ChrisWeigant.com

Maybe Now Congress Will Act On Marijuana Banking Reform?

[ Posted Monday, August 20th, 2018 – 17:16 PDT ]

Over two decades after California legalized medical marijuana (becoming the first of many states to do so), Congress has still refused to act in any way to admit the fact that the times they are a-changin' on marijuana law. Six years after Colorado and Washington became the first two states to outright legalize recreational use for adults, Congress still refuses to act. In the meantime, marijuana has grown into a multibillion-dollar industry, and as with every other multibillion-dollar industry (especially agricultural ones -- remember all those "Got Milk?" ads?), it has begun spending money on lobbying politicians. So far it's a relative drop in the bucket -- total marijuana lobbying this year is only a relatively paltry million dollars -- but one story today may eventually have a ripple effect that (hopefully) will end with Congress admitting the new reality of the existence of the state-legal marijuana industry. In a way, it's a sad commentary on our political system, where as we all know money talks quite loudly. But that's a discussion for another day, really. The system is what it is, and if in some way it spurs the otherwise-somnolent legislators into doing the right thing for once, then that at least will be a desirable outcome.

The story in question concerns the actions of a bank, Wells Fargo. It recently notified a Democratic candidate for Florida state agricultural commissioner that her campaign account would be closed forthwith, because the politician refused to state that she would not accept contributions from "lobbyists for the medical marijuana industry, as well as executives, employees and corporations in the medical marijuana industry." Here are the full details, from the Washington Post:

Wells Fargo Bank recently terminated the campaign account of a Florida political candidate after inquiring into whether the candidate intended to receive donations "from the medical marijuana industry in any capacity," according to documents released Monday by the campaign.

Democrat Nikki Fried, running to be the state's agriculture commissioner, is a former lobbyist who worked on behalf of a number of industries, including medical marijuana. The documents show that not long after opening a campaign account with Wells Fargo, the bank inquired about her stance on medical marijuana and her intent to accept donations from the medical marijuana industry. The bank subsequently closed her account, citing its "responsibility to oversee and manage banking risks."

The move is highly unusual. If such a policy were applied nationwide it could potentially jeopardize the banking access of dozens of state and national politicians, as well as state agencies tasked with regulating the marijuana industry and collecting taxes on marijuana sales.

On June 13, Fried's campaign opened an account with Wells Fargo, according to documents released by the campaign.

Campaign treasurer Gloria Maggiolo noted that the campaign had "never received a request of this nature from a financial institution" and confirmed to the bank that Fried would probably receive contributions "from lobbyists for the medical marijuana industry, as well as from executives, employees and corporations in the medical marijuana industry." Maggiolo said that Fried was a former lobbyist for the industry and that any contributions from any source would happen under "all applicable IRS rules, FEC regulations, and Florida elections law."

According to the campaign, on Aug. 3, it received a phone call from Wells Fargo indicating that its account would be terminated "because of [Fried]'s relationship to the medical marijuana industry." The bank mailed a formal notice dated Aug. 3, stating that following an account review done "as part of our responsibility to oversee and manage banking risks," the account would be closed within 30 days.

My first reaction to this story was that you'd think Wells Fargo would want to avoid an embarrassing public relations scandal, after all the other ones it is now trying to live down. But corporate malfeasance aside, it's really hard to fault the bank itself all that much, because they are bending over backwards (with an abundance of caution) to follow a federal law that may have once made legal sense, but no longer does. The real fault, in other words, lies with Congress.

Individual marijuana businesses and the marijuana industry -- all operating legally under their states' laws -- are seen by the federal government as nothing short of evil drug kingpins or (more politely) high-volume drug traffickers. Marijuana is not only completely illegal under federal law, it is in fact more illegal than most opium-derived drugs. By federal law, fentanyl is considered to be less dangerous than cannabis. This is utterly divorced from reality, and is a monument to the cowardice of every administration and every Congress back to Richard Nixon's time to admit the insanity of putting marijuana in the "most dangerous of the dangerous" category (or "Schedule I"). To put this more bluntly, if you set up a business illegally importing fentanyl from China and dealing it on the streets, you would be considered less dangerous by the federal government than a state-legal medical marijuana clinic.

Because the feds have seen all marijuana businesses through this twisted War On Weed lens for so long (under White Houses and Congresses run by both parties, it bears mentioning), the businesses are supposed to be denied any and all access to the federal banking system. After all, opening a business account for that fentanyl street dealer would constitute abetting drug trafficking and helping to launder money, so it is considered illegal for banks to do so. In most places, this has meant that all marijuana businesses have to be run on a cash basis -- in this day and age. They can't accept debit or credit cards or checks from customers, they must restrict all purchases to cash on the barrelhead. They can't issue payroll checks, they have to pay their employees in cash. They also have to pay all their costs -- rent, suppliers, taxes, whatever -- in cash as well. This, obviously, is a logistical nightmare. It is also dangerous, because this has meant lots of cash has to be moved out of such stores on a regular basis -- meaning some have become targets for thieves. Add to this, for good measure, the indignity of not being able to deduct any of their regular costs of doing business on their taxes (because, according to the feds, drug trafficking costs are not legal, therefore not deductible). Some states have been exploring setting up alternative banking systems for marijuana businesses to use, but this really should be a nationwide policy.

The marijuana industry, as a lobbying force, can be expected to grow just as fast as the rest of the industry. These days, some national politicians (on both sides of the aisle) are now openly advocating for federal marijuana reform. That certainly wasn't true back in the 1990s when California first legalized medical marijuana -- and when virtually all national Democrats were still spooked by Republican "my opponent is soft on crime" political rhetoric. These days, the marijuana industry -- just like every other legal industry -- wants to support those politicians who support such reforms. According to the Supreme Court, it's a free speech issue (that's another discussion for another day...). But the article ends on a rather ominous note for such lobbying:

Industry insiders worry that other marijuana-friendly politicians could see themselves targeted if other banks adopt similar guidelines.

"What's next, will [Sen.] Cory Booker's accounts be closed?" asked Arnaud Dumas de Rauly, chief executive of industry consultants the Blinc Group, in a statement. "Should we expect to see [New York gubernatorial] candidate Cynthia Nixon's accounts closed, as well?"

Marijuana state-legal businesses are already struggling to deal with big piles of cash, because they are being forced to operate their business on a model that is at least a century out of date. What other big businesses are forced to run on a cash-only basis these days? Politicians supportive of the legal marijuana industry being forced to start running their own campaigns on a cash-only basis would only be an additional layer of this nightmare. But it could have one big silver lining in the end. Not every state that has legalized recreational marijuana is a blue state. Over 30 states have now legalized at least some form of medical marijuana, which includes a lot of red states. Politicians may be forced to confront the issue on the basis of self-interest -- which, callous as it sounds, is always a big motivating factor for them to get off their butts and do something.

Right now, there isn't that much marijuana lobbying money on the table. One million dollars may sound like a lot, but it is relative peanuts compared to what other lobbying groups have spent this election cycle. But unlike most industries, marijuana is going through what can only be described as an explosive growth phase. So their lobbying efforts will likely continue to grow at a similar rate. Sooner or later, that's going to be hard for politicians to ignore. Confronted with a purity question from the bank handling your campaign accounts, most politicians today would just walk away from marijuana lobbying money and donations. But more and more of them will soon begin to see the absolute insanity of the status quo of federal marijuana laws. And that, in the end, might just spur them to finally act.

Marijuana sales no longer consist mainly of some twentysomething selling dime bags or quarter ounces near the college campus. It is a multibillion-dollar industry that is strenuously complying with every single rule laid down by all the various states which have legalized it in some way. It has its own lobbying organizations in Washington. Will Wells Fargo's recent actions trigger a stampede of other banks being equally as scrupulous when it comes to political candidates' donations? The federal penalties for abetting a major drug trafficker are quite severe, as they were all mostly passed during the 1980s "Just Say No!" era of overreach in federal drug law. Which is why it's really hard to place much blame on Wells Fargo. The law is the law, it is indeed severe, and it hasn't been changed in decades. The reality of marijuana legalization has changed things so much it's getting hard to remember what things were like before states began this journey towards sanity. Meaning federal law is becoming ever more divorced from the reality on the ground. So far, this hasn't motivated Congress to act to reconcile the two in any meaningful way. But perhaps the thought of forgoing major campaign contributions might change this? As I said, it's crass, but change would certainly be welcomed -- no matter how self-interested the motives may be.

-- Chris Weigant

 

Follow Chris on Twitter: @ChrisWeigant

 

20 Comments on “Maybe Now Congress Will Act On Marijuana Banking Reform?”

  1. [1] 
    neilm wrote:

    Another motivating factor could be the sales and profits that Canada are going to demonstrate over the next few years. Also, Mexico seems finally to be waking up to the Portuguese model of blanket legalization in an effort to defang the drug cartels. They could also be a model for how to monetize a problem and make the negative effects be paid for out of taxes (with a lot left over for other uses).

    Big pharma will fight this tooth and nail, and they have deep pockets and a good reason to fight (who needs Excedrin PM when you can relax and fall asleep with a 25 cent hit from a vaporizer?)

  2. [2] 
    Don Harris wrote:

    "...it's a sad commentary on our political system, where as we all know money talks quite loudly.
    But that's a discussion for another day, really."

    Tommorrow's another day.

    As good a day as any for a discussion aboot the problem of Big Money in our political system, One Demand and the current opportunity to mobilize the 20-30% of voters that vote in the presidential elections but don't vote in off year elections to participate in One Demand in 2018 instead of not voting.

    Over two and a half years of "That's a discussion for another day" is getting pretty old.

  3. [3] 
    Kick wrote:

    (?? ? ?? )? ???

  4. [4] 
    Kick wrote:

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  5. [5] 
    TheStig wrote:

    Kick.-4. Gotta love that mid 1970s retro graphics charm!

    CW- What is Wells Fargo trying to accomplish with their sudden hyper attention to the letter of the law? It's not exactly in character. Is somebody putting them up to this? Perhaps somebody in government? Wheels within wheels... Follow the money.

  6. [6] 
    TheStig wrote:

    RE-5

    Hint: Google "anti-marijuana lobby"

    Corrections industry
    Police
    Opiod industry
    Tobacco industry

    All the above have strong economic (cash flow)incentives to keep pot illegal...or at least hedge their bets going forward.

  7. [7] 
    Balthasar wrote:

    Very good article, CW. It comes just after NPR did a piece about the beverage companies getting interested in making THC-laced beers (which would be stripped of alcohol).

    Interesting that you didn't mention Santa's elf at the DOJ and his long-time animosity toward marijuana.

  8. [8] 
    Balthasar wrote:

    And now, a catch-all retort for the next time a Trumper accuses you of shading the truth:

    "The truth is relative and it's not absolute like some philosophical concept." - Rudy Giuliani

  9. [9] 
    Don Harris wrote:

    Balthy (7)-
    I remember seeing a book in the 1970's on growing pot that said that marijuana and hops were similar plants. It said if you grew some small marijuana plants and some small hops plants that you could graft the top of the hops to the roots of the marijuana and it would look like hops but have the THC of a marijuana plant.

    I always wondered that if that were true if the hybrid hops could be used to brew beer and if it would carry the THC into the beer or be destroyed in to fermentation/brewing process.

  10. [10] 
    Balthasar wrote:

    Don [9]: Sounds like a great project for some Future Farmer of America! Maybe something for the 4-H to bring to the County fair...

    The NPR piece suggested that the brewing companies would probably just add THC to their non-alcoholic lines (since they make those anyway), and then rename them things like 'Coors Mellow'.

  11. [11] 
    ListenWhenYouHear wrote:

    TheStig [6]

    Not so sure the police are as anti-legalization as you might assume. The one I sleep with definitely supports legalization. Of the ones that I know that I’m not sleeping with, all but one supports it. The one against it also believes we should re-enact prohibition laws on alcohol and has a photo of him with VP Mike Pence in his office.

    (He has commented multiple times that he cannot believe that we are gay because we don’t act the way he always thought “gays” were supposed to act. I apologized and offered to “queer it up” for him next time I was around him to better conform with his prejudices, but he just laughed nervously and said that wasn’t necessary!)

  12. [12] 
    ListenWhenYouHear wrote:

    Balthy,

    "The truth is relative and it's not absolute like some philosophical concept." - Rudy Giuliani

    Not absolute like some philosophical concept? Philosophy = Absolutes.

    That sums up the GOP’s collective mindset better than any attempt I have ever heard!

  13. [13] 
    Michale wrote:

    OK, so it wasn't a unanimous hung jury on ALL counts like WaPoop initially said...

    Jury reaches verdict on 8 counts in criminal trial of Paul Manafort, Trump's former campaign chairman

    Jurors have reached a verdict on eight counts in the trial of President Donald Trump's former campaign chief, Paul Manafort.

    In a note to U.S. District Court Judge T.S. Ellis, the jurors said they had not reached a consensus on the 10 remaining counts in the bank fraud and tax crimes trial.
    https://www.cnbc.com/2018/08/21/paul-manafort-verdict.html

    The majority of charges, the jury said "NI!!!" :D

    Still, the fact that ya'all claimed it was a "SLAM DUNK" on all charges, ya'all really got egg on yer faces... :D

    Let the back-pedaling begin!! :D

  14. [14] 
    Kick wrote:

    Michale
    13

    OK, so it wasn't a unanimous hung jury on ALL counts like WaPoop initially said...

    "WaPoop" didn't say anything of the sort. You just read EXACTLY what you wanted to into the story. #SSDD

    Still, the fact that ya'all claimed it was a "SLAM DUNK" on all charges, ya'all really got egg on yer faces... :D

    NOBODY on this board claimed it was a slam dunk on ALL charges, quite the contrary, in point of fact. You were the one, however, who insisted over and over and over ad nauseam that Manafort would walk on ALL charges. Since Manafort was found guilty on two of the more serious charges of bank fraud, that tells you EVERYTHING you need to know. :)

    Furthermore, Michael Cohen just plead guilty to 8 counts of felonies in SDNY, including 2 payments of hush money regarding the Trump campaign. Michael Avenatti is no doubt ready to depose the sitting President of the United States in the Stormy Daniels case of his.

    Alexa: Order all the popcorn! :)

  15. [15] 
    neilm wrote:

    Michale: you just got b-slapped by the Jury - that must hurt.

    And, of course, you can't complain about the jury because"

    I'll remind you of that claim when they let Manafort walk and then you start trashing them... :D

    Manafort is walking alright, just as Kick said, into a cell. He is 69 years old, and there is a good chance he won't be free again.

    Now, I wonder if he is interested in a plea deal for sentencing and a walk on the second trial, and what he is willing to pay for it?

    Of course he could gamble on a pardon, and the traitor might pardon him tomorrow, but the implications of overturning a unanimous jury decision on 8 counts is obvious abuse of power, and is likely to hurt the traitor in the long run more than help him.

    Ford gave Nixon a pardon, and it caused rancor for many years. It the traitor is hoping that Pence will pardon him, it would be good to ensure that the right to pardon isn't toxic before the traitor needs it for himself or his treasonous offspring.

  16. [16] 
    LeaningBlue wrote:

    After today, Manafort becomes a sideshow. A longshot outside chance he flips and blows up the presidency. But a really long shot.

    It's Cohen. With the NY state charges pending, there's no pardon. Mueller likely knows that Cohen was in Prague discussing payment for contracting individuals for Clinton hacks, as the Steele dossier sources.

    If Cohen was in Prague with Russians dealing over Clinton data, that's the ballgame.

    The other thing, of course, is that Avenatti gets to depose the President, with Cohen deposed as a witness. No scotus decision required there. And thanks to the Clinton deposition, it's video recorded.

    "What a f**king nightmare!"
    Mona Lisa Vito, in My Cousin Vinnie.

  17. [17] 
    Kick wrote:

    neilm
    15

    Manafort is walking alright, just as Kick said, into a cell. He is 69 years old, and there is a good chance he won't be free again.

    I have heard the case in DC is even more airtight than the bank fraud charges Paulie was just found guilty of... not a good sign.

    Now, I wonder if he is interested in a plea deal for sentencing and a walk on the second trial, and what he is willing to pay for it?

    Neil is right about this, of course, and Manafort can now weigh several new factors while he is contemplating whether or not to put himself through trial two. Cohen has now plead guilty to 8 felonies in SDNY, including two that directly implicate Donald Trump. I would say that Manafort's hand was looking pretty pathetic were it not for a few cards that he uniquely holds: Paulie was in attendance at the June 2016 meeting at Trump Tower and is a very large glob of the glue that binds the books together.

    It is more like a giant book... oh, let's say... The Holy Bible. There's multiple books and two giant sections. In the Old Testament, you will find names like Cohn, Rybolovlev, Deripaska, Sater, el alia, and in the New Testament, you will find names like Cohen, Flynn, Agalarov, Assange, Putin, et alia. Manafort and Stone are the glue that binds all the books.

    Sater and Flynn have beautiful singing voices. Stay tuned.

    http://www.chrisweigant.com/2018/07/18/the-real-double-negative-trumps-non-denial-denial/#comment-123167

    Trump can pardon these clowns until the cows come home, Mueller has more charges in his back pocket and is just getting started... tip of the proverbial iceberg. Furthermore, Trump cannot pardon these clowns for crimes against the State of New York, can he? :)

  18. [18] 
    Kick wrote:

    LB
    16

    After today, Manafort becomes a sideshow. A longshot outside chance he flips and blows up the presidency. But a really long shot.

    You might be surprised, LB. Whether or not he decides to join the Mueller Snitch Hunt Choir, Manafort is nevertheless a huge part of the conspiracy while Cohen is "new potatoes." Think bigger picture, LB. :)

  19. [19] 
    LeaningBlue wrote:

    In the National Lampoon's recorded radio coverage of the Nixon Impeachment Day parade, as the John Dean float passed by, they remarked that it was decorated as a giant paper mache' rat.

    In Trump's parade, would the giant paper mache' rat be on
    the Cohen float, or the McGahn float?

  20. [20] 
    Kick wrote:

    LB
    19

    In the National Lampoon's recorded radio coverage of the Nixon Impeachment Day parade, as the John Dean float passed by, they remarked that it was decorated as a giant paper mache' rat.

    In Trump's parade, would the giant paper mache' rat be on the Cohen float, or the McGahn float?

    In Trump's parade, the rodents are more like Chipmunks:

    https://www.youtube.com/watch?v=2Vk0wqgxQd0

    Well, you asked! ;)

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