CHARLESTON, W. Va. (Feb. 20, 2019) – Last week, the West Virginia House passed a bill that would create a mechanism to handle banking services for the state’s medical marijuana program. Final passage of this legislation would remove a roadblock in front of the developing industry in the state and further nullify federal prohibition in practice.

Del. Eric Nelson (R-Kanawha) introduced House Bill 2538 (HB2538) on Jan. 21. The legislation would empower the West Virginia Treasurer to authorize financial institutions to provide banking services for the state fees, penalties, and taxes collected under the West Virginia medical marijuana program. The legislative findings describe the intent of the bill.

“The Legislature finds and declares that the inability to provide banking services needed to collect and remit the fees, penalties, and taxes authorized under the West Virginia Medical Cannabis Act has delayed the implementation and is precluding access by the patients potentially eligible to be prescribed medical cannabis and investment by the persons and entities interested in providing services under the Act. The purpose of this section is to provide a solution to the banking problems encountered by the state in connection with the Act.”

On Feb. 15, the House passed HB2538 by an 89-7 vote.

Under the proposed law, the state government could not “prohibit, penalize, incentivize, or otherwise impair” financial institutions that accept accounts for medical cannabis businesses operating in compliance with state law. The bill also commits the state to do everything “permitted by law” to defend these financial institutions and cover “payment of the amount of any judgment obtained, damages, legal fees and expenses, and any other expenses incurred.”

The bill is intended to allay fears that banks will be prosecuted or penalized for taking in marijuana-related accounts. The Federal government has used banking laws as a weapon in its unconstitutional war on cannabis by making it impossible for marijuana businesses to access the banking system – even in states where marijuana has been legalized. The feds can prosecute bankers for knowingly engaging with cannabis businesses under the Bank Secrecy Act, the USA Patriot Act, and the Racketeer Influenced and Corrupt Organizations (RICO) Act.

According to marijuana moment, “Concerns about prosecution and asset forfeiture have long haunted financial institutions operating in legal states, but so far those that have taken the risk have operated unencumbered. That could explain why a growing number of banks have begun opening cannabis accounts, according to federal data.”

While passage of HB2538 would not stop potential federal prosecution of a financial institution engaging in the medical marijuana business, it would provide some assurance that the state would shield it from financial loss.

It could also set the stage for creating an independent state banking system for cannabis businesses in West Virginia like the one proposed last year in California.

A GROWING MOVEMENT

West Virginia joins a growing number of states simply ignoring federal prohibition, and nullifying it in practice.

Colorado, Washington state, Oregon and Alaska were the first states to legalize recreational cannabis, and California, Nevada, Maine and Massachusetts joined them after ballot initiatives in favor of legalization passed in November 2016. In 2018, Vermont became the first state to legalize marijuana through a legislative act. and Michigan passed a ballot measure legalizing cannabis for general use.

With 33 states including West Virginia allowing cannabis for medical use, the feds find themselves in a position where they simply can’t enforce prohibition anymore.

“The lesson here is pretty straightforward. When enough people say, ‘No!’ to the federal government, and enough states pass laws backing those people up, there’s not much the feds can do to shove their so-called laws, regulations or mandates down our throats,” Tenth Amendment Center founder and executive director Michael Boldin said.

Expansion of medical marijuana laws in West Virginia demonstrates another important reality. Once a state puts laws in place legalizing marijuana, it tends to eventually expand. HB2538  is a perfect example of this tendency. As the state tears down some barriers, markets develop and demand expands. That creates pressure to further relax state law.

WHAT’S NEXT

HB2538 now moves to the Senate for further consideration. It was referred to the Senate Judiciary Committee where it must pass by a majority vote before moving forward in the legislative process.

Mike Maharrey

The 10th Amendment

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