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 2.  / 
 3. Legal


RESCHEDULING, FARM BILL TRIGGER CANNABIS INDUSTRY LOBBYING BLITZ

By Chris Roberts, Reporter
August 12, 2024

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Just Released! Get realistic market forecasts, state-by-state insights and
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(Image by Grispb/stock.adobe.com)

Encouraged by the first tangible steps toward federal marijuana reform in a
generation – and threatened by hemp-derived competitors – MJ companies are
spending more than ever to win friends and influence lawmakers in Congress, an
analysis of federal lobbying disclosures shows.

Congressional lobbyists working for plant-touching companies deeply involved in
the marijuana or hemp industries reported spending a little less than $4 million
during the first half of 2024, according to forms due at the end of the July,
the most recent reporting period available.

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That’s up from $2.4 million over the same time period a year ago.

The current spike echoes a flurry of lobbying in late 2022, when marijuana
banking reform appeared close to the finish line in a lame-duck congressional
session.

But this increase is more pronounced.

Lobbyists and industry players told MJBizDaily the increase reflects the
potential impact of additional pending legislation, including the Farm Bill, as
well as heightened interest in the Biden administration’s efforts to reschedule
marijuana and, as a result, a lifting of the Internal Revenue Code Section 280E
tax burden.

“The general trend is that there is definitely a growing recognition that it’s
more of a bipartisan issue,” said Charlie Panfil, who leads controlled
substances-related lobbying at The Daschle Group, a Washington, D.C.-based
public policy agency headed by former Democratic Senate Majority leader Tom
Daschle.

“I also think there’s a lot of interest from other industries beside your core
cannabis industry,” Panfil added.


MORE RESOURCES BEYOND MONEY

To that end, neither spending figure is a full depiction of all the resources
directed at influencing federal lawmakers’ opinions toward marijuana.

How much time or energy is spent on cannabis banking or other marijuana matters
compared to other issues is not reflected in disclosure forms filed by major
political players with marijuana interests – such as tobacco giant Altria Client
Services or alcohol monolith Anheuser-Busch.

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But over the past year, members of Congress have heard from a host of varied
interests on cannabis-related issues.

These include major insurance companies and credit unions as well as lobbyists
representing state and local governments such as Colorado Gov. Jared Polis;
Humboldt County, California; and the Sergeants Benevolent Association of New
York City, records show.


‘BANG FOR THE BUCK’?

The impact of all those efforts is questionable considering:

 * The current session of Congress appears set to end without either banking
   reform or a new Farm Bill, the latter meaning the so-called “loophole”
   allowing intoxicating hemp-derived products to be sold online in most of the
   U.S. will persist.
 * Congress’ influence over the Department of Justice-controlled rescheduling
   process is minimal.
 * Section 280E still applies until marijuana rescheduling is final, and most
   observers agree the DOJ is immune to lobbyist pressure.

Advocates point out that lawmakers such as Senate Majority Leader Chuck Schumer
have publicly expressed support for marijuana descheduling, including writing
letters to that effect to Drug Enforcement Administration chief Anne Milgram.

Still, support for reform isn’t quite the same as accomplishing it.

“Action over words is really what we’re looking for,” said Morgan Paxhia, a
co-founder and managing director of California-based cannabis investment fund
Poseidon Asset Management.

“I give companies credit for continuing to try to push, but dollars are so
precious,” he added.

“And doing so in a year where the odds of progress are so limited … that’s why I
don’t know if you’re getting bang for the buck this year.”

In a sign of both their financial muscle as well as the stakes involved,
individual marijuana multistate operators and advocacy organizations compromised
of MSOs wield the most spending power in Washington, D.C.

Records show the top spender by far is Chicago-based MSO Cresco Labs.

So far in 2024, Cresco has spent $1.24 million on in-house lobbyists and to
retain major government-relations firms such as Denver-based Brownstein Hyatt
Farber Schreck, which also contacts members of Congress about marijuana banking
on behalf of credit unions.

That’s a huge increase from the $250,000 Cresco reported spending over the first
two quarters of 2023, but it continues a trend that began a year ago.

Cresco reported spending $510,000 in the third quarter of 2023 – the same time
frame when the Department of Health and Human Services announced it was
recommending marijuana be rescheduled.

The MSO spent another $640,000 in the final quarter of 2023, when many
stakeholders believed Schumer, the Democratic Senate Majority Leader, would call
marijuana banking reform for a floor vote.


But that vote didn’t materialize, in part because of flagging Republican support
for the SAFER Banking Act.

Cresco declined MJBizDaily requests for comment.

The second-biggest spender on marijuana lobbying efforts is New York City-based
MSO Curaleaf Holdings, records show.

Curaleaf is spending $290,000 per quarter, including:

 * $140,000 on its in-house lobbyist.
 * $80,000 to retain Brownstein Hyatt Farber Schreck.
 * $70,000 for the services of business-advisory firm Cozen O’Connor Public
   Strategies.

A Curaleaf spokesperson did not respond to MJBizDaily‘s request for comment.


2024 MJBIZ FACTBOOK – NOW AVAILABLE!  

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MONEY BETTER SPENT?

In some cases, the marijuana industry’s spending rivals that of major
corporations.

For example, the $80,000 that Cresco Labs paid Brownstein Hyatt Farber Schreck
equals what the McDonald’s Corp. paid that firm in the same quarter.

But the cannabis industry’s increased spending also represents the extra
complexities companies face under federal marijuana law.

In a twist, several observers said, this might incentivize K Street to take its
time solving such problems.

The longer they persist, the longer cannabis firms must pay lobbyists.

This dynamic is playing out in the hubbub over the Farm Bill.

Lawmakers are hearing from hemp companies seeking to preserve the status quo and
also taking meetings with marijuana firms eager to prohibit hemp-derived
cannabinoids.

That dissent within a sector that outsiders see as related, not cutthroat
competitors, encourages most lawmakers to look for other issues to champion,
multiple D.C. insiders said.

“That’s the challenge when you have differing interests: big companies and small
companies,” Poseidon’s Paxhia said.

Another challenge, he added: “How do we become a top-of-the-list item when we
have all these other issues?”

Put another way: Marijuana policy is much more involved than whether to legalize
or not.

And that nuance is still lost on much of a Capitol Hill contingent with many
other pressing concerns, a situation that’s unlikely to change no matter how
much money is spent and effort expended.

Still, advocates said, cannabis companies have a choice: Spend limited capital
on questionable political returns or cut back on their D.C. presence and risk
fading into the background.

“‘If you’re not at the table, you’re on the menu,'” said The Daschle Group’s
Panfil, offering a well-worn nugget of D.C. wisdom.

Chris Roberts can be reached at chris.roberts@mjbizdaily.com.

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