Regulatory Update – July 2022

Federal Updates

This month Senator Booker (D-NJ) formally introduced S 4591, the Cannabis Administration and Opportunity Act (CAOA) cosponsored by Senators Wyden (D-OR), Schumer (D-NY), Murray (D-WA), and Peters (D-MI). This may prompt deja vu for those that remember that the CAOA was announced last year, but up to this point it has technically always been an unofficial draft. This is the legislation that Senate Democratic leadership has been focused on to the exclusion of other cannabis-related reform bills like the SAFE Banking Act.

Meanwhile, the House of Representatives voted in favor of including the SAFE Banking Act’s language in the National Defense Authorization Act of 2023 (HR 7900). This may also lead to feelings of deja vu as Representative Perlmutter (D-CO) successfully pushed to have it included in the House’s version of the previous bill, the National Defense Authorization Act of 2022. Its inclusion in 2023’s version marks the seventh time the SAFE Banking Act has passed with bipartisan support on the floor of the House as either stand-alone legislation or added as an amendment to a budgetary bill or stimulus package. It was ultimately dropped from the previous version of the NDAA once the Senate and House bills were reconciled, and it’s possible the same will happen again this time. This is one of Perlmutter’s last chances to push SAFE through before he retires at the end of this term. Perlmutter has suggested that his colleague David Joyce (R-OH), co-chair of the Congressional Cannabis Caucus, would be a good choice to “pick up the mantle.”

SAFE Banking is not the only cannabis-related item in HR 7900. Section 743, entitled “Study and awareness initiative regarding use of medical cannabis to treat certain members of the Armed Forces on terminal leave,” would permit the Secretary of Defense to “conduct a study on the use of medicinal cannabis as an alternative to prescription opioids.” While this section isn’t getting a lot of attention, it’s significant because many veterans groups advocate for the use of cannabis in the treatment of pain and PTSD but up to this point the Veterans Health Administration hospital system has prevented healthcare providers from discussing its potential use with patients. Even if Section 743 does not make it past the finish line, there is some hope that these restrictions may ease due to the Senate’s confirmation of former New Jersey health commissioner Shereef Elnahal as undersecretary for health at the Department of Veterans Affairs. Dr. Elnahal tweeted in 2018: 

“Marijuana needs to be descheduled at the federal level. Enough is enough.

Patients on #MedicalMarijuana deserve better.

Until then, we are stuck with:

-Scant research funding

-Limited to no access in hospitals/nursing homes

-High costs for patients”

Other legislation aimed at promoting medical studies of the use of cannabis includes HR 8454, the Medical Marijuana and Cannabidiol Research Expansion Act, introduced by Representative Blumenauer (D-OR). While it still hasn’t attracted a lot of attention, some Senate Republicans have indicated that they would be amenable to passing legislation facilitating research where they wouldn’t necessarily support the CAOA or other comprehensive marijuana reform bills. Senator Grassley (R-IA) has been quoted as saying, “Researching marijuana is widely supported on both sides of the aisle, and it’s a smart step forward.” HR 8454 would require the DEA to put more systems in place to support cannabis studies, provide some protections to those who study its effects, and would permit healthcare providers to discuss the use of cannabis with their patients (like those in the VA system).

Returning to financial services, Representative Carter (D-LA) introduced the Capital Lending and Investment for Marijuana Businesses Act (HR 8200), also known as the CLIMB Act. This bill would not only offer protections to banks and credit unions that choose to bank state-legal marijuana businesses similar to what’s in the SAFE Act, but it would also go beyond that to include brokerage, credit card, accounting, and money transfer services, among others. Further, it would also extend a protective umbrella over those that provide non-financial services like legal and compliance, IT, packing and logistics, marketing, management consulting, etc. It would also permit cannabis businesses to list on the national securities exchanges, something that’s prohibited today.

States Matters

Rhode Island

Rhode Island legalized adult-use, and while all the details of the program are being sorted out we do know that the basic license types will include Cultivator, Retailer, Hybrid Retailer, Laboratories (Testing & Research), Employees, and Transporters. This marks a major shift away from the vertically-integrated model used in the current medical program, though that’s not unexpected as we have seen the same shift in nearby states like New York and New Jersey. The number of licenses will be limited in a few ways: the number of available licenses is tied to a number of defined “geographic zones,” in each zone several licenses must be made available to social equity candidates, and municipalities will be able to either entirely or in a piecemeal fashion restrict the operation of cannabis-related businesses (CRBs) in their area. Sales aren’t expected to begin until the end of 2022 (at least).


In an unexpected turn of events, a lack of specificity in a recent bill in Minnesota seems to have inadvertently legalized Delta-9 THC beverages and edibles for all adults over the age of 21. While the bill seems to have been intended to prohibit the sale of hemp-derived CBD and Delta-8 THC to minors, this section has led many to arrive at the conclusion that Delta-9 products have also been legalized:

“An edible cannabinoid product must not contain more than five milligrams of any tetrahydrocannabinol in a single serving, or more than a total of 50 milligrams of any tetrahydrocannabinol per package”

Whether or not this was intentional, the legislation as written includes the phrase “any tetrahydrocannabinol” without excluding Delta-9 THC. This seems to have taken everyone by surprise, and several municipalities quickly imposed bans on the sale of any and all hemp-derived THC products. It remains to be seen whether attempts will be made to revise the legislation or leave it as is.

Washington DC

For years now Washington DC residents have pushed to legalize adult-use cannabis, but due to the city’s unique status as a federally-controlled district Congress has been able to block these initiatives. However the DC government has come up with an interesting solution to this problem by granting any resident above the age of 21 the right to self certify their eligibility for the existing medical marijuana program, meaning they do not need a recommendation from a healthcare provider to register. This has, for all intents and purposes, legalized adult-use marijuana in DC.


Finally, in early July the Federal Reserve, FDIC, FinCEN, NCUA, and the OCC issued a “Joint Statement on the Risk-Based Approach to Assessing Customer Relationships and Conducting Customer Due Diligence”. While there is no specific mention of cannabis-related businesses, the guidance notably includes sections that could easily be plucked from the 2014 FinCEN guidance on banking marijuana businesses. For instance:

“The Agencies recognize that it is important for customers engaged in lawful activities to have

access to financial services. Therefore, the Agencies are reinforcing a longstanding position that

no customer type presents a single level of uniform risk or a particular risk profile related to

money laundering, terrorist financing, or other illicit financial activity.

Banks must apply a risk-based approach to CDD, including when developing the risk profiles of

their customers. More specifically, banks must adopt appropriate risk-based procedures for

conducting ongoing CDD that, among other things, enable banks to: (i) understand the nature

and purpose of customer relationships for the purpose of developing a customer risk profile, and

(ii) conduct ongoing monitoring to identify and report suspicious transactions and, on a risk

basis, to maintain and update customer information.”

We don’t know whether the responsible regulatory agencies responsible had CRBs in mind at all when drafting the joint statement, but it is sound advice for those banking the industry.