Language to protect financial institutions that provide services to the cannabis industry was added to a federal funding bill by a Republican-led House subcommittee. The subcommittee also stripped language preventing the District of Columbia from using funds to support a cannabis marketplace.
In state legislative news, another voter initiative to legalize adult use in South Dakota was approved for the November ballot, while a bill to establish a cannabis market in Virginia was vetoed by the governor.
IRS wouldn’t be able to penalize cannabis bankers
The Fiscal Year 2025 Financial Services and General Government bill provides $23.6 billion in funding for several government departments, including the U.S. Treasury, as well as D.C. It was approved June 5 by the House Financial Services and General Government Subcommittee during a mark-up session.
Under funding provisions for the Treasury Department, which oversees the IRS, Sec. 134 reads:
“None of the funds made available by this Act may be used to penalize a financial institution solely because the institution provides financial services to an entity that is a manufacturer, a producer, or a person that participates in any business or organized activity that involves handling hemp, hemp-derived cannabinoid products, other hemp-derived cannabinoid products, marijuana, marijuana products, or marijuana proceeds, and engages in such activity pursuant to a law established by a State, political subdivision of a State, or Indian Tribe.”
Rep. Dave Joyce (R-OH), co-chair of the Congressional Cannabis Caucus and who sponsored the more robust SAFE Banking Act bill, also chairs this subcommittee.
However, during the hearing, Rep. Chuck Edwards, R-N.C., said he planned to file an amendment to remove the provision. Edwards, who opposes marijuana legalization, said the law has never allowed federally illegal businesses to be banked. He said that since 1842, House precedents prohibited changing pre-existing law in any appropriations bill, and the section is an authorization that tries to serve as a limitation.
“Section 134, which is a selective provision of the SAFE Banking Act, serves as an authorization as it results in a deviation from federal law and would significantly alter the way America does business.”
D.C. may be allowed to open cannabis market
Meanwhile, a rider that has for years prohibited D.C. from using funding to carry out laws that legalize the possession, use and distribution of a Schedule I narcotic or THC derivative has been stripped from the bill.
“I am pleased with many of the provisions in the text of the D.C. spending bill released by the House Appropriations Committee today, which I was able to secure despite Republican control of the House,” said Rep. Eleanor Holmes Norton, D-D.C., in a statement. “Notably, the rider preventing D.C. from commercializing marijuana is absent from the FY 25 bill.”
D.C. still has a legal medical cannabis program and expanded business opportunities with the Medical Cannabis Amendment Act of 2022. There are currently 14 active licensed businesses in D.C. as of May 31, with another 203 licenses pending, according to the CRB Monitor database.
On the Senate side, Sen. Jacky Rosen, D-NV, led a group of senators asking their Financial Services and General Government Subcommittee to allow the Small Business Administration to open up their various loan programs to cannabis and cannabis-related companies.
“Currently, most banks are reluctant to serve even state-legal cannabis businesses due to conflicts with federal law, meaning that these legally operating small businesses often are forced to operate using only cash, potentially jeopardizing public safety in order to do business. SBA loan programs would be especially helpful to cannabis small businesses because they would fill gaps left by the private sector and could expand the availability of capital for many entrepreneurs – including for our minority, women, and veteran business owners,” they wrote in the May 9 letter.
S.D. legalization initiative qualifies for November ballot
For the third time, South Dakotans will be able to vote to legalize adult-use of cannabis. A ballot initiative submitted by South Dakotans for Beter Marijuana Laws was validated by the Secretary of State on June 3.
The ballot question, which will be known as Measure 29, would legalize possessing, using, ingesting, inhaling, processing and transporting cannabis. Adults over age 21 can possess up to 2 ounces of cannabis, 16 grams of concentrate or extracts, and products containing up to 1,600 mg of THC. Cultivation of up to six plants per person, 12 plants per household, will be allowed. However, it won’t create a legal market.
“This is a result of the South Dakota Supreme Court’s ruling in the Amendment A case in 2021, which established a strict single-subject rule for initiatives in South Dakota. If Measure 29 is approved by voters, we will need to work with the legislature to pass a bill that creates the laws and regulations needed for a recreational cannabis market, said Matthew Schweich, executive director of South Dakotans for Better Marijuana Laws, in an email.
The organization submitted 29,030 signatures on May 7, and 17,508 needed to be valid to qualify. The Secretary of State’s office said in a statement that 22,558 signatures, 77.76%, were valid.
Citizens have until July 3 to challenge the validation. As of June 6, nobody has, according to a Secretary of State spokesperson.
This is the third time the citizens answered the adult-use legalization question. It was approved in 2020, but then successfully challenged in court. However, medical cannabis was legalized that year, and there were 146 active medical cannabis businesses as of May 31, according to the CRB Monitor database. Advocates tried again in 2022, but voters rejected it.
Marijuana Moment reported that three polls show voters don’t support this measure.
But Schweich is optimistic it will pass this time. “We are confident that victory is achievable this year. The defeat in 2022 was the result of lower voter turnout, which dropped by nearly 20% from the previous election in 2020 (when cannabis legalization was approved by 54% of voters),” he said.
If approved, South Dakota will be like Virginia, where cannabis use is legal, but there’s no legal way to purchase products. A bill to establish a legal adult-use marketplace passed the Virginia legislature this session but was vetoed by Gov. Glenn Youngkin in March.
