West Virginia Treasurer Says Office Cannot Process Medical Marijuana Banking

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The financial fate of West Virginia’s medical cannabis program could rely on the passage of a bill working through the legislature against a midnight deadline.

State Treasurer John Perdue wrote a letter to the Gov. Jim Justice, legislative leaders and state officials March 1, stating that because of the disparity between state and federal law regarding medical cannabis, it’s pulling out financial support for the program.

“Our vendors currently do not desire to engage in accepting any deposits related to sales, fees, licenses, or taxes related to state-sanctioned medical cannabis sales,” the letter states. “…Therefore, in the best interest of the State, the Treasurer’s Office is unwilling to accept the funds derived from medical cannabis at this time. Any other depositing alternative is not a viable option.”

The House passed a bill Feb. 28 that would increase the number of growers, processors and dispensaries that can be permitted under the program, among other changes.

After receiving the letter, the Senate overhauled the bill with several changes to the program, including designating a credit union as a workaround.

“The State Treasurer may designate a credit union only for the banking functions necessary for the West Virginia Medical Cannabis Act,” the Senate proposal states. It contains similar language calling for designating another credit union to receive state funds for the program.

The banking fix amendment is currently stalled in the Senate. The chamber was slated to vote on its passage Friday evening, though it laid it over to Saturday. It then recessed for half an hour just after 1 p.m. Saturday without reviewing the bill.

The Senate must pass some version of the bill and get the House to either concur with its changes or find a way to reconcile them. If the House refuses to oblige, the two chambers can appoint a conference committee to negotiate a compromise. Only once they both pass identical legislation can a bill make it to the governor’s desk.

West Virginia’s medical cannabis program is scheduled to begin in the summer of 2019.

The letter

Much of Perdue’s concern stems from regulatory changes from the U.S. Department of Justice over the last decade.

In October 2009, President Barack Obama instructed U.S. attorneys not to prosecute people who distribute medical marijuana if it’s legal under state law in what came to be known as “the Cole memo.”

However, in January 2018, Attorney General Jeff Sessions rescinded this policy and puts the emphasis back on federal law, under which marijuana is still a Schedule-I controlled substance.

Perdue’s memo mentions the policy changes but does not mention language tacked on to annual federal appropriations bills by U.S. Reps. Dana Rohrabacher, R-Calif., and Earl Blumenauer, D-Ore., (and formerly by Rep. Sam Farr, D-Calif.), that prohibits the use of federal funds to prosecute medical marijuana businesses operating legally under state law.

The letter says businesses could be exposed to federal prosecution under state law as is currently written.

“Simply stated, all banks are subject to federal law, whether the bank is a state-chartered bank or a national bank,” the letter states. “Because cannabis (marijuana) is an illegal drug under the Controlled Substance Act, financial institutions could potentially be violating federal law by accepting moneys derived from the cannabis industry, even if authorized by state law.”

Other changes

The bill sets minimum requirements on the number of permits the Department of Health and Human Resources must issue for the program. It would require the issuance of 20 permits for growers, 20 for processors and 100 for dispensaries, a spike from current levels.

It also enables businesses to operate as any combination of the three.

Under current law, the permits come at a price: A grower and processor permit costs $50,000, and a dispensary permit costs $10,000.

The bill also instructs DHHR to promulgate a legislative rule that would allow the sale of dry leaf marijuana, which is not currently available within the program.

Additionally, it allows for dispensers to deliver medical cannabis to patients’ homes.