For Maine and nearly a dozen other states, recreational marijuana is simultaneously entirely legal and entirely illegal. A new amendment aims to close the loophole that puts state-legal marijuana businesses at odds with the Federal Government. With the start of recreational sales on the horizon, the timing could be auspicious for Maine marijuana businesses
– but that’s just one of several recent developments in this booming industry.
Congress Votes to Protect State-Legal Marijuana
While 10 states and the District of Columbia have made adult-use marijuana fully legal, selling and using marijuana is still illegal under federal law. That leaves recreational cannabis businesses in a precarious position, fearful that federal authorities could shut them down even if they comply with state law.
A recent Congressional vote made a promising show of support for state-legal marijuana businesses and consumers. In late June, the House of Representatives voted 267-165 to approve a bipartisan amendment to the Commerce-Justice-Science spending bill for the fiscal year 2020. The amendment would prevent the Justice Department from using federal funds to interfere with state-run cannabis programs.
Similar measures were passed in 2014 to protect state-legal medical marijuana programs from federal interference. This new amendment would extend those same protections to states like Maine – those that currently allow recreational marijuana sales, or are on course to legalize it. It was introduced by Reps. Earl Blumenauer (D-OR), Tom McClintock (R-CA), and Eleanor Holmes Norton (D-DC).
If the amendment is included in the 2020 federal spending bill, the Department of Justice would be required to defer to the cannabis laws established by individual states. The Federal Government would be unable to use its funds to interfere with how states legislate the “use, distribution, possession, or cultivation of marijuana,” per the language of the amendment. Transporting legally-purchased marijuana across state lines would still be a violation of federal law.
Whether or not these protections will become law is far from certain. The amendment was easily passed in the Democratic-controlled House, but it’s unclear whether it will survive the Republican-controlled Senate. Even if the measure does get included in the final spending bill for 2020, it will only be in effect for one year.
Although there are few formal protections in place for state-legal recreational marijuana programs, it’s worth noting that cannabis companies currently operating in those states are at little risk of federal interference. For starters, public opinion is on their side: 62% of Americans support marijuana legalization, according to a 2018 survey by Pew Research Center.
During his confirmation hearing at the beginning of this year, Attorney General William Barr expressed his unwillingness to go after state-legal businesses, affirming that, personally, he would support a law that made marijuana illegal across the board. But Barr also acknowledged that if lawmakers could come to a decision about allowing states to make their own cannabis laws, he could support that too. Barr pledged not to target legal cannabis businesses, saying “to the extent that people are complying with the state laws—distribution and production and so forth—we’re not going to go after that.”
Congressional Hearing on Marijuana Reform Scheduled
Could the start of federally-legal marijuana be approaching? The House Judiciary Crime, Terrorism and Homeland Security Subcommittee is scheduled to meet on July 10th to discuss several pieces of current cannabis legislation. The hearing, which has been titled “Marijuana Laws in America: Racial Justice and the Need for Reform,” is expected to address a wide range of topics, including a possible path forward for ending federal marijuana prohibition.
The Future of Banking for Recreational Cannabis Businesses
Perhaps the biggest initial hurdle recreational sellers in Maine will face is procuring traditional financial services. Under current law, financial institutions are undertaking huge risks in taking on cannabis-related businesses. Federal interference can lead to revocation of an institution’s federal deposit insurance and possible money laundering charges. For the State of Maine, that means start-up cannabis businesses have nowhere to turn for start-up funds and ongoing financial services.
The Secure And Fair Enforcement Banking Act of 2019, or SAFE Banking Act, proposes an end to federal interference in cannabis-related banking. In May, a plea letter from the State of Maine to support the passing of the bill was among many others sent from across the country to congressional leaders. While it doesn’t eliminate all risk for financial institutions, the bill does take away the threat of federal insurance losses simply for providing services to cannabis businesses and may open up many doors for existing cannabis businesses and start-up recreational sales to come.
The House Committee on Financial Services issued a report on the bill on June 5th, which is a good sign for the bill’s progress. The bill currently awaits a vote from both the House of Representatives and Senate. The bill is expected to receive a House vote of approval, but its fate among the Senate remains uncertain.
Governor Mills Signs Marijuana Rules
On June 27th, just a week after the amendment gained congressional approval, the start of Maine’s adult-use cannabis sales cleared one more hurdle. Governor Mills signed into law a bill establishing new rules that set a legal foundation for the sale of recreational marijuana in Maine. LD 719, An Act Regarding Adult Use Marijuana, establishes that edible products made with marijuana will no longer be considered adulterated and provides guidelines for attaining and maintaining licensure to sell cannabis, among other provisions.
Once the law becomes effective in September, the Office of Marijuana Policy (OMP) gets 60 days to formally adopt the new rules. After those 60 days, OMP – which is part of the Maine Department of Administrative and Financial Services (DAFS) – has to start accepting applications from adult-use businesses within 30 days. As long as no unforeseen delays occur, recreational sales are expected to begin as soon as March 2020, more than three years after Maine voters approved the legalization of adult-use marijuana.