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CHARLESTON -- One piece of the puzzle to make West Virginia's medical marijuana program functional was introduced in the House of Delegates this week, but lack of funding for the agency that will oversee the program could still push back the implementation timeline.
House Bill 2538 would allow various banking institutions to bid with the state Treasurer's Office to provide services for the state's medical marijuana program. The selected banking institution would manage the Medical Cannabis Program Fund, where the state Treasurer's Office would deposit application fees, penalties and taxes collected from the program.
Under the bill, the following institutions could bid to manage the funds from the program: banks, national banking associations, bank and trust companies, savings and loan associations, building and loan associations, mutual savings banks, or credit union or savings banks.
House Banking and Insurance Committee Chairman Eric Nelson, R-Kanawha, said HB 2538 builds off a similar bill that was introduced last year but failed in the House.
"It allows credit unions to collect deposits. They're not allowed to currently," Nelson said. "The second component of this bill that I think is very important is it will indemnify any institution that decides to go forward once the treasurer or whoever puts out a request for proposal on the banking services."
The Medical Cannabis Act, signed into law in 2017, legalizes marijuana for medical use in West Virginia. The Office of Medical Cannabis and the Medical Cannabis Advisory Board were created to get the program up and running and to set up regulations by July 1, 2019.
Nearly a year ago, however, the state Treasurer's Office raised concerns about being able to handle application fees from the program due to federal laws that make it illegal for banks to handle deposits generated by illegal drug activity.
Even though marijuana is a Schedule 1 controlled substance, Congress has not funded efforts of the U.S. Department of Justice to shut down medical marijuana in states where it is legal. A previous Justice Department memo also protected these states from enforcement actions. But it's still a liability for banks to handle revenue generated from medical marijuana.
An advisory opinion released Jan. 12 by state Attorney General Patrick Morrisey warned lawmakers about the long-term liability of operating a medical marijuana program. The guidance also provided the state cover for passing legislation to find a way to work around the banking issue. Morrisey recommended an all-cash system or a closed-loop system.
Another issue that could cause a delay in the medical marijuana program is funding. Currently, the Office of Medical Cannabis is an unfunded mandate.
The state Department of Health and Human Resources, which oversees the office, is requesting a supplemental appropriation of $269,202 for the current fiscal year. For the fiscal 2020 budget request, DHHR is requesting $2.4 million to run the program. Starting in fiscal 2021, the department estimates it will only need $1.5 million for year three of the program and beyond.
Nelson said the banking fix legislation will come before his committee next week.
Still, some lawmakers want to see complete legalization of recreational marijuana. Delegate Mick Bates, D-Raleigh, introduced HB 2331, which would legalize cannabis production and sales for adult consumption.
"John Denver is famous for two songs: 'Country Roads' and 'Rocky Mountain High.' I don't think that's a coincidence," Bates said on the House floor Thursday. "I'm now concerned that if we do not act, we'll act too late and we'll have all the challenges that come with this industry and none of the benefits. Cannabis can fix the single greatest problem we have. It's our people problem and population problems."