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Congress softens on marijuana policy, but key obstacles remain in Alaska's path

  • Author: Erica Martinson
  • Updated: May 31, 2016
  • Published December 21, 2015

WASHINGTON -- The Justice Department has to back off of state medical marijuana laws and hemp research, according to riders tucked into the recent 2016 spending bill -- but many federal obstacles remain as legal marijuana gets off the ground in Alaska.

Congress agreed to $1.8 trillion in tax and spending legislation on Friday, a bill that carries the government through the end of September 2016. It included several rehashed provisions regarding marijuana, but some issues of key interest to Alaska's legalization efforts -- particularly related to veteran care and banking -- remained on the sidelines.

The state's congressional delegation is unified on the issue, to some extent. None of them voted for legalization in the November 2014 general election, and none of them like it. But they all say the vote of the people should prevail, and the state has a right to decide on its own -- without federal government interference.

"My thing is, I'm not a big fan of the marijuana," said Alaska Republican Rep. Don Young Friday. "I will tell you though, I believe the states have a right to do as they wish to do. That goes back to states rights."

The two pro-marijuana provisions that were included in the "omnibus" spending bill used the congressional purse strings to enact policy. Both were included in last year's spending bill, but were not permanent, and had to be included again in order to continue.

One prevents the Department of Justice and the Drug Enforcement Agency from spending any money on interfering with medical marijuana laws in 40 states, Guam, Puerto Rico and the District of Columbia. The other prevents the DOJ and the DEA from using funding to interfere with state research programs for industrial hemp.

A third marijuana-related provision shows the remaining political split: Once again Washington, D.C., is prohibited from spending funds on implementing regulations that would allow the sale of marijuana. Like Alaska, a voter referendum legalized marijuana in the nation's capitol in 2014. But the district has no voting representation in Congress, which has the option of exerting federal control over D.C.'s budget.

But several key federal policy options didn't make it into the bill, despite making it through at least the Senate Appropriations Committee. Those amendments would have allowed doctors working for the Department of Veterans Affairs to recommend medical marijuana to vets, and would have kept the department from denying services to veterans who are documented as medical marijuana patients.

Another would have allowed banks to work with state-legal marijuana businesses. An amendment that passed the Senate Appropriations Committee would have kept the federal government from spending money penalizing banks that take money from marijuana businesses. But it didn't make it into the final bill, and would have only been a short-term provision.

Banks are reluctant to take money from marijuana businesses, leaving them in the difficult situation of keeping large amounts of cash on hand, being unable to take debit or credit card payments, and facing a slew of other difficulties -- including attempting to pay taxes with cash. A 2013 memo from the Justice Department declared prosecuting banks a low priority, but that hasn't been enough to reassure most financial institutions.

One piece of legislation introduced earlier this year would take care of many of those remaining issues. Despite his personal feelings on marijuana, Young helped introduce H.R. 1538 with Rep. Steve Cohen, D-Tennessee. Sens. Cory Booker, D-New Jersey, and Rand Paul, R-Kentucky, introduced an identical bill in the upper chamber, S. 683, but Alaska's senators have not signed on.

At least half a dozen other marijuana-related bills have been introduced in the House and Senate, but the Young bill is by far the most comprehensive effort.

The bill would make production, distribution and possession of marijuana legal under federal law, if it's legal under state law; would allow for federal research; remove barriers to veterans using medical marijuana; allow some interstate transport of cannabidiol oil -- a part of the plant that doesn't get people high; and allows marijuana businesses access to banks.

But so far, it has gone nowhere -- halted by lawmakers overseeing key committees that don't wish to see it go further.

But Alaska Sen. Dan Sullivan, a Republican, said Friday that he's working with the state to determine the best next steps.

"I've actually held a number of meetings on it," he said. But "it's very complicated, to be honest," he said -- noting that he's working on parsing through unintended consequences of potential legislation.

Like Young, Sullivan and fellow Alaska Republican Sen. Lisa Murkowski voted against legalization, but both say they're ready to manage the results of the vote.

"I'm not bringing any kind of anti feeling to it," Sullivan said. "I'm just trying really to understand the issues and coordinate with the governor and some federal agencies here."

Murkowski said she is "not so big into the camp of making money off of" marijuana because of her concerns about its health impacts. She's counting on regulations to keep it out of the hands of minors and make clear what's in the products.

"I voted against it -- I made no secret of the fact that I don't like the fact that we have legalized it, but we have, the people of Alaska have voted and it was a substantial vote. So I have to respect that, " Murkowski said. She is closely following the state's regulatory efforts -- and she's not opposed to congressional action.

"I think there's a lot of flux going on. But I do recognize that we have an inherent conflict between our federal policies and the states that have chosen to legalize it," Murkowski said.

Both she and Sullivan pointed to concerns about marijuana businesses being able to access safe banking -- a major issue for Alaska as the state dives into legal recreational marijuana, which is already big business in other states.

"There are now thousands of legal adult marijuana businesses across America. Colorado is on track to raise over $125 million in revenue this year. Our friends in Washington state ... expect marijuana sales taxes to bring in more than a billion dollars over the next four years," Rep. Earl Blumenauer, D-Oregon, said in a speech at the High Times Business Summit in Washington, D.C., last week.

But "discrepancies" between state and federal laws "continue to trap state-legal marijuana businesses unfairly in the middle for both medical and adult use," Blumenauer said. "People who just want to abide by state laws, be part of this transition, pay their taxes, do their business -- it's insane that you are not allowed to deduct your business expenses from your taxes like every other state legal activity. It is beyond insane that you can't pay fair taxes with a bank account, with a check. And that your colleagues are forced to carry tens of thousands of dollars in cash -- a safety risk, a logistical nightmare. You shouldn't have to be paying those taxes with shopping bags full of cash."

But Blumenauer, a longtime advocate for legalization, said Congress has turned a corner, with interest in passing marijuana-friendly legislation on the rise -- something he said was "inconceivable" just a few years ago.

Robert Capecchi -- director of federal policies for the Marijuana Policy Project, a national pro-marijuana advocacy group -- was optimistic that the renewal of this year's cannabis policy amendments is a good sign for further action.

It "suggests most members of Congress are ready to end the federal government's war on medical marijuana," he said in a statement. "There's a growing sentiment that the Justice Department should not be using taxpayer dollars to arrest and prosecute people who are following their states' medical marijuana laws."