[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]


     UNLOCKED POTENTIAL? SMALL BUSINESSES IN THE CANNABIS INDUSTRY

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                                HEARING

                               BEFORE THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                             JUNE 19, 2019

                               __________

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
                               

            Small Business Committee Document Number 116-028
             Available via the GPO Website: www.govinfo.gov
                   
                                 
                               _________
                               

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
36-715                       WASHINGTON : 2019                     
          
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                   HOUSE COMMITTEE ON SMALL BUSINESS

                 NYDIA VELAZQUEZ, New York, Chairwoman
                         ABBY FINKENAUER, Iowa
                          JARED GOLDEN, Maine
                          ANDY KIM, New Jersey
                          JASON CROW, Colorado
                         SHARICE DAVIDS, Kansas
                          JUDY CHU, California
                           MARC VEASEY, Texas
                       DWIGHT EVANS, Pennsylvania
                        BRAD SCHNEIDER, Illinois
                      ADRIANO ESPAILLAT, New York
                       ANTONIO DELGADO, New York
                     CHRISSY HOULAHAN, Pennsylvania
                         ANGIE CRAIG, Minnesota
                   STEVE CHABOT, Ohio, Ranking Member
   AUMUA AMATA COLEMAN RADEWAGEN, American Samoa, Vice Ranking Member
                        TRENT KELLY, Mississippi
                          TROY BALDERSON, Ohio
                          KEVIN HERN, Oklahoma
                        JIM HAGEDORN, Minnesota
                        PETE STAUBER, Minnesota
                        TIM BURCHETT, Tennessee
                          ROSS SPANO, Florida
                        JOHN JOYCE, Pennsylvania

                Adam Minehardt, Majority Staff Director
     Melissa Jung, Majority Deputy Staff Director and Chief Counsel
                   Kevin Fitzpatrick, Staff Director
                            
                            
                            C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Nydia Velazquez.............................................     1
Hon. Steve Chabot................................................     2

                               WITNESSES

Ms. Shanita Penny, President of the Board of Directors, Minority 
  Cannabis Business Association, Portland, OR....................     4
Mr. Eric Goepel, Founder & CEO, Veterans Cannabis Coalition, 
  Walnut, CA.....................................................     6
Ms. Dana Chaves, Senior Vice President and Director of Specialty 
  Banking, First Federal Bank, Lake City, FL.....................     8
Mr. Paul Larkin, John, Barbara, and Victoria Rumpel Senior Legal 
  Research Fellow in the Meese Center for Legal and Judicial 
  Studies, The Heritage Foundation, Washington, DC...............    10

                                APPENDIX

Prepared Statements:
    Ms. Shanita Penny, President of the Board of Directors, 
      Minority Cannabis Business Association, Portland, OR.......    30
    Mr. Eric Goepel, Founder & CEO, Veterans Cannabis Coalition, 
      Walnut, CA.................................................    63
    Ms. Dana Chaves, Senior Vice President and Director of 
      Specialty Banking, First Federal Bank, Lake City, FL.......    72
    Mr. Paul Larkin, John, Barbara, and Victoria Rumpel Senior 
      Legal Research Fellow in the Meese Center for Legal and 
      Judicial Studies, The Heritage Foundation, Washington, DC..    75
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    CUNA - Credit Union National Association.....................    93
    ETA - Electronic Transactions Association....................    94
    Florida Department of Agriculture and Consumer Services......    95
    Full Spectrum Omega, Inc.....................................    97
    NCIA - National Cannabis Industry Association................   103
    NORML - National Organization for the Reform of Marijuana 
      Laws.......................................................   105
    SARBA - Safe and Responsible Banking Alliance................   107
    Statement of Dan Anglin, Loveland,CO.........................   109

 
     UNLOCKED POTENTIAL? SMALL BUSINESSES IN THE CANNABIS INDUSTRY

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                        WEDNESDAY, JUNE 19, 2019

                  House of Representatives,
               Committee on Small Business,
                                                    Washington, DC.
    The committee met, pursuant to call, at 11:30 a.m., in Room 
2360, Rayburn House Office Building. Hon. Nydia Velazquez 
[chairwoman of the Committee] presiding.
    Present: Representatives Velazquez, Finkenauer, Golden, 
Kim, Crow, Davids, Evans, Schneider, Espaillat, Delgado, 
Houlahan, Craig, Chabot, Hagedorn, Stauber, Burchett, and 
Joyce.
    Chairwoman VELAZQUEZ. Good morning. The committee will come 
to order.
    I thank everyone for joining us this morning, and I want to 
especially thank the witnesses who have traveled from across 
the country to be here with us today.
    We are here to draw what I believe is needed attention to 
an industry that is rapidly evolving. As more and more states 
take steps to bring cannabis to commerce, we are seeing small 
businesses at the forefront of this expanding industry. As the 
only House committee dedicated solely to the needs of small 
firms, it is important for us to be shedding light on the 
challenges these small entities face, as well as the economic 
potential they offer. That is why I have called today's panel, 
and I look forward to hearing more from our witnesses and thank 
them for taking the time to be with us this morning.
    In recent years, there has been a rapid shift in the legal 
treatment of cannabis, often led by voters at the local and 
state levels. Today, nearly every American lives in a state 
where cannabis is decriminalized to some extent, and legal 
business activity is permitted to certain degrees. This rapid 
growth of the legal cannabis industry has had a considerable 
impact on our nation's broader economy. In 2018, consumer 
spending in this industry passed $10 billion for the first 
time, and consumer spending is expected to increase to $23 
billion by 2022.
    Investment activity also increased dramatically last year 
up $13.8 billion in 2018, compared to only $3.6 billion in 
2017. Clearly these figures illustrate a market that is ripe 
for entrepreneurship. Despite growing economic opportunities 
around legal cannabis, factors like federal law enforcement, 
conflicting rules among the states, and our current banking 
regulations are hindering the ability for entrepreneurs and 
small businesses to fully engage in this new industry.
    So today, we will have a chance on this committee, to spark 
the dialogue over the role of the federal government, and 
particularly, the Small Business Administration, can plan in 
supporting entrepreneurs in this sector. By reducing financial 
barriers to entry in cannabis-related businesses, SBA can play 
a critical role in offering affordable access to capital and 
counseling services. That is why I am currently working on 
legislation that will work to open some of the agency's 
programs to businesses in areas where the industry is legal.
    We know the cannabis industry is quickly evolving but is 
mired with inconsistent federal and state laws that are 
creating barriers for small businesses. We are here today to 
listen to the challenges and opportunities small firms face in 
this industry.
    Before I yield to my friend, Ranking Member Chabot, I want 
to mention that I understand that there are differing views on 
the legalization of cannabis. Our committee has had a long 
history of approaching issues in a thoughtful and constructive 
way to best represent the interests and concerns of 
entrepreneurs and small businesses. As the Ranking Member and I 
always say, there are no Republican small businesses nor 
Democratic small businesses, only American small businesses. 
And our role on this committee is to fight for them. I 
encourage everyone to keep that in mind and remember that we 
can disagree without being disagreeable.
    Again, I want to thank the witnesses for being here today, 
and I now yield to the Ranking Member, Mr. Chabot, for his 
opening statement.
    Mr. CHABOT. Thank you, Madam Chairwoman.
    I would like to thank the witnesses for being here today. 
And as you look around the room, I would just say that it is 
clear that there is considerable interest in this topic because 
the room is packed. And as most people know, we like to think 
that this is the most bipartisan Committee in Congress. Both 
Ms. Velazquez and I have had the opportunity to lead this 
Committee over the past several years, and regardless of who is 
in charge, we have worked together and moved bipartisan 
legislation together. And as she mentioned, when we disagree, 
we do it without being disagreeable, usually.
    Unfortunately, today is one of those times where the 
philosophical divide between our respective perceptions of how 
we should move forward deviates. But as is our custom, I am 
confident that we will do so respectfully.
    Marijuana is the most commonly used illicit drug in the 
United States. Its use is associated with a range of adverse 
health effects. Short-term effects include altered senses, 
reduced motor coordination, diminished memory, and impaired 
problem-solving abilities.
    Recent research suggests that the early use of marijuana 
may adversely impact long-term thinking, memory, and learning. 
Marijuana use is also associated with addiction to other 
substances and dependency, respiratory problems, child 
developmental problems related to use during pregnancy, and 
mental health problems. These are not my opinions; these are 
facts backed up by decades of academic and medical research.
    In June 2018, scientists at the University of Pennsylvania 
discovered that young people who use marijuana frequently were 
more likely than nonusers to have lower scores on memory tests, 
have greater difficulty learning new information, and show less 
than higher level problem solving. Other studies have also 
found that teen brains are more vulnerable to the effects of 
marijuana than alcohol.
    And while I understand that the majority, if not all the 
states and municipalities have decriminalized marijuana to some 
degree, have implemented an age limit of 21, another study, 
this one by the National Institute for Drug Abuse for Teens, 
found that nearly 33 percent of 10th graders reported having 
used marijuana at least once. It does not stop there. A 2018 
University of Michigan study found the percentage of 8th 
graders, 10th graders, and 12th graders who reported using 
marijuana is at the highest rate in history.
    The U.S. Constitution established a government based on 
Federalism because a state is typically in the best position to 
legislate the laws most appropriate for its citizens. However, 
the drug market is a multi-billion dollar, nationwide business 
and its repercussions do not stop at state borders. It is my 
belief that the use of marijuana can be harmful to both family 
and society. Additionally, prohibiting marijuana sends a clear 
message to young people that this drug is not only illegal but 
dangerous.
    I have concerns that opening this door as quickly and as 
widely as various states and municipalities are pushing will 
have a negative effect on our young people and on society at 
large. While I understand there may be entrepreneurial 
opportunities in this area, it is my opinion that the dangers 
to our Nation and the communities within it outweigh those 
opportunities.
    I yield back.
    Chairwoman VELAZQUEZ. The gentleman yields back.
    I would like to take a minute to explain the timing rules. 
Each witness gets 5 minutes to testify and the members get 5 
minutes for questioning. There is a lighting system to assist 
you. The green light comes on when you begin, and the yellow 
light means there is 1 minute remaining. The red light comes on 
when you are out of time, and we ask that you please stay 
within the timeframe to the best of your ability.
    I would now like to introduce our witnesses.
    Our first witness is Ms. Shanita Penny, a cannabis 
advocate, business professional, and entrepreneur. Her boutique 
consulting firm provides management and strategy consulting to 
startups and small businesses in the legitimate cannabis 
industry. She proudly serves as president of the Board of 
Directors for the Minority Cannabis Business Association, and 
is also a member of the New Jersey Cannabis Industry 
Association's Board of Trustees. Ms. Penny is a proud alumni of 
North Carolina A&T State University where she earned a 
bachelor's of science degree in transportation and logistics 
management.
    Our second witness is Mr. Eric Goepel, the founder and CEO 
of the Veterans Cannabis Coalition, a nonprofit advocacy group 
dedicated to ending cannabis prohibition and guaranteeing equal 
access to cannabis for veterans and all Americans. He enlisted 
in the U.S. Army at the age of 18, served for 7 years, 
providing communications and intelligence support in the 
Special Operations community. During that time, he deployed 
twice to Iraq and once to the Philippines. At the end of his 
enlistment, Mr. Goepel worked as a defense contractor in 
Afghanistan before returning to the U.S. to attend and graduate 
from the University of California-Berkeley, with a B.A. in 
Political Science. Prior to founding the Veterans Cannabis 
Coalition, Eric was the Assistant Director of the American 
Legion's National Security Division where he developed 
positions for the legion on the opioid crisis, cybersecurity, 
and transnational organized crime. Welcome to all of you.
    Our third witness today is Ms. Dana Chaves, the Senior Vice 
President and Director of Specialty Banking for First Federal 
Bank of Florida. She has been building strategic banking 
financing and legislative relationships to further the cannabis 
industry access to banking and financial services for more than 
5 years. Ms. Chaves also currently serves as Chair of the 
National Cannabis Industry Association's Banking Access 
Committee. Prior to joining First Federal in February of this 
year, Ms. Chaves worked at Hybrid Payroll as the Director of 
Banking Relations at Colorado Credit Union, providing some of 
the earliest access to banking services to the cannabis 
industry. Welcome, Ms. Chaves.
    I would now like to yield to Mr. Chabot to introduce our 
final witness.
    Mr. CHABOT. Thank you, Madam Chair.
    Our final witness will be Paul Larkin, a senior legal 
research fellow in the Meese Center for Legal and Judicial 
Studies at The Heritage Foundation. Mr. Larkin works on 
criminal justice policy, drug policy, and regulatory policy. 
Before joining Heritage, he held various positions within the 
Federal Government. At the U.S. Department Justice from 1984 to 
1993, he served as an assistant to the Solicitor General and 
argued 27 cases before the U.S. Supreme Court. He also was an 
attorney in the Criminal Division's Organized Crime and 
Racketeering section. He also served as counsel to the Senate 
Judiciary Committee and head of the Crime Unit for Senator Orin 
Hatch. He received his law degree from Stanford Law School and 
received a master's in Public Policy from George Washington 
University. We thank you for being here, Mr. Larkin, and I 
yield back.
    Chairwoman VELAZQUEZ. The gentleman yields back.
    And now, Ms. Penny, you are recognized for 5 minutes.

    STATEMENTS OF SHANITA PENNY, PRESIDENT OF THE BOARD OF 
DIRECTORS, MINORITY CANNABIS BUSINESS ASSOCIATION; ERIC GOEPEL, 
  FOUNDER AND CEO, VETERANS CANNABIS COALITION; DANA CHAVES, 
SENIOR VICE PRESIDENT AND DIRECTOR OF SPECIALTY BANKING, FIRST 
 FEDERAL BANK; PAUL LARKIN, JOHN, BARBARA, AND VICTORIA RUMPEL 
SENIOR LEGAL RESEARCH FELLOW IN THE MEESE CENTER FOR LEGAL AND 
           JUDICIAL STUDIES, THE HERITAGE FOUNDATION

                   STATEMENT OF SHANITA PENNY

    Ms. PENNY. Good morning, Chairwoman Velazquez and members 
of the Committee. Thank you for your leadership on the effort 
to provide the regulated cannabis industry with access to Small 
Business Administration services.
    As the president of MCBA, I lead an organization with the 
mission to create equal access to the cannabis industry to 
economically empower our communities. We work collaboratively 
to create equitable cannabis policy that encompasses 
restorative justice, community reinvestment, and of course, 
economic empowerment which I will focus on today.
    Equitable economic development and empowerment unlock the 
full potential of the local economy by dismantling barriers and 
expanding opportunities for low-income people and communities 
of color. Through accountable public action and investment, the 
cannabis industry will help grow quality jobs and increase 
entrepreneurship, ownership, and wealth.
    Our latest resource for policymakers, a model municipal 
social equity ordinance is intended to be used by 
municipalities that have adopted or are currently considering 
drafting ordinances to regulate, zone, and license local 
cannabis businesses. We started with the framework of the 
RESPECT Resolution introduced by Representative Barbara Lee 
last year and borrowed from social equity ordinances in 
development attempting to improve upon these pioneering works 
with the benefit of hindsight.
    I have included a copy of our model ordinance in the 
appendix of my written testimony. And while we have worked 
tirelessly to ensure that cannabis policy is equitable on every 
level, our efforts have been crippled by a lack of access to 
and support from agencies like the SBA. State and municipal 
social equity and economic empowerment programs across the 
country are stalled because they are wasting precious resources 
testing various solutions when the answer is literally right in 
front of me.
    State and municipal social equity programs are doing this 
work, but like all other small businesses, those wishing to 
start a state legal cannabis business should be able to access 
an agency that has, since its founding, delivered millions of 
loans, loan guarantees, contracts, counseling sessions, and 
other forms of assistance to small businesses.
    Six figure to multi-million dollar startup costs make 
starting and growing cannabis businesses challenging for most, 
but it is especially difficult for state and city equity 
licensees. Without access to capital, they are vulnerable to 
predatory lending and business practices. These business owners 
need SBA support and resources to start and grow their 
businesses, not business partners and investors that take 
advantage of equity programs to enter the market early or 
tokenize their partners for market share.
    Small cannabis businesses are often left scrambling to 
remain compliant when regulations change and must either find 
new sources of capital to cover the cost of changes or face 
significant fines for violations. In addition to regulatory 
changes, uncontrollable factors, such as insect infestation, 
crop failure, or a natural disaster can often leave business 
owners with insurmountable debt and no way of making up for 
lost revenue.
    As Representative Earl Blumenauer, Chair of the Cannabis 
Caucus said earlier this year, ``There will be no comprehensive 
cannabis legalization bill that does not include strong equity 
components.''
    Even narrowly tailored legislation, like the Safe Banking 
Act or the small business legislation we are discussing today 
must address business and social hardships that 
disproportionately impact minority businesses owners and our 
communities.
    Representative Perlmutter's amendment added during markup 
created a requirement that Federal regulators collect data and 
provide an annual report to Congress on the availability of 
access to financial services for minority-owned cannabis 
businesses and that the Government Accountability Office carry 
out a study on the barriers to entry for minority-owned 
cannabis businesses.
    MCBA suggests that Congress require SBA to: (a) collect 
data on the availability and provision of SBA products and 
services to minority-owned cannabis businesses; (b) issue an 
annual report to Congress; and (c) require SBA to collect and 
report data on the denial of loan and 8(a) program applications 
on the sole basis of a prior cannabis conviction that would not 
preclude participation in a state cannabis program.
    We suggest that Congress direct the GAO to conduct a study 
on the barriers to marketplace entry, including access to SBA 
financial services for potential and existing minority-owned 
cannabis businesses and that Congress require that SBA not 
preclude participation in the 8(a) business development program 
or the granting of a Federal contract for cannabis-related 
business based solely on prior cannabis convictions, again, 
that do not preclude participation in state legal cannabis 
programs.
    Last, we suggest that SBA lift the moratorium on new 
Community Advantage lenders to ensure sufficient lenders to 
provide equitable access to Community Advantage Loans in 
affected communities.
    Thank you again for the opportunity to testify today. I 
look forward to working with you to create equitable cannabis 
policy that addresses the needs and concerns of often-forgotten 
stakeholders, small businesses, and the communities devastated 
by the failed war on drugs.
    Chairwoman VELAZQUEZ. Thank you, Ms. Penny.
    Mr. Goepel, you are now recognized for 5 minutes.

                    STATEMENT OF ERIC GOEPEL

    Mr. GOEPEL. Chairwoman Velazquez, Ranking Member Chabot, 
and members of the House Committee on Small Business, the 
Veterans Cannabis Coalition would like to thank you for the 
opportunity to address the Committee on veterans and cannabis 
issues currently under consideration. We would especially like 
to thank the Committee for its foresight in tackling some of 
the many challenges that have arisen as citizens grapple with 
the conflict between Federal and state laws regarding cannabis.
    I served for 7 years on active duty in the U.S. Army, which 
included two deployments in Iraq. I cofounded Veterans Cannabis 
Coalition with Bill Ferguson, an infantry combat veteran of the 
invasion of Iraq and a long-time veteran advocate because we 
saw the need for effective treatments for vets and the 
potential for cannabis. We recognize in ourselves and in our 
sisters and brothers in arms the struggles with physical and 
mental health and, as they would say in the military, their 
second and third order effects that negatively impacted our 
relationships, our housing, and our employment. For too many in 
our community, those struggles ended in suicide and overdose.
    Our generation of veterans has the distinction of having 
served in the longest conflicts in U.S. history that saw nearly 
7,000 service members killed in action while an estimated 
100,000 veterans died at home of suicide and overdose. At least 
20 veterans die by suicide and overdose a day, month after 
month, year after year, while their friends and family are left 
to pick up the pieces.
    We know the factors leading to suicide and overdose are 
complex but they are understandable. And we have come to 
understand the often unspoken role that legal pharmaceuticals 
played in many untimely deaths. Hundreds of veterans have told 
us about being prescribed cocktails of opioids, sedatives, 
stimulants and numerous other psychotropic substances and 
experienced severe suicidal ideation or attempted suicide. Many 
more have discussed varying reactions to these drugs like major 
depression, sleep disturbances, or fits of rage.
    Enter cannabis. The American Legion Iraq and Afghanistan 
Veterans of America have both conducted surveys asking veterans 
questions about cannabis. Across both surveys, at least one in 
five veterans reported using cannabis for their service-
connected conditions. In our work, many of those same veterans 
who struggled under the weight of taking dozens of pills a day 
found immense relief through using cannabis, finding it far 
more effective at managing their injuries, like post-traumatic 
stress disorder and chronic pain, than drugs like anti-
psychotics and ibuprofen.
    This is where the Veteran Cannabis Coalition stands. We see 
the bright light between cannabis and improved health because 
have witnessed the positive changes in the lives of many in our 
community who chose cannabis as an alternative to a slew of 
toxic, addictive pharmaceuticals. We also understand the broad 
potential of a plant that has numerous medical, commercial, and 
industrial applications and what that means for millions of 
veteran patients, employees, and employers.
    Despite the current field of international multi-billion 
dollars cannabis corporations, the movement to reform cannabis 
laws in the U.S. was centered on the needs of patients, not the 
potential for profit. But while many patients in the past were 
able to rely in donation networks and co-ops, the scale 
required today to reach everyone interested in cannabis often 
necessitates complex supply chains made more complex by the 
double-edged sword of heavily regulated state systems and 
Federal prohibition.
    These complexities favor heavily capitalized businesses who 
have the resources necessary to comply with burdensome rules 
and massive tax liabilities. This presents a huge threshold to 
entry for small businesses made more difficult because they are 
cut off from raising capital from traditional sources. 
Financial services, including basic access, like deposits in 
checking, are often denied to legal cannabis businesses by 
vendors who fear Federal reprisal. For example, Berkeley 
Patients Group, the Nation's longest-running cannabis 
dispensary and co-owned by a Gulf War veteran, has had their 
bank accounts closed nearly 40 times in 20 years. Multiple 
times per year, BPG is forced to pay taxes in the hundreds of 
thousands of dollars in cash at great personal risk to both 
employees and government workers who have to deal with massive 
amounts of currency.
    The denial of access to traditional financing forces 
cannabis businesses to seek vendors offering far less favorable 
terms. Ancillary services in the cannabis industry, including 
payroll, IT, and insurance are extremely limited due to 
potential sanctions by the Federal Government on firms that 
participate in any way in the cannabis industry. This, in turn, 
enables those providers who do participate to charge exorbitant 
rates. Just as the Federal and state conflict in cannabis laws 
damages the ability of cannabis touching small businesses to be 
successful, it discourages the participation of indirect 
businesses which further negatively impacts direct cannabis 
businesses and their ability to deliver accessible, affordable 
medicine.
    Millions of patients across the country have a need for 
equal access to cannabis, which we define as a combination of 
affordability, physical accessibility, and a standardized 
quality. We have seen the benefits veterans have experienced 
using and working with cannabis and we know that in making 
those benefits as widely available as possible, we can work to 
reduce the suicide and overdose epidemic that has devastated 
our community. But everyone who uses legal cannabis relies on 
licensed cultivators, licensed manufacturers, and retailers and 
dozens of ancillary businesses that interact with them. We want 
to see industries small businesses delivering medicine to those 
in need, developing new devices and treatments, and fully 
exploring all the pathways the plant contains. And those 
businesses can be empowered by the actions of this Committee.
    We hope that you will continue supporting this discussion 
and work with stakeholders to fulfill the promise and ingenuity 
of American small businesses in this new and important sector.
    Thank you for your time.
    Chairwoman VELAZQUEZ. Thank you, Mr. Goepel.
    Ms. Chaves, you are now recognized for 5 minutes.

                    STATEMENT OF DANA CHAVES

    Ms. CHAVES. Chairwoman Velazquez, Ranking Member Chabot, 
and members of the Committee, I am Dana Chaves, and I am the 
senior vice president and director of Specialty Banking 
Services at First Federal Bank of Florida. Thank you for the 
opportunity to testify before the Committee today to discuss 
the importance of unlocking access to affordable capital for 
businesses in the regulated cannabis industry. I am pleased to 
provide a first-hand account of how local community banks can 
invest in aspiring entrepreneurs and new businesses to help 
facilitate economic development and job growth, especially in 
underserved areas. I will briefly summarize my written 
testimony and I look forward to answering your questions.
    First Federal Bank is a federally chartered mutual bank 
which was established in 1962. We have over 750 employees, with 
over 24 branches, 17 mortgage offices, and operate in eight 
states with almost $2 billion in total assets. And that 
encompasses nearly 75,000 clients.
    We launched our cannabis banking program on April 1, 2019, 
and to date, we have opened 62 accounts tied to marijuana-
related businesses. We classify these accounts into three 
separate tiers. Tier I are direct plant touching businesses, 
such as dispensaries and cultivators; Tier II are ancillary 
businesses, vendors, investment accounts, and depository 
accounts; and Tier III are businesses that are involved in the 
medical side, like the treatment centers or doctors' offices.
    We also serve CBD companies, as they, too, are dealing with 
issues related to financial services. We have over 55 Tier I, 
II, and III pending applications and several are currently 
under our due diligence review. This process can take up to 
several weeks to complete.
    I am also testifying on behalf of the National Cannabis 
Industry Association (NCIA), the largest national trade 
association dedicated to protecting state-regulated cannabis 
businesses and advancing policy reforms needed to align Federal 
and state cannabis laws. Currently, I am the Chair of the NCIA 
Banking Access Committee and have helped publish several 
industry reports to assist and educate financial institutions 
and state regulatory agencies on cannabis-related banking.
    To date, 47 states and the District of Columbia, as well as 
Guam, the Northern Mariana Islands, and Puerto Rico, have 
passed legislation authorizing some form of cannabis for 
regulated medical or adult-use purposes. Additionally, 33 
states have enacted laws regulating the commercial production 
and sale of medical or adult-use marijuana, excuse me, 
including my home state of Florida. However, because cannabis 
remains a Schedule I drug under the Federal Controlled 
Substances Act, licensed cannabis-related businesses have been 
effectively locked out of accessing basic financial services, 
including the traditional loans and programs established by the 
Small Business Administration, such as the 7(a) loan guaranty 
program, the 504 Certified Development Company loan guaranty 
program, the Microloan program, and disaster relief efforts.
    With my testimony today, I hope this Committee will develop 
and pass legislation that expands access to business loans and 
lending programs under the jurisdiction of the SBA for 
cannabis-related businesses, many of which are led by aspiring 
entrepreneurs or are minority or women-owned. Also, I hope the 
members of the Committee will also support H.R. 1595, the 
Secure and Fair Enforcement Banking Act. The bill, which 
currently has over 200 bipartisan cosponsors, would permit 
banking and depository services to licensed cannabis-related 
businesses, including ancillary businesses.
    Given the lack of clarity for cannabis banking, as well as 
the inability for SBA to partner with community banks to assist 
MRBs, I have seen, and continue to see, those involved in the 
state-regulated cannabis industry struggle. As an example, I 
have an executive who left a Fortune 500 to work for one of our 
clients who was refinancing his home with a large national 
bank. The executive had a longstanding relationship with this 
bank and literally 30 minutes before they were closing his loan 
they canceled it and decided they could not help him because of 
where his funds were coming form. We had to step in and assist 
him with refinancing his home. So while this example had a 
positive outcome, First Federal has several requests for 
lending from MRB clients and we are not in a position to 
provide these services due to the current regulatory 
environment.
    Since 2004, the U.S. Department of Treasury's financial 
crime enforcement network has maintained guidance regarding the 
conditions under which financial institutions may work with 
cannabis-related businesses. These conditions include an array 
of Federal requirements financial institutions must meet to 
provide banking services to licensed cannabis-related 
businesses, such as preventing distribution of cannabis to 
minors, preventing revenue from the sale of cannabis to 
criminal enterprises and cartels, ensuring cannabis activities 
and transactions are not being diverted to a state where it is 
not legal, among others. As a provider of small business loans, 
it is frustrating that the SBA has not incorporated a similar 
approach.
    I want to thank the Chair, Ranking Member, and Committee, 
for your time to discuss expanding access to SBA loan programs 
for the regulated cannabis industry. This topic is important 
and has economic consequences for businesses and community 
banks all across America. I urge the Committee to develop and 
pass legislation that allows SBA to provide the regulated 
cannabis industry with affordable capital necessary to increase 
economic opportunity and support job growth.
    Thank you again for the opportunity to submit my testimony 
today.
    Chairwoman VELAZQUEZ. Thank you, Ms. Chaves.
    Mr. Larkin, you are now recognized for 5 minutes.

                    STATEMENT OF PAUL LARKIN

    Mr. LARKIN. Madam Chairwoman, Mr. Ranking Member, and 
members of the Committee.
    I made four points in my written statement and I will 
summarize only one of them here, and that is this: If Congress 
were to legalize recreational marijuana use, it should require 
that states own and operate distribution facilities.
    Debate over the supply aspect of marijuana legalization is 
generally focused on the difference between distribution by 
large and small-scale businesses. I think that is a mistake 
because those are not the only two options. Distribution by 
whatever size business is not just the province of private 
parties, and I think it is important to consider other 
distribution mechanism.
    Now, why? It is important to do this because marijuana is 
not an ordinary commercial product, like batteries or 
flashlights. It is much closer to alcohol or tobacco. Long-term 
use can lead to severe problems. We know a certain percentage 
of people who use it on a long-term basis will become 
physically dependent or addicted. A certain percentage will 
suffer severe mental disorders. And people who use it, even on 
a short-term basis and drive can lead to havoc on the highways. 
So it is not your average commercial product. It is very 
different. All of which, I think, can wind up giving rise to 
the conclusion that we have to be careful about how we wind up 
legalizing it if that is your decision.
    Now, moderate use of marijuana by adults at home is not 
likely to lead to large-scale social problems or major 
individual problems. Adults who use a few times a week when not 
driving, when not working, when not caring for children is 
going to be an activity that is fairly harmless. But that might 
describe only about half of cannabis users, and that practice 
describes only 2 percent of cannabis use. Okay? Which is 2 
percent of consumption and only 2 percent of sales and profits. 
A small number of daily or dependent users consume far more 
marijuana than the average person who does it on an occasional 
basis.
    Cannabis consumption is like alcohol consumption. It 
follows the 80-20 rule. Eighty percent of consumption is by 20 
percent of the users. What does that mean in practice? Since 
1996, since cannabis use has been legalized in various states, 
it has changed from being a weekend activity to sometimes being 
a daily activity. It has become more like smoking tobacco than 
drinking alcohol. The number of Americans who self-report using 
cannabis daily or near daily has increased from roughly 1 
million in 1992 to roughly 8 million in 2016. That is a 
considerable increase.
    Now, aggravating those factors is this: Just under one-half 
of consumption is by people who either have been in treatment 
for some type of substance use disorder or have the symptoms of 
a substance use disorder and just have not had treatment for 
it. And since being addicted or being physically dependent is 
not an activity that generally is one that people consider 
laudatory, the numbers I have given you may even be 
conservative. They may even be higher.
    Moreover, about 60 percent of consumption is by people with 
a high school education or less, which means they are far more 
sensitive to declines in prices and prices have dropped, 
sharply, in fact.
    But what does that mean? From the perspective of cannabis 
vendors, marijuana abuse is not an unfortunate side effect of 
legalization. No. Marijuana abuse is the goal and marijuana 
abusers are the target demographic. That is the result of the 
80-20 rule.
    Now, the trick, as Professor Mark Kleiman of NYU has said, 
if you are going to legalize it, is to try to keep at bay the 
logic of the market because the logic of the market has a 
tendency to create and exploit people with substance abuse 
disorders. How then do you do that? There are at least two 
other options that should be debated. One is endorsed by 
Professor Jonathan Caulkins of the Carnegie Mellon University. 
He says the shale should be limited simply to not-for-profit 
companies. Another option is the one that Professor Mark 
Kleiman of NYU endorses. He says that the sale should be 
limited to government businesses, similar to what happens in my 
own state of Virginia for distilled spirits. I think Professor 
Kleiman has the better of the argument for several reasons. I 
mentioned them. Let me just mention one.
    There is no First Amendment problem whatsoever to 
preventing advertising of marijuana if it is sold by the 
states. States are not persons. They have no First Amendment 
rights and it is easier for the states to keep track of their 
own stores and their own people.
    For these reasons, I hope you will, if you decide to 
legalize it, consider these other two options and avoid 
recreating what we have with cigarettes and tobacco. Thank you.
    Chairwoman VELAZQUEZ. Thank you, Mr. Larkin.
    And thank you to all the witnesses. I will begin by 
recognizing myself for 5 minutes.
    Ms. Penny, recent data shows the legal U.S. cannabis 
industry has a high rate of women in leadership roles with a 36 
percent average across the industry and the highest being 63 
percent in high-level executive positions in testing labs. We 
also know that minority business owners generally face greater 
challenges in accessing affordable capital to start, expand, 
and operate their businesses, and that the SBA has historically 
played a role in providing access to affordable capital in 
emerging industries such as technology and communication 
services. Should SBA loan programs and entrepreneurial 
development programs be accessible to small firms in the 
cannabis industry?
    Ms. PENNY. Absolutely. We do not have access to 
institutional lending currently, and so we are left to finance 
these businesses with private equity. This is usually a very 
expensive loan. And because most people are not savvy enough, 
they typically get into situations where as they continue to 
raise money they lose equity. And so these businesses that were 
once minority owned, women owned, quickly become, you know, 
something that is not that.
    Chairwoman VELAZQUEZ. Thank you.
    Mr. Goepel, we know that generally veterans try to give 
back and help fellow veterans, including by hiring them in 
their businesses. However, we also heard that veterans who 
receive benefits from the VA have expressed hesitation before 
entering the legitimate cannabis industry, either as 
entrepreneurs or as employees for fear of losing their VA 
benefits. Should the VA issue guidance clarifying that veterans 
employed in the legitimate cannabis industry will not lose 
their benefits simply because of the industry in which they are 
employed?
    Mr. GOEPEL. Thank you, Chairwoman.
    Currently, the VA has a directive stating that veterans who 
self-disclose cannabis use within the VA healthcare system will 
not be denied benefits or stripped of benefits. However, when 
you are talking about other non-healthcare related benefits, 
like VA home loans, the VA looks at where the source of your 
income is coming from. And if it sees that the major source of 
your income is coming from a cannabis-related enterprise, then 
essentially you do not have income. So it disqualifies a lot of 
veterans because the VA essentially does not recognize the 
validity of the business they are working in.
    Chairwoman VELAZQUEZ. So should SBA and the VA enter into a 
partnership designed to enhance entrepreneurial and employment 
opportunities for veterans in the legitimate cannabis industry 
and making sure that because you work as an employee or as a 
business owner, you would not be denied any type of benefits or 
your income counting for the purposes of acquiring any type of 
property?
    Mr. GOEPEL. That clarification would go a long way to 
alleviating a lot of the stress and hesitation veterans 
experience, you know, entering or working in the cannabis 
industry, essentially being under the gun of some sort of 
Federal sanction if it were to come out in certain 
circumstances that they were working in the cannabis industry. 
So, yes, we would certainly support any effort to, you know, 
the SBA or, excuse me, the Small Business Committee and the VA 
working together to clarify that.
    Chairwoman VELAZQUEZ. Thank you.
    Ms. Chaves, SBA policy prohibits SBA-backed loans from 
going to direct or indirect cannabis businesses. The policy 
defines an indirect cannabis business as one that generates any 
revenue from the sale of a good or service to a direct cannabis 
business. That is an incredibly broad prohibition. As a banker, 
what kind of impact does this have on the small business sector 
and local communities?
    Ms. CHAVES. It has a very large impact. These small 
businesses are not allowed to grow. They are not allowed to 
expand and help the communities and provide jobs in underserved 
areas or any other areas. So these loans and this clarification 
would help immensely for us to be able to help these 
businesses.
    Chairwoman VELAZQUEZ. And what are the potential, 
unintended consequences of denying legitimate businesses 
traditional banking services and forcing them to operate on an 
all-cash basis?
    Ms. CHAVES. The consequences are huge. Operating in an all-
cash environment creates a community safety risk as far as 
their employees, the staff, and the community itself. We do 
take some cash deposits but we never take a cash deposition in 
our financial institution. It has always been armored car 
service. So these risks are huge and they can cause severe 
damage.
    Chairwoman VELAZQUEZ. Thank you.
    My time is up. My time has expired.
    And now I recognize the Ranking Member, Mr. Chabot, for 5 
minutes.
    Mr. CHABOT. Thank you, Madam Chair.
    The Chair started out by asking a question about women, so 
Ms. Penny, let me ask you this: Are you aware that marijuana 
usage among pregnant women has doubled in recent years?
    Ms. PENNY. I was not aware of that. I am aware of the fact 
that a lot of people have replaced harmful pharmaceuticals with 
cannabis. And so if pregnant women are falling into that 
category it may be some truth to that statement.
    Mr. CHABOT. Let me follow up. Are you aware that use of 
marijuana by a pregnant woman can cause premature birth? It can 
cause low birth weight, both of which can be harmful to the 
newborn child and it can cause other problems as well; would 
you agree with that?
    Ms. PENNY. I have not seen this science or research that 
says that specifically. I am aware of what smoking does. 
Pregnant women today----
    Mr. CHABOT. Pregnant women should not be smoking either.
    Ms. PENNY. Pregnant women today have a lot of options for 
consuming cannabis safely through topicals, low THC forms of 
the medicine itself.
    Mr. CHABOT. Okay.
    Mr. Larkin, let me move to you. Would you characterize the 
growing, cultivating, transporting, and selling of a product, 
any product, across state lines, interstate commerce?
    Mr. LARKIN. Yes, sir.
    Mr. CHABOT. Okay. And does the U.S. Constitution give the 
authority to the Federal Government to ``regulate'' commerce 
among the several states or does it just leave it up to the 
states to figure out?
    Mr. LARKIN. The Constitution expressly grants that power to 
Congress.
    Mr. CHABOT. Thank you.
    Would you think it fair for a state, any state, let's say 
Vermont since we do not have anybody on this Committee from 
Vermont, to opt out of a Federal law, perhaps the Clean Water 
Act or even the Internal Revenue Code by plebiscite or a vote 
of the people in that state to hold a referendum and say, well, 
we do not want to pay any more Federal taxes. Why on earth if 
we would not do it for those things would we do it for 
marijuana, for example?
    Mr. LARKIN. I am searching for that answer myself. 
Historically, it has been up to Congress to decide whether to 
exempt states from Federal law. It is not up to the states to 
decide voluntarily to leave.
    Mr. CHABOT. Thank you.
    Ms. Chaves, let me ask you this. The additional usage of 
marijuana, what effect do you think that would have on injuries 
and deaths on the Nation's roads and highways, if any?
    Ms. CHAVES. I do not think that the usage is any different 
than other substances, like alcohol.
    Mr. CHABOT. Okay. And if people are drinking and driving, 
that can cause an increase in the injuries and deaths on the 
highways; is that correct?
    Ms. CHAVES. Definitely.
    Mr. CHABOT. And if marijuana usages goes up and people are 
driving while they are having ingested in some manner 
marijuana, is it not reasonable to assume that injuries and 
deaths on the Nation's highways would go up as well?
    Ms. CHAVES. I am not aware of any studies but there is a 
possibility. It depends on who is behind the wheel. And there 
is always that risk.
    Mr. CHABOT. Thank you very much.
    Let me go back to you, Mr. Larkin. Justice Brandeis 
famously stated that we should allow the states to serve as 
laboratories to try out novel social and economic experiments 
without risk to the rest of the country. Why should we not 
apply that to marijuana in this particular instance?
    Mr. LARKIN. It is a great phrase but it has its limitations 
because after all, Dr. Frankenstein had a laboratory, too. What 
we have decided for a very long time, 80 plus years, in fact, 
is that we should leave, for example, the question of whether a 
particular item is a drug. And if it is a drug, whether it is 
safe and effective to the Food and Drug Administration to 
resolve.
    In 1937, Congress in the Marijuana Tax Act effectively 
prohibited the interstate distribution of marijuana. The 
following year, in the Federal Food, Drug, and Cosmetic Act, it 
entrusted the FDA with the responsibility to decide what is 
safe, and in 1962, also what is effective. If the question is 
whether marijuana is a safe and effective drug, we should leave 
it to the Food and Drug Administration to decide. We should not 
leave it to the states. That is exactly the wrong way about 
going about this. We do not by plebiscite decide what drugs can 
be distributed in interstate commerce because they are safe or 
effective. We rely on the expert judgment of the commissioner 
of Food and Drugs and the staff at the FDA. We should do the 
same with respect to all the drugs that are regulated by 
Congress.
    Mr. CHABOT. I am just about out of time.
    Mr. Goepel, let me ask you this to conclude. Are you aware 
that studies have shown that marijuana usage among teens 
oftentimes leads to suicidal thoughts?
    Mr. GOEPEL. I believe a lot of those studies that link 
psychosis or suicide or schizophrenia to cannabis use run into 
major issues when it comes to directionality.
    Mr. CHABOT. Would you agree they are linked to anxiety and 
depression and memory loss and a number of other----
    Mr. GOEPEL. I mean, there have been links but there is not 
anywhere close to a definitive correlation between the two.
    Mr. CHABOT. My time is expired. Thank you. Thank the panel.
    Chairwoman VELAZQUEZ. The gentleman's time has expired.
    And now we recognize Mr. Jason Crow, Chairman of the 
Subcommittee on Innovation and Workforce Development from 
Colorado for 5 minutes.
    Mr. CROW. Thank you, Chairwoman.
    Mr. Goepel, thank you for joining us today. I also am a 
fellow veteran, and anecdotally through my work with veterans 
in Colorado, I have seen and heard what you described of 
earlier, this effect of veterans going to cannabis to self-
medicate and going away from more lethal prescription drugs and 
opioids and the lifesaving impact that that has had. Can you 
just elaborate a little bit more on some of the experiences 
that you have had on that and some of the data that suggests 
that this is a positive impact for veterans overall?
    Mr. GOEPEL. Sure. So, for example, the Department of 
Veterans Affairs in a 2014 study basically found that half of 
all veterans have chronic pain. Untreated chronic pain is one 
of the biggest drivers in suicide. What the Department of 
Veteran Affairs and let's just say more broadly, the private 
healthcare system would provide to veterans who have 
indications like PTSD and chronic pain, anxiety, depression, is 
essentially a cocktail of medications individually that all 
carry risks combined. There is zero research to back giving 
someone combinations of sedatives, opioids, stimulants, and a 
variety of other drugs that are intended to treat these very 
narrow indications, but in turn, create other problems which 
require other medications to treat. And now you have veterans 
taking 20, 40 pills a day, you know, between 6, 8, 10, 12 
medications a day. That is not a sustainable lifestyle. 
Certainly, it is not a sustainable treatment program. And yet, 
that is what the VA and private health care have provided us.
    So obviously, we see a lot in our community where people 
have tried the pharmaceutical route. They have been driven near 
suicide. Someone, usually a friend or someone trusted, comes to 
them and brings them cannabis and the relief that they 
experience is almost immediate and incredible comparative to 
years of not sleeping, for example, where a lot of veterans are 
taking medication either because of their underlying conditions 
or the medications themselves are unable to really ever 
stabilize or get healthy.
    Mr. CROW. And I would add to that that there is this 
tradition of veterans protecting and helping other veterans. 
And what I have seen in Colorado is veterans who have had 
positive experience with cannabis as an alternative to more 
lethal drugs and opioids in particular are starting cannabis 
businesses to help their fellow veterans. And I am assuming you 
have seen that at a national level as well?
    Mr. GOEPEL. Yes. We deal with veteran entrepreneurs who 
generally have started out with the intent to, yes, they see 
some future in cannabis as an industry but they also see the 
benefit that being a cannabis entrepreneur can bring to others 
in the community.
    Mr. CROW. And Ms. Penny, as you know, I am from Colorado, 
and we have been one of the leaders in cannabis legalization 
and creating a system that works well and is responsible to the 
community. And I have a number of cannabis businesses in my 
district and I have yet to see and ever run into a business 
that feels like running afoul of the law or giving cannabis to 
individuals who are abusing it is a good business model. In 
fact, I see that people go out of their way to actually be 
responsible and to be good stewards of the community and do it 
the right way because they want to serve as an example for the 
community that this can be done. And I just would love your 
thoughts on that and whether that has been your experience at a 
national level as well.
    Ms. PENNY. Yes. Colorado has been a model for a lot of the 
other states that have legalized. You see elected officials 
traveling to Colorado to visit these businesses. You see 
interested parties who are entering the cannabis industry go to 
Colorado. You have a great deal of small business owners and 
entrepreneurs in Colorado. A lot of the other state programs 
were not created in that way and as the Colorado market 
matures, regulatory changes that have taken place have really 
impacted the small businesses there. So access to SBA services 
and institutional lending will impact Colorado greater, but the 
impact that it can have on new programs and developing programs 
is an even larger opportunity.
    Mr. CROW. Thank you, Madam Chair. I yield back.
    Chairwoman VELAZQUEZ. The gentleman yields back.
    The gentleman from Minnesota, Mr. Hagedorn, is recognized 
for 5 minutes.
    Mr. HAGEDORN. Madam Chair, thank you for the opportunity 
and holding this hearing. Ranking Member Chabot, and the rest 
of you, the witnesses.
    At full disclosure, I am one of those that grew up in the 
Nancy Reagan era of ``Just Say No'' but I am not here today to 
pass any judgment. I just want to talk about the issue. In 
fact, I would like to switch gears a little bit from the 
legalization of marijuana for recreational purposes and medical 
to the concept of the industrial hemp and using low dose THC 
for pain management and things of that nature. We have 
businesses in southern Minnesota that are exploring this. 
Farmers, manufacturers. I toured a plant recent, a whole 
production facility in Waseca, Minnesota, and listened intently 
as to what was going on.
    There are a lot of issues that might be impediments as you 
are talking about in this area for industrial hemp and for the 
pain management, the oil. And you are looking at it, as 
farmers, and you want to go out and grow, but you can have some 
crosspollination problems where if two farmers are too close 
together and one plant impacts the other, it can destroy crops. 
And you have other situations where right now for agriculture 
there is no specialty crop insurance for industrial hemp. That 
is something they are looking into. I talked with the Secretary 
of Agriculture and others on down and they say maybe in a 
couple of years as they move forward, since this is an emerging 
crop, that might be something they look at.
    But, you know, there are other areas. Regulations. Federal, 
state, and other regulations as to whether or not the products 
that are produced, are they pure? Do they meet standards? Are 
they going to do what they say? Do they have the level of oil 
in there that they claim? You are looking at international 
trade issues where the Chinese dump product that might not be 
sufficient and good for the American people or again, follow up 
on their claims.
    The Ranking Member brought up the commerce clause and the 
banking issues. And there are regulations by the police and 
investigations to make sure that the specialty crop for 
industrial hemp is not something other that the state does not 
allow or should not be grown.
    So those are the types of things that we are looking at and 
I am going to try and represent the district in the interest of 
everyone at heart. But just a couple of questions.
    Is it Goepel? Is that how you are pronouncing it, sir?
    Mr. GOEPEL. Yes, sir.
    Mr. HAGEDORN. I appreciate our advocacy for veterans and 
everything that you are trying to do to make sure we can 
prevent suicides, help them manage pain properly. Let me live 
the best life possible. Give them the benefits they deserve and 
everything else. One of the things I am working on with some 
members is to try to make sure we have choice for veterans for 
mental health capacities and others. They should be able to go 
choose the mental health provider of their choice, not 
necessarily have to rely on the VA, and get that as soon as 
possible.
    But for veterans that are dealing with pain management, do 
you think that--you advocate for the medical marijuana, but do 
you think that they should have to try low dose oils with THC 
levels lower before they would move on to medical marijuana?
    Mr. GOEPEL. I think you make a great point, Congressman. 
Basically, there needs to be some sort of established protocol 
for introducing people to cannabis. And introducing them in a 
way that allows them to find the right dosage and the right 
ingestion method to meet whatever their healthcare needs are. 
We do not necessarily advocate for just the straight smoking of 
cannabis.
    Mr. HAGEDORN. So those types of standards you think might 
be okay. What about the idea of finding other delivery methods 
than smoking it? Would that be beneficial in the long run, do 
you believe?
    Mr. GOEPEL. Most definitely. We have seen, especially in 
California, for example, and Colorado, certainly, the 
proliferation of different methods of ingestion. And many of 
them are more efficient than smoking.
    Mr. HAGEDORN. All right.
    Mr. Larkin, I was going to go down this road because I met 
with a law enforcement officers in southern Minnesota, and they 
all kind of tell me the same thing. They tell me that the 
marijuana of today is a lot different than it was 20 or 30 
years ago. It is many, many times stronger. They believe, the 
law enforcement, that it is a gateway drug. They believe that 
for that reason they oppose it. You seem to have a lot of 
knowledge in this area. Do you have any comment to that?
    Mr. LARKIN. Yes. First, it is far more powerful.
    Mr. CHABOT. The mic. The mic there. Pull the mic towards 
you.
    Mr. LARKIN. Oh, I apologize.
    The marijuana that people used back in the 1960s when it 
became a symbol of opposition to the government was maybe 1 to 
3 percent THC. Nowadays, you can have marijuana that is in the 
teens. You can have hashish that is higher. And if you have the 
right facilities, you can manufacture a substance that can be 
used that is up in the 90s. So as a factual matter, marijuana 
can be far more potent today than it was back then.
    Mr. HAGEDORN. All right. My time is up. I just have one 
more quick question.
    On the issue of liability, dispensaries, should they be 
held to the same standards, for instance, as maybe bars and 
others where if you overserve or you do things in a bad 
capacity that they should be liable for problems?
    Mr. LARKIN. Absolutely. If they are contributing----
    Chairwoman VELAZQUEZ. Be brief, please. Time has expired.
    Mr. LARKIN. Yes, yes, yes, yes.
    Mr. HAGEDORN. Thank you, Chair.
    Mr. LARKIN. If they are contributing to injuries and deaths 
on the highway, they should be responsible as well.
    Mr. HAGEDORN. I am not saying I subscribe to all that. I am 
just asking your opinion. Thank you.
    Thank you, Chair. I yield back.
    Chairwoman VELAZQUEZ. Thank you. The gentleman's time has 
expired.
    Now I recognize the vice Chair of the Committee, Mr. Evans 
from Pennsylvania for 5 minutes.
    Mr. EVANS. Thank you, Madam Chair. And I thank the Ranking 
Member for the purpose of this hearing.
    I come from the Commonwealth of Pennsylvania. When I was in 
the state legislature I voted for medical marijuana, and it is 
ironic that I am here. I was on the Agriculture Committee and I 
voted for the Farm Bill, which we deal with the issue of hemp. 
So the question I want to go to is Ms. Perry. A couple 
questions real quick.
    Can you explain how the 8(a) program you spoke to about 
leveling the playing field for economic disadvantaged people, 
and why is it important for SBA to allow individuals with prior 
cannabis convictions to participate?
    Ms. PENNY. Thank you. It is important for us to allow the 
people who have been impacted by prohibition to participate in 
this industry because essentially, the industry was built on 
their backs. So we want to embrace them. They have experience 
that with the proper training and polishing, they could be 
business leaders, innovators, thought leaders as this industry 
evolves. And so when we look at the services and support 
offered by SBA, we want to make sure that we are not creating 
an environment where these programs are assisting people who do 
not really need additional assistance. We have seen programs in 
the past that have been kind of hijacked. You know, a white 
woman-owned business being positioned as a minority-owned 
business. We do not want to see that in the cannabis industry. 
So we want to be specific in these targeted funds for the 
groups that have been impacted. We want to see specific funds 
for minorities, and we want to identify those groups that were 
impacted by the war on drugs. And we know that in this country, 
black and brown people are four times more likely to be 
arrested for cannabis possession than anyone else, even with 
similar usage.
    Mr. EVANS. Okay, Ms. Penny, can you explain the types of 
jobs this industry created from the cultivating to 
distribution?
    Ms. PENNY. Sure. You have everything from the 
horticulturist, or the botanist, the person responsible for 
that strategy and what you are going to grow. You then have 
processors, people with chemistry backgrounds, chemical 
engineers, folks that understand formulations and how to make 
medicine, down into the dispensary portion of the supply chain. 
You have retail management, pharmacists. To support these 
businesses, you have a ton of professional services, the same 
services that any other business would have. In the next few 
years, cannabis is going to outpace manufacturing in the number 
of jobs created, and if we are not developing a pipeline of 
talent, there is no way that we are going to have a diverse 
industry. And the SBA also needs the support of the existing 
operators so that you have expertise at the SBDC, so that you 
can actually provide the technical assistance that is promised 
in most of these social equity and economic empowerment 
programs.
    Mr. EVANS. Mr. Goepel, what are some of the obstacles 
unique to veteran startups in the cannabis industry? And I am 
going to do a follow up so you can get it in. What can the 
Small Business Administration do to focus its existing efforts 
to empower the veteran-owned business population?
    Mr. GOEPEL. Well, we can look at, excuse me, the Committee 
can look at the declining rate of veteran entrepreneurship and 
perhaps see an opportunity in cannabis to enable veterans who 
have an interest, who have a connection to cannabis as patients 
oftentimes to participate. And I think one of the best ways to 
do that is training and loan programs. And that is something 
that the Small Business Committee already oversees at the SBA. 
There is a lot of opportunity for veterans to become valuable 
members of the industry. They already possess a lot of talents 
and skills that would be useful in the context of cannabis. And 
so I think there are a lot of areas there for the Committee to 
empower and incentivize vets.
    Mr. EVANS. One last question to Ms. Penny. What do low-
income neighborhoods and communities of color stand to lose if 
they are left out of the cannabis policy?
    Ms. PENNY. They will remain devastated. They will remain 
food deserts. They will remain places where you cannot access 
health care or any of the other things that you need in any 
community.
    Mr. EVANS. I yield back the balance of my time. Thank you.
    Chairwoman VELAZQUEZ. The gentleman yields back.
    And the gentleman from Tennessee, Mr. Burchett is 
recognized for 5 minutes.
    Mr. BURCHETT. Thank you, Chairlady and Ranking Member.
    I speak to a lot of groups. One of the groups I speak to, I 
have in the past, is the Libertarian group. And they brought to 
me a lot of these statistics, facts and figures, one way or the 
other. But I think the reality is we can talk about the 
medicinal purposes and the oils and everything, but people want 
to get high. I mean, that is the reality of this industry, I 
believe. And I think that if we do not acknowledge that and the 
effects that that could have on society, then I think we are 
missing the boat.
    Mr. Larkin, do you think it makes sense for the Federal 
Government to allow tobacco to be sold under Federal regulation 
but to authorize states to have complete control over 
marijuana?
    Mr. LARKIN. No, sir. I think that would be quite silly.
    In 2009, Congress decided for the first time heavily to get 
into the business of regulating the safety, to the extent you 
can, of cigarettes and the like. They empowered the FDA to 
regulate cigarettes, tobacco, and the like. There is no reason 
not to do the same thing here.
    Mr. BURCHETT. Okay.
    Mr. LARKIN. Oh, and by the way, you mentioned the real 
reason. You know, you are not alone in that. Dr. Peter Bach 
wrote an article in The Wall Street Journal earlier this year 
entitled, ``If weed is medicine, so is Budweiser.'' So it is 
not just you thot thinks what we are really talking about is 
the value in having that euphoric feeling. He is a physician at 
Memorial Sloan Kettering Cancer Institute. He said the exact 
same thing.
    Mr. BURCHETT. Yes, sir. Because I do know that, for 
instance, THC can be created in the lab and it can be through 
the use, I believe the drug they use is called Marinol, and it 
has the same euphoric effect that would be just of smoking 
marijuana from what I understand.
    Mr. LARKIN. Yes.
    Mr. BURCHETT. And I do not support that but it is just the 
reality of where we are at. And at some point I think folks 
should just say that.
    I would ask the whole Committee, the group that is gathered 
here, what small business owners and what sector of small 
businesses would benefit and which would be most directly hurt 
if we were to legalize marijuana? Because we have available 
dollars. You are going to spend them on something. I mean, is 
it going to affect, as you said, is it going to affect 
Budweiser or is it going to affect something else? Because it 
is not going to be this new money is just going to appear. 
People have available funds to spend on something. What will it 
affect? And I would ask all the Committee members up here.
    Mr. LARKIN. Well, I am glad to start. I think to the extent 
people use marijuana for the euphoric effect it creates, it is 
going to create a similar effect to what you have when you use 
alcohol. So whatever they take money away from to purchase 
alcohol, they will probably also use that same source to 
purchase marijuana. Or they may take even more because they may 
purchase alcohol and marijuana because the two are often used 
together.
    Mr. GOEPEL. If I could answer that question. I think the 
idea that the vast majority of consumers are using cannabis 
specifically to get high very much undermines the medical value 
that especially veterans have experienced. The drugs that 
veterans are prescribed, opioids, sedatives, stimulants, 
antipsychotics, a lot of these all carry euphoria as a side 
effect but we do not necessarily dismiss those things just 
because they have a euphoria attached to them. Now, they are 
also very psychoactive and incredibly impactful on mental 
health and other aspects of physical health. So we have a 
situation here where I believe cannabis is a dual purpose 
substance, whereas, cannabis can be used recreationally, it can 
be used medicinally. That cannot be said the same for alcohol 
or tobacco because there are no children who are seizure-free 
because they are drinking Budweiser.
    Mr. BURCHETT. I realize that except the CBD oils and 
things, they are, as was stated earlier, I believe 47 states 
have something, as does my own state. So it would go back to 
the original premise though. I mean, if those things are 
already there, then what is the further purpose of marijuana 
past that?
    Mr. GOEPEL. I mean, there still needs to be massive amounts 
of research. I mean, we want to see cannabis medications in the 
Department of Veterans Affairs and we cannot get there without 
research. And we cannot get research without ending 
prohibition.
    Mr. BURCHETT. Ma'am?
    Ms. CHAVES. I am not here to discuss the particulars of the 
components of the drug itself because that is not my area of 
expertise. My area of expertise is in the banking of these 
businesses and getting the cash off the streets.
    Chairwoman VELAZQUEZ. The gentleman's time has expired.
    The gentlelady from Iowa, Ms. Finkenauer, Chairwoman of the 
Subcommittee on Rural Development, Agriculture, Trade and 
Entrepreneurship, is recognized for 5 minutes.
    Ms. FINKENAUER. Thank you, Madam Chair. And thank you all 
for being here today, sharing your views, but then also your 
expertise and scientific facts. It means a great deal that you 
took the time to come and chat with us today.
    And I have to tell you, before I had the great honor to be 
a congresswoman from Iowa's 1st District, I was also in the 
State House in Iowa for 4 years. So I got an up-close 
experience of the journey of cannabis law and regulations very 
specifically in my home state. And I would like to share with 
you all just a moment that had really impacted myself as a 
legislator and also on this issue in particular.
    It was 2017. We were at the end of session, so it was the 
last night of session. We were all there until I think it was 7 
o'clock in the morning trying to get something done. There were 
two bills left that we were trying to get done. One had to do 
with CBD oil and medical cannabis, and one had to do with water 
quality. And I remember that night, again, folks showing up 
into the gallery who had been working on both of these issues, 
and I walked up there and I got to meet a little boy named 
Brady and his mom Quincy. You see, Brady and Quincy are of the 
Sac and Fox Tribe and they are Meskwaki. And so they had come 
back to Iowa after living in Colorado for a couple of years so 
Brady could get the treatment that he needed because he has 
seizures that basically immobilize him. And for years had 
actually, again, lived in Colorado to be able to treat that. 
But because of being Sac and Fox, and also obviously Meskwaki, 
wanted to come back home and be with family. And the year or 
two before this they came to the state capital and Quincy was 
told by the state representative that if you care about your 
son you will go back to Colorado. And I will never forget 
hearing that story, and I will never forget those moments with 
Quincy and Brady up in that gallery as I heard their story 
personally. And again, I knew that we had a heck of a lot of 
work to do in Iowa and across the country to educate folks 
about, again, cannabis and its uses. And again, it was quite 
the journey in Iowa. That year, we did end up passing something 
that was not what we all wanted but it was a pilot program that 
made CBD oil available to patients with eligible medical 
conditions like cancer or Parkinson's disease. Unfortunately, 
it left off many issues that are considered women's health 
issues, like polycystic ovary syndrome, endometriosis, just to 
name a few. And then this year, the State House did make some 
serious gains trying to expand access to other cannabis 
products to help treat patients. Unfortunately, and again, many 
gains were made bipartisanly in the state of Iowa, passing both 
the Republican-controlled State House and State Senate, but 
just a few weeks ago our governor happened to veto that bill, 
the reasons being she said addiction. Although earlier that 
week she signed a sports betting bill. So again, it is very 
frustrating on my end being an Iowan and hearing stories that 
so many of my constituents have dealt with and dealing with, 
again, lack of certainty and regulations and needing more 
certainty. And part of that is having access to medical 
cannabis and cannabis in general in the state of Iowa and 
making sure that we have the producers in Iowa. And one of the 
companies that I have talked with, MedPharm, expressed their 
frustrations where right now they are manufacturing in Iowa and 
they are trying to make safe, effective products but at the 
same time are unsure every single day about what the future of 
the industry looks like.
    And I do not know if Ms. Penny, I know we only have a few 
minutes here, but if you can touch on what the uncertainty that 
we see in states like Iowa can cause manufacturers to be able 
to deliver product and then also grow their business when there 
is such an opportunity to do so.
    Ms. PENNY. Sure. The contradiction between the Federal 
Government and the state government is a reason for any 
business owner to pause. When you are well-funded though you 
will notice that you do not pause as much. When the Cole Memo 
was rescinded, the members of MCBA were the only people in the 
industry that I really felt were really concerned because 
everybody else was going to be able to work around it. When you 
start to think about a small farmer and their opportunity, we 
have to end Federal prohibition so that they can feel 
comfortable getting into this industry and creating the 
businesses that then create jobs and tax revenues for those 
communities.
    Ms. FINKENAUER. Thank you, Ms. Penny. I appreciate it. And 
I know my time is about to expire, so I yield back. And thank 
you, Madam Chair.
    Chairwoman VELAZQUEZ. The gentlelady yields back.
    And now we recognize the Chairman of the Subcommittee on 
Contracting and Infrastructure from Maine, Mr. Golden, for 5 
minutes.
    Mr. GOLDEN. Thank you, Madam Chair.
    Two questions if I have time. First, for Mr. Goepel. You 
are getting asked a lot about this but I just wanted to give 
you more opportunities to talk about it because I think it is 
important.
    I was actually somewhat concerned and skeptical early on 
about the potential harmful side effects of marijuana use on 
veterans. I am one myself in Afghanistan and Iraq. I was 
diagnosed with post-traumatic stress coming home from Iraq back 
in 2006. But I have just heard repeatedly from veterans and 
mental health care experts with specialization in providing 
care to veterans that it can be life-changing in a positive way 
for a lot of veterans. And so I have come around to believing 
it. But I have also heard those same professionals and veterans 
say that if not used correctly it can have negative impacts as 
well. You know, there is a fine line there and veterans need 
guidance. And they need help finding the right approach.
    And of course, I call it a gag order really where VA--we 
know a lot of veterans go to the VA for their health care but 
when it comes to this they are stepping outside the system. 
They are still going to the VA for their health care because 
that is what is affordable for them.
    So what can we do? If it is not the VA and getting rid of 
the prohibition, what else can be done to help get information 
to veterans so that they have the best shot at experiencing the 
positive medical benefits?
    Mr. GOEPEL. I think, you know, only 6 million veterans use 
the VA for health care, so that leaves about 14 million 
veterans outside the VA. Outside VA care either with no care or 
private care. Or, you know, employer tied care. And this is an 
issue that I have seen in California where it is legal but 
there has been no real effort at the state level to educate 
consumers about what is now legal.
    And the research that is being produced about cannabis and 
various cannabinoids, because we talk about cannabis as a plant 
but that plant holds 120-plus active components which all seem 
to have some sort of medical effect, and only a few are 
actually psychoactive or cause euphoria. So to essentially 
throw the entire plant out because there is a fear of THC 
making people, I do not know, relaxed or happy. I mean, this is 
the tension. Right? We are penalized and stigmatized for using 
something that we recognize to be far less harmful, far more 
effective while being compelled in some cases to take 
psychoactive, heavily addictive, toxic medications. There is no 
known fatal dose of cannabis use. That cannot be said of any 
other drug veterans are regularly prescribed from nonsteroidal 
anti-inflammatory drugs, like ibuprofen, to gabapentin, to 
opioids, again, to benzodiazepines. You can name the sort of 
class of drugs that veterans get prescribed, and they all carry 
toxic and destructive side effects.
    But with cannabis, veterans, and all Americans essentially 
need an education about what this plant is, and you do that by 
educating the doctors first because they are usually the 
gatekeepers of medical knowledge in our society.
    So I will leave it at that. Thank you.
    Mr. GOLDEN. Yep. Educate the doctors. You know, the 
situation I am talking about are those veterans in the VA 
system though who are choosing to use medical marijuana and 
then are going to their VA doctors and they are not disclosing, 
or if they are, being told that it is threatening their VA 
services and access to it. Right? So it is a huge problem and 
one that I think we ought to figure out.
    Ms. Chaves, in Maine, I am only aware of one bank in the 
entire state, in a state that has now first allowed for medical 
use and now has decided through voter referendum to do a 
legalized sale as well on recreational use, only one bank 
willing to work with any business related with this as we move 
forward. I thought I might give you an opportunity to kind of 
talk about how that may have negative impacts on small 
businesses only having one bank to go to. What are some of the 
negative consequences for them?
    Ms. CHAVES. The negative consequences for the bank is----
    Mr. GOLDEN. I am more interested for the small businesses.
    Ms. CHAVES. The small businesses, depending on the size of 
the bank, and I am sure it is fairly small so they cannot 
handle a lot of the businesses that are opposing up, the impact 
that it makes is that these businesses have to stand in line 
for bank accounts and if they are typically not doing as large 
a revenue they get pushed toward the bottom of the barrel or 
the end of the line. So their opportunity for banking is 
stretched out further away. And so they are unable to do 
business in a legal manner with banking.
    Mr. GOLDEN. All right. Thank you for that. What you are 
describing is inadvertently it is almost encouraging somewhat 
predatory behavior because like you are saying, if you are not 
big enough for us to see the most value in it then we are not 
working with you. We are going to go work with like the bigger 
businesses; correct?
    Ms. CHAVES. Definitely.
    Mr. GOLDEN. Thank you.
    Chairwoman VELAZQUEZ. The gentleman yields back.
    Now we recognize the member from New York 19, Mr. Delgado, 
for 5 minutes.
    Mr. DELGADO. Thank you, Chairwoman.
    Thank each and every one of you for coming out and 
testifying before this Committee. I appreciate your perspective 
on this issue.
    Ms. Chaves, there are a lot of dairy farmers in my district 
who are seeking additional sources of income in a difficult 
farm economy, as well as communities that are looking to 
attract new industries to help them revitalize. And New York 
has until its legislative session ends today to determine if it 
will legalize recreational use of marijuana. I actually think 
it may have actually happened in the last hour or two. But 
which could potentially in a way that is not legal. I am not 
sure at this point but, which could potentially have a huge 
economic benefit on the district if it were to be legalized.
    However, even if the state does legalize cannabis, there 
will still be many hurdles at the Federal level for folks 
looking to enter the industry to overcome. What steps, and 
forgive me if this has been addressed already, but what steps 
can Congress take to make sure that new startups and existing 
small businesses can access this market and spur economic 
growth in rural communities like mine?
    Ms. CHAVES. For starters, these small businesses need 
capital to even apply for their license. The licenses in each 
state, the fees are astronomical and they are getting more and 
more expensive. So it really knocks out the small business 
person for these licenses.
    Second of all, if they get through the process of getting a 
license, they have no banking. They cannot operate as a normal 
business would act. They cannot pay their bills. They cannot 
get lease agreements for their property, their brick and 
mortar. They cannot operate as a normal business. This impacts 
the entire community, as well as the economy.
    Mr. DELGADO. I have one follow up there.
    I am also on the Agriculture Committee and I know that last 
year's Farm Bill removed hemp from the Controlled Substances 
Act, but the FDA still has strict regulations on hemp products. 
I have heard from folks back home about how this stringency 
creates a difficult and uncertain business environment. Which 
steps in your opinion should the FDA take to make it easier for 
dairy farmers to work in the hemp industry?
    Ms. CHAVES. It is education and Congress also needs to 
understand that hemp is not an infused plant. There is no THC 
value, and therefore, should not be treated as a THC plant. 
Therefore, regulation should be different from cannabis making 
it easier for these companies or agriculture to enter the 
business.
    Mr. DELGADO. All right. Thank you.
    I yield back.
    Chairwoman VELAZQUEZ. The gentleman yields back.
    The gentleman from Illinois, Mr. Schneider, is recognized 
for 5 minutes.
    Mr. SCHNEIDER. Thank you, Madam Chairman. I want to thank 
the Chairwoman and the Ranking Member for having this hearing. 
I want to thank the witnesses for your testimony, for sharing 
your insights and experiences on what is an important issue.
    As the others have, I am going to focus on you, Ms. Chaves. 
I apologize. I will try not to be redundant. But it has been 
talked about the challenges these small businesses are facing 
without the access to full banking services because of 
restrictions. I will not repeat the other questions but one of 
the thoughts I have is not just that it is hard to get started 
for the businesses that are there. It is hard for them to grow. 
And I would love for your thoughts on what you are seeing the 
constraints on growth.
    Ms. CHAVES. The problems with them being able to grow is 
they need capital in order to do so. And without that capital 
or the ability for us to lend them the capital to grow, they 
cannot expand, they cannot hire new employees, they cannot 
develop new products, and that really inhibits their entire 
growth and at times puts them out of business.
    Mr. SCHNEIDER. Sure. One of the things I know from my 
experience working with entrepreneurs, entrepreneurs find a way 
of working around, and I am sure you have seen, as we have seen 
in Illinois, medical marijuana is not moving to recreational 
marijuana. These business people are going to find workarounds. 
What are some of the examples of workarounds you have seen in 
the marketplace?
    Ms. CHAVES. They create pseudo companies, holding companies 
under different names and entities so as to mask their true 
industry, their true identity so that they can manage to get 
away and provide, obtain banking access. Unfortunately, banks 
are getting on to this and they do find out. And when they do 
find out, these accounts do get closed.
    Mr. SCHNEIDER. Sure. And one of the other things I am 
hearing is a lot of these businesses are holding cash. It makes 
them a target and increases some of the risk to the businesses 
and the communities within which these businesses are 
operating. Are you seeing that at all as well?
    Ms. CHAVES. Yes. And the problem with that is the banks 
that do decide to create a banking program, we are not able to 
accept the cash that they have held on to previously so that 
cash is no good. If we accept the cash from previous sales or 
previous months, we have to have a forensic accountant come in 
and validated all that cash. And that is very expensive and 
time consuming.
    Mr. SCHNEIDER. Thank you.
    I will just emphasize as more and more states are moving 
towards this and trying to create opportunities for businesses, 
I know the rest of you have talked about opportunities in 
minority businesses, other situations, the ability to have full 
access to capital, full access to banking services is crucial, 
and it is something that I hope we can address here in Congress 
and work with the states as well to allow these businesses to, 
as you said, Ms. Chaves, to grow, to create jobs, and to move 
the industry forward in a way that is constructive for all 
stakeholders.
    So again, I want to thank the witnesses for being here 
today, and with that I will yield back.
    Chairwoman VELAZQUEZ. The gentleman yields back. Thank you 
so very much.
    I just have one question and then the Ranking Member, if 
you have any other comment or question.
    Mr. Goepel, we heard statements and comments here like 
people want to get high or that the use of cannabis will lead 
as a gateway to other drugs or that it will encourage children 
and teens to use it. And I have read, and I was not high, that 
the National Institute on Drug Abuse had found that despite 
increasing legalization for adult use, it is not leading to 
corresponding increases in marijuana use for teens. Can you 
comment on that?
    Mr. GOEPEL. Yes. The National Institute for Drug Abuse has 
long been looking for harms for cannabis. You know, the idea 
that we do not do research on cannabis is not true. We do 
plenty of research, it is just looking for specific faults 
essentially. And those are the only studies that essentially 
can get funded by the Federal Government or get approval by the 
Federal Government. So for NIDA to release findings that 
undermine their position, I think it shows just how much or how 
wrong, excuse me, you know, Congress and the Federal Government 
has been in the way that they treat cannabis just as a plant. 
And specifically, the cannabinoids that the plant consists of.
    For example, you know, the DEA has already rescheduled 
dronabinol, which was brought up, which is synthetic THC. But 
it is chemically identical to THC found in the plant. And they 
put that as a Schedule III drug, which while not a Schedule I, 
is still inappropriate because that category also contains 
drugs like ketamine and Vicodin, which I do not think anyone 
would argue that those drugs are comparable to THC. And the 
fact that CBD and the FDA sent a letter to the DEA asking for 
CBD to be put on Schedule V, which is the least restrictive 
schedule in the Controlled Substances Act because they found 
that it did not even really meet the requirements for 
scheduling.
    So what we have in the cannabis plant is a lot of 
substances, a lot of compounds. We understand a couple of them. 
But what we have failed to understand, and largely because of 
the prohibition on research, is the way that all these 
compounds interact and influence each other. We understand that 
CBD, for example, can have an effect on reducing the psycho 
activity of THC. So if that is a concern, then there are ways 
to formulate a drug to avoid that terrible outcome of euphoria.
    I guess the broader point here is that we cannot keep going 
around and around saying, well, these are the harms, these are 
some of the benefits, but we cannot actually do substantive 
research because prohibition exists and because of the 
scheduling of the whole plant on Schedule I.
    Chairwoman VELAZQUEZ. Thank you.
    Now I recognize the Ranking Member for 5 minutes.
    Mr. CHABOT. Thank you. I will not use the whole 5 minutes, 
Madam Chair. I would just maybe sum it up on our side to some 
degree.
    Chairwoman VELAZQUEZ. Sure.
    Mr. CHABOT. Mr. Hagedorn mentioned that he kind of grew up 
during the Just Say No Reagan era, and not as a child he grew 
up then but he was aware of what was going on at that time as 
well, and I was, too. I think I was on the Cincinnati City 
Council during that time. And we had a real problem with crack 
cocaine that was going on. That was one of the things that led 
to Just Say No. We had about 10,000 deaths a year due to drug 
overdoses at that time. Now the most recent year it was 70,000. 
So from 10,000 to 70,000 overdose drugs. It is not marijuana, 
obviously. We are talking opioids. But nonetheless, illegal 
drugs. So it seems somewhat ironic to me that we are having a 
hearing considering the uses and the effects on small business 
and in essence it is about legalization and,that is kind of 
what this ultimately is leading to of marijuana. And at the 
same time when we have got this opioid crisis that has been 
epidemic that has killed so many Americans all across the 
country and we really have not got a complete handle. Yes, we 
passed CARA. We passed the Support Act about a year ago. And so 
we have made some legislative progress, but the problem is 
still out there and people are still dying.
    But at the Federal level, I mean, clearly all the stuff we 
have talked about here is inconsistent with Federal law right 
now. It is illegal if the law was enforced at the Federal 
level. And that is something that I think probably the Congress 
ought to take it up and make a decision to let people know what 
they can do is legal or not. Right now it is illegal at the 
Federal level and I am also on the Foreign Affairs Committee 
and the Judiciary Committee as well as being the Ranking Member 
of this Committee. But on the Judiciary Committee, I remember 
well asking the new attorney general at that time, Jeff 
Sessions, what was the administration's policy going to be 
relative to enforcing the Federal drug laws? Not because I was 
trying to influence him to go in one direction or another, but 
just to see what it was. And he indicated to me at that time 
that they had no plans at that time to do anything inconsistent 
or dramatically different than the previous administration, 
meaning the Obama administration, which was basically not to 
enforce the Federal laws.
    So I would say in the near future there is probably no 
reason to think that that is going to change. I think we ought 
to clarify it one way or the other so the public is out there 
not breaking Federal law because it could be enforced some day 
and a lot of people are going to invest a lot of time and money 
into something which is right now illegal. And so we ought to 
clarify that. I think we owe that to the public. And I do not 
know which way the vote would go. I mean, I know the way I 
would probably vote. I think most of you would know from what I 
said today. I think it is not a good idea because I think the 
down sides of this outweigh the up sides. Maybe not from a 
financial perspective, especially from those that profit from 
it, but I have not been convinced that the benefits outweigh 
the dangers. But then I have been around a long time and it 
seems like the older generation more feel that way. The younger 
generation seem to be just the opposite. And a lot of things 
have changed in this country in recent years and that seems to 
be one of them. So, we will see where this all goes. And I 
almost did take the 5 minutes.
    So I will give you one minute back. I yield back. You can 
wrap this up, Madam Chair.
    Chairwoman VELAZQUEZ. The gentleman yields back. And 
definitely, as I stated at the beginning of this hearing, this 
is a complex and emerging industry, and Ranking Member, public 
sentiment is everything. Things that we thought we would not 
deal with 10 years ago, 20 years ago, public policies have 
changed because research and thought-based information help us 
craft legislation that will address the new discoveries and the 
new research.
    So let me take this opportunity to thank all the witnesses 
for being here and testifying on this very important issue. My 
priority is to ensure that small businesses have a seat at the 
table and can be involved in this emerging industry. The fact 
and the reality is that the trend of legalization at the state 
level is not going to slow down, which will lead to more jobs 
in many sectors of our economy, and we need to see what role 
the federal government can play. We have now heard about the 
opportunities and challenges for entrepreneurship and small 
business growth the legal cannabis industry presents for small 
firms. It is clear that this conversation is just beginning, 
and I am hopeful we can take a thoughtful approach to 
addressing the many aspects of legalized cannabis, particularly 
as it relates to protecting the interests of the small business 
owners operating in this space.
    As I have done with other topics on this committee, I look 
forward to working with my colleagues on both sides of the 
aisle to find workable solutions to these problems.
    I would ask unanimous consent that members have 5 
legislative days to submit statements and supporting materials 
for the record.
    Without objection, so ordered.
    And if there is no further business to come before the 
committee, we are adjourned. Thank you.
    [Whereupon, at 1:05 p.m., the Committee was adjourned.]
                           
                           
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