News Fix: American Bar Association, Senators Ask Government for Clarity on Cannabis

Not all heroes wear capes.

Some of them wear suits… and speak at public hearings.

Like former Rep. Barney Frank (D-Massachusetts). Frank served in Congress from 1981 through 2013. He was a member of the Massachusetts House of Representatives from 1972 to 1980 before that. And he has been a champion for marijuana reform throughout his career.

In 1972, Frank introduced legislation that would have decriminalized cannabis and established a noncommercial legalization model in Massachusetts. In the 1980s, he co-sponsored a federal medical cannabis legalization bill. And he introduced similar legislation himself in 1995.

Frank now works in the cannabis industry. And this past Wednesday, he stopped by a Massachusetts Cannabis Control Commission hearing to comment on how much progress has been made and why it needs to continue.

“People have said to me, well, what’s the reason for [allowing marijuana access]?” he said. “And the basic reason for it, I think, is the reason that we ought to have any set of rules in America: It’s because… the people in this country ought to be allowed to do what they want to do unless they’re harming other people.”

Spot on, Frank.

We need that kind of attitude to push legislation forward. And because the government has been notoriously slow to act on marijuana legalization, the industry needs some sort of legal and regulatory clarity to help businesses in states where marijuana is legal to operate in the sunshine. After all, what’s the point of legalizing cannabis and hemp at the state level if businesses and entrepreneurs don’t have the tools they need to succeed?

The Fix noticed this theme while we perused the internet this week.

Two different senators – Senate Minority Leader Chuck Schumer (D-New York) and Sen. Michael Bennet (D-Colorado) – sent letters to federal regulators requesting clarification on banking services for hemp businesses. The Federal Reserve, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, Farm Credit Administration and National Credit Union Administration all responded with varying degrees of “it’s not our jurisdiction.”

Meanwhile, the American Bar Association (ABA) passed a resolution urging Congress to let states legalize cannabis. The resolution also calls for Congress to recategorize or completely remove marijuana from the Controlled Substances Act, which currently lists marijuana as a Schedule I drug (meaning it has no accepted medical use and a high potential for abuse). And it calls for more medical research into cannabis.

The ABA’s exasperation is clear.

“We ought to not have states flying blind, the federal government flying blind,” law professor Stephen Saltzburg said. “It might lead us to regulate it more or regulate it less. We have no position on that, but by god research would be good.”

And to top it off, the DEA still hasn’t approved a single marijuana grower application since it requested them three years ago. More than two dozen research institutions have applied to become federal cannabis manufacturers since the DEA posted about accepting applications in August 2016. (Most universities can conduct research only on federally approved cannabis supplies.)

Progress is slow. And people are frustrated. But the more lawmakers, activists and organizations push for marijuana reform, the more pressure the government feels. And the closer we get to clear regulations.

It seems to be at once frustrating and validating for former Rep. Frank to see marijuana legalization slowly unfold decades after he pushed for it.

“I am getting old, but at least one thing that I have found improves with age, and that is the pleasure of being able to say ‘I told you so,’” he said.

Like we said: hero.

On to the News Fix.

Cannabis

New York City seals marijuana misdemeanor records: Manhattan District Attorney Cyrus Vance Jr. worked with nonprofit groups and lawyers to seal the criminal records of 350 people with marijuana misdemeanors in Manhattan (High Times).

This move comes on the heels of a change to New York’s Raise the Age Act, which stated that people with two or less nonviolent offenses would be eligible to have their records sealed after 10 years if they had no new offenses on their record. As promising as the act was, it’s been difficult for people to get their records wiped. An estimated 600,000 are eligible for the program. But only 1,200 people have managed to seal their records.

Pennsylvania judge rules searching car because of a weed scent is illegal: A Pennsylvania judge has ruled that searching a medical marijuana patient’s car based on the scent of cannabis is illegal (High Times).

The ruling comes from the case of Timothy Barr, a registered medical marijuana patient in the state. He was pulled over in a car being driven by his wife. Barr showed state troopers his medical marijuana card, but the troopers searched the car anyway. Unsurprisingly, they found marijuana.

“The smell of marijuana is no longer per se indicative of a crime,” the judge wrote.

Startups

WeWork plans its IPO: WeWork, the shared workspaces company that rebranded to the We Company, released its IPO prospectus Wednesday. The company is expected to go public as early as next month (CNBC).

In the filing, the company reported revenues of $1.5 billion and a net loss of more than $900 million for the first half of 2019. The company was recently valued at a staggering $47 billion after SoftBank invested an additional $2 billion into the company back in January. The trend of bigger venture capital checks and bigger startup valuations continues.

SoftBank targets Latin American startups: Speaking of SoftBank, it’s not just American startups it’s after. The funding giant has about $4 billion left to spend of its $5 billion fund that’s targeting Latin American tech companies. Its powerful capital cannon is aimed at 300 companies, 200 of which are in Brazil (Bloomberg).

Chinese tech startups go abroad: Like Adam Sharp, Chinese tech startups seem to prefer emerging markets. China is home to massively successful platforms like TikTok and WeChat, but oversaturation is inspiring startups to look elsewhere for growth – in particular, the Middle East, Africa, India and Southeast Asia (Abacus News).

Crypto

Coinbase backs crypto derivatives exchange: Coinbase is backing a $4.3 million raise for a crypto derivatives exchange called Blade (CoinDesk). Blade is planning to go live in a few weeks with a focus on perpetual swaps. Blade founders say they’re focusing on perpetual swaps because they are “arguably the fastest-growing segment of cryptocurrency trading.”

Unfortunately, American investors will not be allowed to use the platform due to regulatory issues. And while we’re on the subject of regulatory issues…

SEC postpones decision on three bitcoin ETF proposals: The Securities and Exchange Commission has delayed a decision on three bitcoin exchange-traded fund (ETF) proposals (Cointelegraph). The decision on the VanEck SolidX bitcoin ETF proposal (filed in January) has been delayed until October 18. The decision on the Bitwise Asset Management proposal (filed in February) was pushed to October 13. And the decision on the Wilshire Phoenix proposal (filed in July) was delayed until September 29.

60 Latin American banks can make cross-border payments with bitcoin: Bantotal, a banking service provider based in Uruguay, is partnering with crypto exchange Bitex to facilitate cross-border payments using bitcoin. According to a Bantotal spokesperson, about 20 million people use Bantotal’s services (CoinDesk).

“The integration of Bitex into the Bantotal program represents a major step in the breakthrough of blockchain technology in banking,” said Bitex Chief Marketing Officer Manuel Beaudroit.

Barclays cuts ties with Coinbase: Barclays is no longer providing banking services to Coinbase (CoinDesk). The partnership connected Coinbase to the U.K. Faster Payments Scheme, which enabled users to instantly withdraw and deposit British pounds on Coinbase. The end of the relationship means U.K. customers saw slowed deposits and withdrawals, which are now taking days to process.

Coinbase has since found a replacement bank. But it’s nonetheless a disappointing move for the crypto community.

And finally… one news item that made the Fix chuckle. A black bear broke into a house in Colorado in a quest for food. The bear then crashed through a wall “like the Kool-Aid man” to escape, according to police.

Don’t drink the Kool-Aid, folks. You might attract bears.

Have a great weekend!

Allison Brickell

Assistant Managing Editor, Early Investing