03/01/15 Doug McVay

Doug McVay Reports: DC legalizes marijuana, and the state of Oregon looks at banking for the marijuana industry

Century of Lies
Sunday, March 1, 2015
Doug McVay
Drug War Facts
Download: Audio icon COL030115.mp3



MARCH 1, 2015


DEAN BECKER: The failure of drug war is glaringly obvious to judges, cops, wardens, prosecutors, and millions more now calling for decriminalization. Legalization. The end of prohibition. Let us investigate the Century Of Lies.

DOUG MCVAY: Hello and welcome to Century of Lies. I'm your host, Doug McVay, editor of Drug War Facts dot org. Century of Lies is a production of the Drug Truth Network, which comes to you through the Pacifica Foundation Radio Network and is supported by the generosity of the James A. Baker III Institute for Public Policy and of listeners like you.

Now, on with the show.

At 12:01am on the morning of Thursday February 26th, marijuana became legal in the District of Columbia. Some rightwing members of Congress had threatened the District with all kinds of scary nasty stuff, they threatened to have the mayor arrested and put in jail, and as is usually the case with bullies, those were all empty threats. The Mayor, the DC City Council, the city's newly-elected attorney general, and the DC police chief stood together to defy the bullies. They held a news conference to discuss it on Wednesday, here's some of that audio:

MAYOR MURIEL BOWSER: Well good afternoon everybody, I'm Muriel Bowser, and I am the duly-elected mayor of the District of Columbia, and we know that the residents fo the District of Columbia spoke loud and clear last November 4th when they adopted Initiative 71 to legalize small amounts of marijuana in Washington, DC. And we are, our government is prepared to implement and enforce Initiative 71 in the District of Columbia.

In keeping with the opinions of our attorney general, we believe of course that 71 was self-enacted, was enacted on December the 5th, when our board of elections approved the initiative, and we have been working to make sure that we clarify and inform our agencies and the residents of the District of Columbia what that means.

Let me repeat again, as I did yesterday, what Initiative 71 allows. It allows for the home use and home growth of, of marijuana. It does not allow for the sale of marijuana, the use or consumption of marijuana in public spaces, the use of marijuana by juveniles, that means people under the age of 21 is illegal. While use by adults will be legal under these limited circumstances, we continue to recognize that marijuana is a controlled substance that should be used safely and responsibly by adults.

And all of the agencies of our government have been tasked with making sure that they understand what the rules are, and how it affects their operations and have made recommendations to me. I am pleased to be joined here by the members of the Council and our attorney general. The council of course is, has spoken up loud and clear along with the residents of the District of Columbia, and our attorney general has collaborated with both branches throughout this process. And I would like to turn to Chairman Mendelson to speak for the Council.

COUNCIL CHAIR PHIL MENDELSON: Thank you, Mayor Bowser. The reason why we are all standing here together is because we take very seriously this issue and the questions that have been put forward, but we also are of the same view, which, as Mayor Bowser said, that the initiative was enacted at the point that the voters voted and the board certified the results. There have been some questions about whether the government should have responded differently, and since the handling of legislation falls to the legislative branch, I want to make these points.

First of all, I sent the initiative to Congress for the required Congressional review, as required by law. This is not a matter that I had a choice about. The legal opinions that I have from our attorney general, from our general counsel, and others are consistent that the legislation was enacted and therefore I had no choice but to send it to the Hill, which I have done.

The council tracks the legislative review days and the 30 days are up, or will be up very shortly. And we have choice but to track those days, that's what we do, and we don't, we don't have any discretion to choose with regard to this initiative, with regard to opposition by or objection by some members of Congress, to choose not to track the legislative days, and similarly, as the chairman of the Council, the legislative branches determines when the 30 days have expired, that legislation has become law and there will be a notice that I will have to sign that says it is law.

This is the process, this is the process that we have to follow when legislation has been enacted. And there is a process as well that's available to members of Congress. Legislation goes up for a 30 day period of review, and members of Congress in either house can introduce disapproval resolutions and ask the chambers, their respective chambers, to vote on those disapproval resolutions. There are other ways that Congress can legislate with regard to the District of Columbia. So there's that process as well.

I say all this because, I think there's some folks who feel that there's some intentionality on our part to do something that maybe we don't have a choice to do, the only choice that we have, those of us who are standing here, is to reflect that the initiative was adopted and adopted overwhelmingly, and then proceed as required by us under the Home Rule Act. So again, that's why we are all standing here because we are all of the same view, that this legislation was enacted and the 30 day Congressional review period is about to expire. Thank you.

MURIEL BOWSER: Thank you. Mr. Attorney General.

KARL RACINE: Well, since I'm no longer being paid by the word or by the hour I'll be brief. Every single representation that the mayor has made, and certainly the representations that Council Chairman Mendelson has made, are absolutely accurate and clear. They received advice from their counsel with respect to Initiative 71. That advice was emphatic, that they were proceeding in a lawful manner, and that indeed, as the mayor indicated, Initiative 71 is in the attorney general's office's view, law.

I would add that the council and the mayor, and certainly the police chief, have acted fully and faithfully in a responsible manner to do what's right, which is to implement the law in a way in which we give guidance to the citizens and residents of the District of Columbia. There's nothing more, and there's nothing less.

MURIEL BOWSER: Thank you Mr. Attorney General. Let me also acknowledge the Councilmember McDuffie and Silverman and Grosso, and Allen and Orange and Bonds and Nadeau. Did I miss anybody? All who have played a role in of course oversight of these issues in the District, and I want to thank you for being here and your support, and we'll be available for any questions now. Yes, Tom?

TOM SHERWOOD: Mayor, what's next? Are, are you going to go to the Hill, are you going to wait to see what the House committee does? What's next?

MURIEL BOWSER: Well, what's next is that, as the residents of the District of Columbia voted for, the law will go into effect one minute after midnight. We will, as we have in these last 8 weeks, continue outreach to members of the Congress. I have had conversations this morning with members of the Congress, as I've had over the last couple weeks, so this, our position is not news to anybody. We've stated all along that we believed that once the Congressional review period was over, that 71 would go into effect, and that as mayor it was my responsibility to make sure that the implementation was thoughtful and reasonable, and that all of our employees know how to respond, and that's exactly what we've done.

TOM SHERWOOD: If I could briefly up that question, in those conversations with members of Congress, did any of them say to directly as opposed to the letter, that you are violating the law if you go forward?

MURIEL BOWSER: I think that it was expressed, and let's, let's just say this, Tom, that a lot of reasonable people have a different view of this issue. As you've heard, our advice is that 71 was enacted when passed by voters and confirmed by our Board of Elections. Others have a different view. And so we believe that we are acting lawfully. Yes, Sam?

SAM: Mayor, how do you react to the thought that you might go to jail, that part of it?

MURIEL BOWSER: Well, I, I, you've heard that we believe that think we're acting lawfully. So, I have a lot of things to do here in the District of Columbia, me being in jail wouldn't be a good thing. But making sure that the will of the voters is implemented, and making that I'm doing my job in getting the guidance out to the residents, getting guidance out to our agencies about how to enforce the law, that's my job, and that's what I'm doing. Yes, Bruce.

BRUCE: Will you be sending to Congressman Chafetz the information he requested in his letter?

MURIEL BOWSER: We're reviewing the congressman's letter and we intend to, to be cooperative. I asked the attorney general, and certainly already was working on his thoughts around that issue and we'll look to him for help to be responsive.

DOUG MCVAY: That was Washington, DC Mayor Muriel Bowser, Council Chair Phil Mendelson, DC Attorney General Karl Racine, and DC Police Chief Cathy Lanier, speaking at a news conference about marijuana legalization in the District. By the way, Karl Racine is the District's very first elected attorney general.

The Centers for Disease Control recently released a report on opiate use by American adults. We've all heard officials talk about how use of painkillers has been on the rise. We don't usually hear officials talk about the serious issue of untreated and undertreated chronic pain in this country, which goes a long way toward explaining that increase in use. I'll get to that part in a moment.

According to the CDC, quote:

“In 2011–2012, 37.0% of opioid users used an opioid stronger than morphine in the past 30 days;
20.0% of opioid users used only a weaker-than-morphine opioid. For 43.0% of opioid users, the
strongest opioid used was a morphine-equivalent strength opioid.” End quote.

The CDC's data also show that the proportion of people using opioids stronger than morphine has risen steadily since 1999, so though the number of users has remained stable, more of them are using stronger opiates.

Now, as to the prevalence of actual pain. Research published by the Journal of Pain in 2014 noted that, quote:
“Approximately 19.0% of adults in the United States reported persistent pain in 2010, but prevalence rates vary significantly by subgroup. Older adults are much more likely to report persistent pain than younger adults, with adults aged 60 to 69 at highest risk. Women are at slightly higher risk than men, as are adults who did not graduate from high school. Approximately half of adults who rated their health as fair or poor say they suffer from persistent pain. Recent hospitalization and obesity are also linked to higher rates of persistent pain. In contrast, Latino and African American adults are less likely to report persistent pain than their white counterparts.” end quote.

So, once again. 6.9 percent of adults aged 20 and over reported using a prescription opioid analgesic in the past 30 days in the period 2011-2012. On the other hand, 19 percent of adults in the United States reported persistent pain, so a chronic pain condition that is a persistent concern. It's all about perspective, and keeping things in context.

And speaking of context, the Institute of Medicine in 2011 noted that, quote:
“Currently, large numbers of Americans receive inadequate pain prevention, assessment, and treatment, in part because of financial incentives that work against the provision of the best, most individualized care; unrealistic patient expectations; and a lack of valid and objective pain assessment measures. Clinicians’ role in chronic pain care is often a matter of guiding, coaching, and assist­ing patients with day-to-day self-management, but many health professionals lack training in how to perform this support role, and there is little reimbursement for their doing so. Primary care is often the first stop for patients with pain, but primary care is organized in ways that rarely allow clinicians time to perform comprehensive patient assessments. Sometimes patients turn to, or are referred to, pain specialists or pain clinics, although both of these are few in number. Unfortunately, patients often are not told, or do not understand, that their journey to find the best combination of treatments for them may be long and full of uncertainty.”

The point is, pain management is a difficult and nuanced issue, actually a set of issues. There are many pain patients whose only choices are either opioids or new prescription drugs that may pose very serious health risks, because their doctors are not allowed to recommend medical cannabis. More and more people live in states where medical cannabis is available, yet there are still millions for whom it's not yet a viable option. And there are some people for whom medical cannabis is never going to be sufficient, whose pain is so intense that some opioid use is inevitable.

At the same time, it must be admitted, there are indeed some people out there who try to scam the system, whether it's to get opiates or to get marijuana when they're not actually not in medical need. It appears however that there are relatively few of them, and that many many more people suffer needlessly because of society's fear over of the abuses of a few. As to the dangers, let's put this in context: Aspirin is a non-steroidal anti-inflammatory drug that's available over the counter, no age limits. The US Food and Drug Administration says that a lethal dose of aspirin for an adult human is typically about 30 grams. A regular-strength aspirin has about 325 milligrams per tablet or capsule. That means that a bottle of 100 of these contains 32.5 grams. Anyone who's tall enough to reach the shelf and has enough money can get and purchase one of those at a grocery store.

The state of Oregon is moving forward with its plans to regulate the marijuana market for adults. The Oregon Liquor Control Commission is holding hearing sessions around the state to give people in the general public a chance to vent and talk about their concerns to officials, who may or may not do anything about it. The state legislature meanwhile is holding hearings, with invited testimony, as they prepare the guidelines for OLCC's rule-making.

The legislature is also considering changes to the adult use marijuana program. Now, that ballot measure was only approved back in November. But Oregon state law allows the legislature to make changes practically immediately, with only a majority vote in both houses.

One of the biggest concerns as states move forward with full legalization as well as medical use, is that these businesses need access to banks and banking services. Unfortunately, the federal government makes that difficult if not impossible. The Oregon Legislature's committee on implementing measure 91 recently heard testimony from several state and industry officials about banking and law enforcement concerns. Let's give a listen to part of that hearing:

JEFF BAKER: I'm Jeff Baker, President and CEO of M-Bank, headquartered in Gresham, Oregon. With me Casey Ryan, also with M-Bank, director of corporate development. Let's see. So, you guys have heard from a lot of the experts, attorneys, about the challenges in this space, and, you know, I think everybody's kind of highlighted that this is a dangerous place to be. You know, the federal pressure is, is real, and so, you're not going to see too many financial institutions enter this space.

You know, for us, I think the best thing I can tell you that tips the scale, you know, we feel we have an obligation to provide services to an under-served community. And, you know, that, I think that necessarily isn't the same sentiment that a lot of financial institutions share. So as a result, I think you're going to see a lot of people nervous and concerned about that federal pressure.

So, you know, it's a tough place to be, it's a scary place to be, it's a long period of risk assessment to get to a decision like this, for us on the heels of the Cole memo and the FinCEN guidance, our state regulators and the FDIC in March of 2014 took the stance where they did not object to their banks providing services, and I should note that that non-objection is a mile away from an approval, if you will, but uh, that was the position that they gave us.

SEN. GINNY BURDICK: And who is that that gave you that position?

JEFF BAKER: The FDIC and state of Oregon, in terms of, we're a state chartered bank, state of Oregon's our primary regulator, and FDIC insured, they are also our regulator. The process, to go through that, uh, involved a lot of education to try and understand, you know, the laws that are in place in Oregon, educate ourselves about the industry, about dispensaries, about growers, about processors, to ultimately come to a conclusion of how we could build a program that would fit within regulatory guidance.

So we set about building out a program. Uh, we are, we're fairly, well, extremely transparent with our regulators, following the FinCEN guidance, which primarily focuses on money laundering, and our role, you know, in monitoring this industry lies around that for the most part. Shared our program with our state and federal regulators, got their feedback, implemented those items. Opened up a couple of accounts in August in Oregon, then went through an exam process, and do an exam by those regulators where once again they could look at our program and kind of provide more feedback and constructive criticism, and we could work hard to implement that.

So we went through that process, and implemented their, their suggestions, and continued down the path. So today, we have probably about 100 accounts opened, that's probably 75-ish relationships, cross-section of dispensaries, of grow operations, of processors, represents about $4 million in deposits at our bank.

Uh, let's see. I could, so that in a nutshell is kind of how we got to where we're at. You know, you, hopefully you'll understand that there won't be many of us that will take this step, because of the process.

Uh, you know, if I may, uh, apologize for the formality, so Co-Chair Lininger, Co-Chair Burdick, Senator Ferrioli, you had made a comment about no safe harbor and that's exactly right. I got to spend some time in DC, to see the CFPB to the FDIC, I even found a new regulator that supervises all of the state, uh, state regulators, and, uh, Jeremiah Norton of the FDIC, you know, I asked him about this, how is it that the FDIC can allow one of their banks to enter this space when there's this fear of federal prosecution by the Department of Justice. His comment was, there's no safe harbor.

And so, I mean, you nailed it, it's exactly – we have a risk, and where we're at is, it's a risk assessment. You know, we know that what we do provides tremendous value, you know, not just to the industry, in terms of access to banking, but the, the process of the monitoring, the due diligence, the filing of reports, provides what we think is very valuable information to the federal government, working closely with the states, uh, you know, it's all part of an effort to ensure sure that we've got good business people, you know, wanting to do this business right. So there's a tremendous amount of value in all that.

So. Uh, I don't know – I jotted some notes, if you would like me to address some of the questions that were asked, I thought I could be helpful.

SEN. GINNY BURDICK: Oh, please do, yes.

JEFF BAKER: Uh, and I once again apologize if I do this incorrectly.

GINNY BURDICK: That's all right.

JEFF BAKER: Co-Chair Burdick, Co-Chair Lininger, Representative Buckley. You asked about an FRB account. The Federal Reserve Bank, you know, provides an account to us banks and credit unions and allows us to clear all of our activities, so when someone brings a check into our bank, that, and they have an account at Bank of America and they deposit it, we give them some cash, we've got to get money from Bank of America, so that clears through the Fed to Bank of America.

When someone wants to send a wire, ACH, same thing, account to another checking account, it travels through the Fed. So they sit in the middle of all the activity, where, where money moves. And in addition, as cash is physically, cash is sent to the Fed or the Fed sends cash to a financial institution, that's one of the other services they provide. So none of us can really do much of anything without an access to the Fed, either directly or through a correspondent relationship with another bank that's got a Fed account. Is that helpful?

REP. PETER BUCKLEY: It is very helpful. So, if I could just ask, how are you then operating? How do you –

JEFF BAKER: Well, so the Federal Reserve will, will allow us continue to operate in that we're a bank, we have a variety of customers, we transact in a very typical way, we've just added one piece, of, of, you know, an industry if you will, and that hasn't created a situation that would cause them not to continue to give us access.


LINDA NAVARRO: You know what you might say? You might say how long you've been in existence, you aren't in for marijuana.

JEFF BAKER: Yeah. Linda brings up a good point, we've been around for 20 years, and in fact we're celebrating our 20th anniversary and we're trying to note that this year, as a result of, we'd like to remind people that M-Bank has been around for 20 years, it wasn't created yesterday with the naming for the industry.

GINNY BURDICK: Glad you answered that.

SEN. FLOYD PROZANSKI: Branding, there.

JEFF BAKER: Let's see, if I – so Co-Chair Burdick, Co-Chair Lininger, Senator Prozanski. I think there was a question asked about prosecution in California. Uh, one of the important things to understand is that the Cole memo is very specific, in that it seems to provide some sort of cover for where you have a state-run program. So California's got lots of dispensaries and grow operations, but it's not, it's not licensed or run by the state, it's done by municipality, and so there's a fear by many of us in the financial world that that is not protection. And so some banks may aggressively interpret that, but in our case we can't.

DOUG MCVAY: That was from a hearing of the Oregon legislature's committee on implementing the state's adult-use marijuana program. The state's considering changes to the law passed by voters last November. They're also setting out guidelines for the Oregon Liquor Control Commission, which is tasked with issuing and enforcing regulations for the industry.

At the same time, the state is considering whether, and how, the state's medical marijuana program will operate alongside the adult use, or should it just be rolled into the same program. We'll keep following and reporting on the progress of this as it goes on. The state of Oregon is just one of the first in the United States to have a legal adult-use and a legal, regulated, medical use program. Other states will be watching, so what happens in Oregon could end up being replayed around the whole country.

Well, that's all the time we have this week. You're listening to Century Of Lies, a production of the Drug Truth Network. We come to you once a week with news, information, and commentary on the drug war. Century Of Lies is heard on 420Radio.org on Mondays at 11 am and 11 pm, and Saturdays at 4 am, all times are pacific. We're heard on time4hemp.com on Wednesdays between 1 and 2pm pacific along with our sister program Cultural Baggage. And we're on The Detour Talk Network at thedetour.us on Tuesdays at 8:30pm.

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We'll be back next week with more news and commentary on the drug war and this Century Of Lies. For now, for the Drug Truth Network, this is Doug McVay saying so long. So long!

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