million for 2023, based on data from the state. 

Given the illegal federal status of cannabis, licensees lack the ability to employ standard business strategies such as writing off expenses, yet they are on the hook for federal payroll and income taxes. 

Assembly Bill 430 is intended to reduce the burden on cultivators by setting a flat 15% tax on wholesale transactions between unaffiliated companies, while transfers within vertically integrated operations would be taxed in accordance with the state-issued FMV, a proposal that gives growers no relief on sales to affiliated companies. The measure would also require the state to publish new FMV data quarterly rather than twice a year. 

The proposal is based on the formula used in Colorado and has the support of the NCA. 

‘Sticker shock’

“The simplest way to go forward, as every state has done except Colorado, is eliminate the wholesale tax,” suggested Will Adler, a lobbyist representing the Sierra Cannabis Coalition, which is seeking to eliminate the wholesale tax and increase the current retail tax on recreational sales from 10% to 15% to capture some of the lost revenue.  Washington eliminated its wholesale taxes and now charges consumers a 37% retail tax on cannabis products. 

The proposal met with opposition from the NCA.

“High taxes are already the number one complaint we get from our customers,” testified Brandon Wiegand, president of the NCA and chief operating officer of Thrive Cannabis Marketplace. 

Adler argues customers are already paying a higher price that includes the cost of the wholesale tax. 

Some lawmakers raised concerns about the loss of revenue to the state under both proposals. Cannabis sales contributed $147 million to education in 2022. 

The 10% retail tax imposed on recreational sales generated $89 million in 2022. Revenue is  distributed directly to education funding. 

The 15% wholesale tax on sales from cultivation facilities to other licensees generated $63 million in 2022. Revenue goes to the operating budget of the Cannabis Control Board and to local governments throughout the state to offset the effects of the legal industry. 

The state sales tax of roughly 8% imposed on cannabis sales generated $77 million in 2022. 

Taxing arms-length transactions at a flat 15%, rather than based on the state’s FMV, would cut tax revenue by $19 million in fiscal year 2023, followed by annual increases of several million dollars a year, according to estimates provided by the Sierra Cannabis Coalition. 

The proposal to eliminate wholesale taxes and increase the retail tax would result in a loss of $15 million in FY 2023, also followed by annual increases of several million dollars a year. 

Department of Taxation officials testified eliminating the wholesale tax would reduce the department’s workload considerably. 

The committee took no action on the measure.

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Studies indicate marijuana use among youth declines after legalization. (Carol Yepes, Getty Images)

Policy, politics and progressive commentary

“What about the children?”

This was arguably the most frequently posed question by critics in the years prior to state-level marijuana legalization. Many legalization opponents presumed that legalizing cannabis for adults would lead to an increase in marijuana use among teens.

But ten years following the first states’ decisions to legalize, data conclusively shows that these fears were unfounded.

For example, recent data from the Centers for Disease Control and Prevention determined that the percentage of high schoolers who report having used cannabis over the past 30 days actually fell from 23 percent in 2011 to 16 percent in 2021.

Likewise, the percentage of teens who acknowledge having ever tried cannabis has similarly declined. These downward trends coincide with the period when over 20 U.S. states legalized cannabis use by adults.

Those states have experienced similar declines in underage use. According to the findings of a 2020 study published in in the Journal of Adolescent Health, the adoption of state-level legalization laws “predicted a small significant decline in the level of marijuana use among [youth] users.”

Another study published in JAMA Pediatrics similarly concluded: “Marijuana use among youth may actually decline after legalization for recreational purposes,” since “it is more difficult for teenagers to obtain marijuana as drug dealers are replaced by licensed dispensaries that require proof of age.”

In fact, data from California, Colorado, and other legal states confirms that licensed cannabis retailers seldom if ever sell marijuana products to customers who lack proper ID.

Data published last year in the Journal of Safety Research reported that in California, where the adult-use market has been legally regulated since 2016, “there was 100% compliance with the ID policy to keep underage patrons from purchasing marijuana directly from licensed outlets.”

In short, states’ real-world experience with marijuana legalization affirms that these policies can be implemented in a way that provides regulated access for adults while simultaneously limiting youth access and misuse.

That’s one among many of the reasons why public support for adult-use cannabis legalization has risen dramatically over the past decade and remains at record highs.

To date, not a single state that has implemented legalization has reversed course. That’s because these policies are working largely as politicians and voters intended — and because they are preferable to marijuana prohibition.

Ultimately, common sense regulation allowing for the legal, licensed commercial production and sale of cannabis best addresses adult consumers’ demand while keeping marijuana products largely out of the hands of young people.

By contrast, the continued criminalization of cannabis only compounds the public safety risks posed to young people and others by the unregulated marketplace.

This column was originally published in OtherWords.org

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Senate Bill 195 is designed to encourage “cooperation between regulators and the industry, just like we see in gaming,” said the measure's sponsor.  (Photo by Uriel Sinai/Getty Images)

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Nevada’s Cannabis Compliance Board is thwarting growth of the industry according to experts, who say the state’s practice of charging licensees for regulators’ time and effort amounts to double billing because the agency is already fully funded via an excise tax paid by licensees. 

“It’s fully funded by that 15% wholesale excise tax on cannabis products and the $63 million that’s brought in annually from that tax is more than six times the CCB’s operating budget,” Layke Martin, executive director of the Nevada Cannabis Association, testified Wednesday before the Senate Commerce and Labor committee. 

Tyler Klimas, executive director of the agency, said the CCB’s $10 million budget is not covered by $8 million generated in excise tax.

“The CCB bills licensees for inspections and audits, travel time, reviewing security footage, even communicating with licensees to resolve a compliance issue,” Martin told lawmakers. “If you’re a licensee and you have a meeting with the CCB about an issue, you will get a bill from the CCB for their staff time at the hourly rate of $111 per hour. It doesn’t matter if the staff person is brand new, they’re still billed at the rate of $111 per hour. If there are three CCB staff at the meeting, you’ll get a bill for $333, the hourly rate for all three people.

Martin says the charging practice makes it “impossible for licensees to budget for these expenses, and it’s challenging for them to control costs,” adding licensees are spending “tens of thousands of dollars” on fees monthly, rather than “growing their businesses and hiring employees.” 

“Not only are these fines and fees a threat to the existing industry, but they will create significant challenges for any new entrepreneurs trying to open up a licensed cannabis business in Nevada,” Sen. Rochelle Nguyen told the Senate Commerce and Labor Committee during a hearing on Senate Bill 195. 

“In total, we have paid the CCB approximately $47,000 in time and effort fees since our 2021 inspection,” testified Koaunin Villa of Green Life Productions in Pahrump, who said her company was forced to defend its methods to the state before getting the green light to continue the process its employed for eight years.

SB 195, which has seven primary sponsors, including Nguyen, would prohibit the state from engaging in time and effort billing. It would also encourage self-reporting of violations and incentivize compliance.

Nevada’s cannabis industry employs about 18,000 people and contributed $147 million to the state education fund last year, according to Nguyen, who says the industry has an annual economic impact of $2 billion a year. But sales are down by as much as 20% from last year, she said. 

Senate Bill 195, sponsored by Nguyen, is designed to encourage “cooperation between regulators and the industry, just like we see in gaming,” she testified.  

Since the state’s creation of the CCB in 2019, “there have been many successes and there have been many growing pains,” Nguyen said.  “I expect that we will probably be back here year after year session after session trying to clean up what is a baby board or baby commission.” 

Nguyen said the intent behind the CCB’s creation was to emulate the Gaming Commission, “and we’re just not seeing that and I think that has nothing to do with the people that are a part of the board.”

Nguyen noted licensees not only compete with one another, but with an unlicensed market that makes up an estimated half of sales. “Those people are obviously not paying taxes. Those people are not regulating and testing the products that are going out. When we have an over- regulated industry that doesn’t allow people to efficiently and effectively and safely grow, I think you will see an even bigger growing market of black market and gray market sales.”

A goal of SB 195 is to encourage self-reporting, conserve state resources, and incentivize compliance, according to Martin, who says the current regulatory system offers licensees no benefit for self-reporting violations.

Brandon Wiegand, COO of Thrive Cannabis Marketplace, characterized the CCB as taking a “hostile stance and aggressive approach” toward the industry, and alleged “the behavior of the CCB has created a culture of fear that permeates the industry, impacting licensees and their employees.”

CCB officials refuted some of the allegations.  Klimas cited five instances where self-reported violations resulted in fines.

“If the regime feels like it’s tough, it’s because it is,” he said, testifying from a neutral position on the bill.

Note: The original version of this story misidentified Brandon Wiegand, who works for Thrive Cannabis Marketplace, not the Source. 

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The banking bill clarifying that federal regulators can't penalize banks for doing business with legal marijuana retailers has passed the House seven times since its first introduction in 2019, but the Senate has never passed it. (Carol Yepes, Getty Images)

Policy, politics and progressive commentary

The annual Defense Department policy bill members of Congress released last week did not include measures to loosen federal marijuana restrictions, to the disappointment of advocates.

That leaves few avenues to pass marijuana measures seen as boons to states where the drug is legal before Congress adjourns for the year.

As one of the last must-pass bills Congress would consider while Democrats still control both chambers, the defense bill was a potential target for advocates of legalizing marijuana to attach two bills.

One would clarify that banks lending to legitimate marijuana businesses in states with legal markets are not in violation of federal law. The other would provide federal funding to help states expunge criminal records of people convicted of offenses before the substance was made state-legal.

Though the bulk of the defense bill deals with authorizing Pentagon programs, it is often filled with additional policy measures.

But when 4,400 pages of text for the 2022 bill were released last week, neither marijuana proposal was included.

With so little time left in the session, the path to passage is now either as part of a year-end spending bill –— another popular target for legislation — or on its own, Morgan Fox, the political director for the cannabis advocacy group National Organization for the Reform of Marijuana Laws, said in an interview.

“I’m glad that we still have other options,” Fox said Wednesday. “It’s pretty disappointing.”

A vote on a standalone marijuana bill is unlikely, with the Senate in session only a handful of days this year and a list of priorities remaining, including the year-long government funding bill and a measure to clarify election laws.

Split with states

Though the federal government places marijuana on its list of the most restricted controlled substances, 21 states have legalized recreational use.

That policy split leads to unique challenges for state-legal businesses in areas like banking, where some financial institutions refuse to work with the marijuana industry out of fear they would violate federal law.

The banking bill, introduced by U.S. Rep. Ed Perlmutter, a Colorado Democrat retiring at the end of the year, would clarify that federal regulators could not penalize banks for doing business with marijuana retailers in compliance with their states’ laws.

The banking bill has passed the House seven times since its first introduction in 2019, but the Senate has never passed it.

The streak in the House may be in danger as Republicans take over next year. Despite its bipartisan support and a 321-101 vote in favor last year, the legislation could face long odds next year if Ohio Republican Jim Jordan becomes the chairman of the House Judiciary Committee, as expected. Jordan has consistently voted against marijuana legalization efforts, including against the banking bill.

Senate Majority Leader Chuck Schumer, an advocate of liberalizing marijuana laws, told reporters before the defense bill’s text was released Tuesday he was working on getting the banking measure passed.

“It’s a priority for me,” Schumer said. “I’d like to get it done. We’ll try and discuss the best way to get it done.”

Senate Minority Leader Mitch McConnell, a Republican from Kentucky, opposed including marijuana provisions in the defense bill, listing the banking bill as an item that did not belong there.

“We’re talking about a grab bag of miscellaneous pet priorities — making our financial system more sympathetic to illegal drugs,” he said. “If Democrats wanted these controversial items so badly, they had two years to move them across the floor.”

Schumer resisted bringing the banking bill to the floor this Congress as he sought to instead pass a broader federal legalization measure he introduced with fellow Senate Democrats Cory Booker of New Jersey and Ron Wyden of Oregon.

“Although the SAFE Banking Act is common-sense policy that I support, it has to be coupled with strong restorative justice provisions that seek to right the many injustices experienced by Black and brown communities as part of our nation’s failed war on drugs,” Booker said in a statement last year.

A spokesman for Booker did not return a message seeking comment Wednesday.

Schumer’s advocacy would be crucial to passage, Fox said, though the deference to a more comprehensive bill may have hurt its chances this year.

“Having support of Senate leadership I think was really important,” Fox said. “I wish they’d gotten the ball rolling on this way earlier in the session, instead of waiting until after the (Schumer-Booker-Wyden bill) was introduced.”

While the more comprehensive measure stalled, advocates hoped packaging in a year-end bill the bipartisan banking measure with a bill to provide $20 million in grants to help states process expungements would suffice.

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People of color and women are still underrepresented in the cannabis industry. (Photo by Kym MacKinnon on Unsplash)

Policy, politics and progressive commentary

The Fair Access for Cannabis Small Business Act was introduced by Democratic U.S. Sen. Jacky Rosen would expand programs and loans by the Small Business Administration (SBA) to the cannabis industry operating in states where it is legalized. 

“The unfair barriers to basic federal support and resources have hurt our state’s legally-operating cannabis small businesses,” Rosen said in a statement. “This legislation will level the playing field so that small cannabis businesses – including those owned by people of color, women, and veterans– have access to the same federal resources and loans that other legal businesses are entitled to.”

The legal cannabis industry is notorious for excluding the people most negatively affected by America’s war on drugs, particularly Black Americans and women. 

Even now, Black Americans are more than three times more likely to be arrested for pot-related offenses compared to white Americans nationally. In states that have legalized recreational use, where cannabis arrests have dipped, Black Americans are still about twice as likely to be arrested for cannabis-related offenses compared to their white neighbors, according to a 2020 report from the ACLU.

More than 62% of women in federal prisons are incarcerated for nonviolent drug offenses. 

But people of color and women are still underrepresented in the cannabis industry. 

Nationally, women own only 22.2% of cannabis companies, and racial minorities only 15.4%, according to the fourth annual report of Diversity, Equity & Inclusion in the Cannabis Industry by MJBizDaily. Nonwhite ownership decreased from this year to 15.4% from 20.7% in 2021, according to the report. 

Few states address social equities in the industry. 

Of the 39 states with legal cannabis programs, only 38% have created social equity programs, and Nevada is not one of them, according to the report.  

“Lack of access to capital and banking services remain the greatest barriers to entry into the cannabis industry,” said Layke Martin, the executive director of the Nevada Cannabis Association, in the statement from Rosen’s office. 

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