DENVER—Everyone in Colorado from Republicans to marijuana moguls wants to stop welfare cash from being used to buy recreational pot, but standing in their way are the state’s formidable legislative Democrats.
Despite mounting evidence that “welfare for weed” is more than an urban myth, Democratic legislators are balking at a bill that would add marijuana dispensaries and strip clubs to the list of places, along with casinos and liquor stores, where debit-style benefits cards cannot be used to withdraw cash from automatic teller machines, or ATMs.
Democrats killed a similar bill last year, but now the stakes are higher. States had two years to align their statutes with a 2012 federal law banning the use of electronic benefits transfer (EBT) cards at gambling and adult-entertainment venues.
As of this year, states that fail to take action risk having their federal grants under the Temporary Assistance for Needy Families program reduced by 5 percent.
While pot shops aren’t on the federal list, Colorado officials are concerned that failing to disable ATMs at marijuana dispensaries for EBT cards would violate the spirit of the law and provoke the ire of the Justice Department, which is keeping the legalized pot industry in states like Colorado and Washington on a short leash.
“Even though it’s not part of that ban requirement, marijuana is illegal at the federal level, and we just want to be proactive and ahead of that,” said Levetta Love, director of Office of Economic Security for the Colorado Department of Human Services, in testimony last week in support of the bill before a Senate committee.
The bill’s sponsor, Republican state Sen. Vicki Marble, noted that President Obama’s nominee for attorney general, New York federal prosecutor Loretta Lynch, took a hard line on states that legalize marijuana at last month’s Senate Judiciary Committee confirmation hearings.
“I don’t know if you’ve been following who the new attorney general may be going to be on the federal level, but she is not in favor of marijuana,” Ms. Marble said. “Are we going to now allow ourselves to be open to federal raids? Closings? Our state is not ready to deal with that.”
The bill received preliminary approval Friday from the state Senate, where Republicans hold an 18-17 edge. The stumbling block lies with House Democrats, who hold a 34-31 majority and have shown no enthusiasm for the measure.
Why? Last year, Democrats said they were worried about limiting access for welfare recipients, many of whom don’t have bank accounts and may find it difficult to locate nearby ATMs in their neighborhoods. Democrats were also dubious about whether EBT cardholders were really blowing public dollars on pot.
Those arguments were raised once again at last week’s Senate State, Veterans and Military Affairs Committee hearing, where the bill passed 3-2 on a party-line vote.
“My county still expresses concerns about this bill, and they don’t know how big a problem it is as far as people using this money for the activities listed here, so I’m going to be a no,” said Democratic state Sen. Matt Jones.
Liberals in Colorado and elsewhere have mocked concerns about welfare recipients getting high on the taxpayers’ dime, exemplified by a headline in September from Media Matters, which said, “Right-Wing Media’s Mythological ‘Welfare for Weed’ Campaign Has Resulted in Actual GOP Legislation.”
But investigations by other media outlets have shown that the problem is more than a myth. On Thursday, Fox31 Denver reported that at least 17 lbs. of marijuana were likely purchased with public dollars in 2014, based on an examination of all ATM transactions using the EBT card in state marijuana dispensaries.
That’s a small percentage of Colorado’s annual pot sales, but the television station’s report nonetheless concluded that the “welfare for weed” phenomenon is “a reality in Colorado.”
“Using computer matching, FOX31 Denver traced at least $32,275 in welfare cash that was withdrawn from ATMs located inside secure marijuana retail facilities,” said the report. “Withdrawals inside pot shops ranged from $20 to $400 with a total of at least 465 separate transactions. ATMs in 82 different marijuana dispensaries were used; that’s a quarter of the licensed recreational stores statewide.”
The results were similar to those of a National Review Online investigation released in July that found $23,608.53 had been withdrawn over six months at pot-shop ATMs using the EBT cards, which are intended to be used for non-food essentials like gas and utilities.
In July, the Colorado Office of Economic Security enacted an emergency rule banning the use of EBT cards at restricted facilities, including marijuana dispensaries, citing the federal law’s looming deadline.
“What we’re doing is more or less codifying that rule in statute,” said Republican state Rep. Dan Nordberg, sponsor of the House bill.
The marijuana industry is on board. Shawn Coleman, a Colorado marijuana industry lobbyist, said last week that dispensaries are less-than-ideal locations for families withdrawing cash.
“A marijuana business in general is not a particularly good cash access point,” Mr. Coleman said. “These are age-restricted facilities. For example, if the nearest marijuana facility was either a retail facility or a dual use [medical and retail], which I would say accounts for about 70 percent of the facilities in the state: You can’t bring someone into the facility at all who’s under the age of 21. So in other words, if you’re a parent trying to access, you have to leave your minor child outside of the facility because they are not legally allowed to enter the facility.”
Tyler Hansen, president of the Colorado Cannabis Chamber of Commerce, added that, “As the cannabis industry in the state, we pride ourselves as being good stewards of our economy and also of our community.”
In Washington, the state Liquor Control Board, which also regulates recreational marijuana, solved the problem by adding a clause to licensing agreements saying that pot retailers must disable their ATM machines for EBT use, said John Wiley, spokesman for the Washington State Department of Social and Health Services.
Mr. Nordberg pointed out that under the Colorado 2012 legalization initiative Amendment 64, marijuana is supposed to be regulated like alcohol—and EBT cash withdrawals aren’t allowed at liquor stores, either.
“The argument that the only place you can withdraw benefits from are marijuana shops and strip clubs—I don’t think the taxpayers buy that,” Mr. Nordberg said. “We have clear examples of abuse in the system, and I’m confident and optimistic that common sense will prevail.”
Then again, Colorado Democrats have shown no sign of folding. At last week’s committee hearing, Democratic state Sen. Jesse Ulibarri offered an amendment to ensure that ATM machines removed from pot shops and other EBT-banned facilities for repairs are reprogrammed if they are subsequently relocated to approved locations.
The amendment passed unanimously—but Mr. Ulibarri voted against the bill anyway.