CannaBeat is a curated biweekly selection of top news stories impacting business, research, and culture in the cannabis industry, crafted by Emerge Law Group.
Emerge’s Hot Take
Senators Introduce Revised Marijuana Banking Bill
A bipartisan group of Senators has introduced an updated version of the Secure and Fair Enforcement (SAFE) Banking Act, now titled Secure and Fair Enforcement Regulation (SAFER) Banking Act. This legislation comes only a few weeks after the U.S. Dept. of Human Health and Services (HHS) issued a recommendation that marijuana be reclassified as a Schedule III drug, and if passed, would allow cannabis owners access to more traditional financial institutions. Due largely to current restrictions on banking, cannabis businesses are widely known to be “cash-heavy” and are frequent targets of robberies. In 2021, Visa instructed banks not to honor payments made to cannabis merchants via Visa debit services. Mastercard followed suit in August of this year. Additionally, many licensees struggle with the high cost of startup for their businesses because they are unable to obtain financing via traditional small-business loans. Sponsors of the new bill hope to change these trends, citing key bill language that prohibits regulators from ordering banks to close accounts “without a valid reason,” and that protects state-legal cannabis employees from mortgage rejections based on the nature of their employment. While the bill does not require financial institutions to offer financial services to cannabis business, it does contain language discouraging institutions from denying services based on “personal beliefs or political motivations.”
As licensees await the DEA’s response to HHS’s rescheduling recommendations, legislation such as this is vital to the cannabis ecosystem. “The scheduling of cannabis at the federal level has caused the industry grave financial hardship,” says Emerge East attorney Stephanie Algarin Santiago. “Not only does it subject cannabis businesses to 280E, making standard tax exemptions inaccessible, but it is also the reason why the industry is underbanked and underfinanced, and why standard forms of financial relief, such as bankruptcy, remain unavailable.”
Other Noteworthy News
Leafly Challenges Certain New York Cannabis Regulations; Court Enters Order Blocking Enforcement
BUSINESS WIRE – “Earlier this week, Leafly, a leading online cannabis information resource and marketplace; Stage One Dispensary in Rensselaer, New York; and an individual consumer, jointly filed a legal challenge to certain portions of the recently adopted Adult Use Regulations in New York. On Thursday, the New York Attorney General’s Office agreed to a stay, and the court entered an order to that effect, which blocks the enforcement of the challenged regulations against Leafly and fully operational licensed cannabis dispensaries in New York State. The lawsuit alleges that New York’s Office of Cannabis Management (OCM) unfairly targeted so-called “third-party platforms” in a misguided attempt to restrict the manner in which retailers may market or promote their business and products, and prevent price-shopping consumer behaviors. Leafly believes, and the lawsuit alleges, that the adoption of these regulations by the state is both arbitrary and capricious and a violation of the United States and New York constitutions. ‘The decision is a step in the right direction and gives retailers in New York immediate access to important tools to help them grow their businesses,’ [said] Galina Innes, CFO of Stage One Dispensary. ‘The regulations as adopted are needless restrictions on the most basic of market activities and only serve to undermine the emerging legal cannabis market.’ The case is Leafly Holdings, Inc. et al vs. New York State Office of Cannabis Management et al, Index No. 908706-23, filed in the State of New York Supreme Court in Albany County and can be accessed through the New York State Unified Court System database.”
House Democrats File Marijuana Legalization and Expungements Bill
MARIJUANA MOMENT – “A top House Democrat has reintroduced a bill to federally legalize, tax and regulate marijuana, with provisions to expunge prior cannabis convictions. Rep. Jerrold Nadler (D-NY), ranking member of the House Judiciary Committee, refiled the Marijuana Opportunity, Reinvestment and Expungement (MORE) Act on Wednesday. Nadler’s MORE Act would deschedule marijuana by removing it from the list of federally banned drugs under the Controlled Substances Act (CSA). However, it would not require states to legalize cannabis and would maintain a level of regulatory discretion up to states. Marijuana products would be subject to a federal excise tax, starting at five percent for the first two years after enactment and rising to eight percent by the fifth year of implementation. Nobody could be denied federal public benefits based solely on the use or possession of marijuana or past juvenile conviction for a cannabis offense. Federal agencies couldn’t use ‘past or present cannabis or marijuana use as criteria for granting, denying, or rescinding a security clearance.’ People could not be penalized under federal immigration laws for any cannabis related activity or conviction, whether it occurred before or after the enactment of the legalization legislation. [Additionally,] the bill creates a process for expungements of non-violent federal marijuana convictions.”
NCAA Committee Recommends Legislation to Remove Cannabis from Banned Substances List in all Three Divisions
CBS SPORTS – “A top House Democrat has reintroduced a bill to federally legalize, tax and regulate marijuana, with provisions to expunge prior cannabis convictions. Rep. Jerrold Nadler (D-NY), ranking member of the House Judiciary Committee, refiled the Marijuana Opportunity, Reinvestment and Expungement (MORE) Act on Wednesday. Nadler’s MORE Act would deschedule marijuana by removing it from the list of federally banned drugs under the Controlled Substances Act (CSA). However, it would not require states to legalize cannabis and would maintain a level of regulatory discretion up to states. Marijuana products would be subject to a federal excise tax, starting at five percent for the first two years after enactment and rising to eight percent by the fifth year of implementation. Nobody could be denied federal public benefits based solely on the use or possession of marijuana or past juvenile conviction for a cannabis offense. Federal agencies couldn’t use ‘past or present cannabis or marijuana use as criteria for granting, denying, or rescinding a security clearance.’ People could not be penalized under federal immigration laws for any cannabis related activity or conviction, whether it occurred before or after the enactment of the legalization legislation. [Additionally,] the bill creates a process for expungements of non-violent federal marijuana convictions.”
A Recap of NY Cannabis Insider’s Buffalo Conference – ’Opportunity in Crisis’
SYRACUSE.COM – “The politics of legal weed, the state of affairs for licensees and legal issues in the industry were just a few of the topics covered on panels during NY Cannabis Insider’s live conference in Buffalo [last] Thursday. Held at Pearl Street Grill & Brewery, the event marked NY Cannabis Insider’s first conference in Buffalo. Panel discussions focused on cannabis industry issues statewide, but also examined the situation in Western New York, a region where retail has been stymied by two separate court injunctions. A panel discussion about Conditional Adult-Use Retail Dispensary businesses discussed how [these injunctions are] affecting Western New York CAURDs, real estate challenges, and more. Buffalo Deputy Mayor of Operations Rashied McDuffie and Jamestown Mayor Eddie Sundquist were part of a panel talk on the politics of cannabis, and how statewide issues are affecting the local weed industry in their cities. Cultivators from three different licensed growing companies talked about issues ranging from competition with medical cannabis Registered Organizations, specific challenges for farmers in Western New York, and how distributors will change the state’s legal weed market. A panel on medical cannabis [discussed the entry of Registered Organizations into New York’s adult-use market and how it could benefit local cultivators].”
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