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Montana Judge Blocks Restrictive Medical Marijuana Provisions

A state judge has blocked some of the most onerous provisions of a new law designed to rein in Montana's medical marijuana industry from taking effect. But other provisions of the law, which will make life more difficult for patients and providers, are now in effect.

medical marijuana containers and vaporizer (image via wikimedia)
District Court Judge James Reynolds issued a preliminary injunction late Thursday to block those portions of the law from going into effect hours later. But the rest of the repressive "reform" is in effect as of July 1.

Reynolds ruled that lawmakers went too far in trying to clamp down. He blocked a provision of the new law that outlawed anyone making money in the business, including growers being compensated for their efforts. He blocked the law's ban on advertising and promotion of medical marijuana. And he threw out the new law's provision limiting providers to growing for no more than three patients.

"The court is unaware of and has not been shown where any person in any other licensed and lawful industry in Montana -- be he a barber, an accountant, a lawyer or a doctor -- who, providing a legal product or service, is denied the right to charge for that service or is limited in the number of people he or she can serve," Reynolds wrote.

Those provisions in the law "will certainly limit the number of willing providers and will thereby deny the access of Montanans otherwise eligible for medical marijuana to this legal product and thereby deny these persons this fundamental right of seeking their health in a lawful manner," Reynolds continued.

The lawsuit against the new law was brought by the Montana Cannabis Industry Association, which is also organizing a referendum effort to block the law from going into effect until it can go before the voters in November 2012. Montana voters approved the old, less restrictive, medical marijuana law in 2004 with 62% of the vote.

The association called the ruling "a partial victory," noting that "caregivers" have been eliminated and must now become registered "providers." "This, of course, temporarily breaks down the entire system, Yet, it was clearly the judge's intention to allow commercial activity," the group noted.

For a more detailed look at the new law and how the judge's order modified it, visit this Montana NORML web page.

Helena, MT
United States

Three Medical Marijuana Bills Filed in Congress [FEATURE]

A bipartisan group of US representatives filed three medical marijuana-related bills in Congress Wednesday. The three bills aim at protecting medical marijuana patients, caregivers, and providers from ongoing federal arrests, prosecutions, and harassment.

Medical marijuana is on the agenda at the US Capitol (Image via Wikimedia.org)
The trio of bills is a clear signal to the Obama administration that disenchantment with its approach to medical marijuana is growing in Congress. While the Obama Justice Department declared in its famous 2009 memo that it would not go after medical marijuana operations in compliance with state laws in states where it is legal, federal prosecutors and the DEA have continued to arrest and prosecute medical marijuana providers.

In the past few month, US attorneys in states implementing or contemplating regulated and licensed medical marijuana dispensaries have sent threatening letters to state officials warning that marijuana is still illegal under federal law and that even state employees could be at risk of arrest. Meanwhile, the DEA has been sitting on a nine-year-old petition to reschedule marijuana under the Controlled Substances Act.

HR 1983
, the State's Medical Marijuana Protection Act of 2011, introduced by Rep. Barney Frank (D-MA), would explicitly exempt people complying with state medical marijuana laws from federal arrest and prosecution. It also directs the federal government to reschedule marijuana under the Controlled Substances Act. It is cosponsored by Rep. Jared Polis (D-CO) and Dana Rohrabacher (R-CA).

"The time has come for the federal government to stop preempting states' medical marijuana laws," Frank said. "For the federal government to come in and supersede state law is a real mistake for those in pain for whom nothing else seems to work. This bill would block the federal prosecution of those patients who reside in those states that allow medical marijuana."

HR 1984
, the Small Business Banking Improvement Act of 2011, introduced by Rep. Polis, would protect banks that accept deposits from medical marijuana from federal fines or seizures and allow them to avoid the onerous "suspicious activity" reports they now have to file when accepting deposits from medical marijuana businesses. That has led financial institutions including Wells Fargo, CitiCorp, and Bank of America to refuse to do business with medical marijuana entities. The bill is cosponsored by Reps. Frank and Pete Stark (D-CA), as well as Rep. Ron Paul (R-TX).

"When a small business, such as a medical marijuana dispensary, can't access basic banking services they either have to become cash-only -- and become targets of crime -- or they'll end up out-of-business," said Polis. "In states that have legalized medical marijuana, and for businesses that have been state-approved, it is simply wrong for the federal government to intrude and threaten banks that are involved in legal transactions."

HR 1985
, the Small Business Tax Equity Act of 2011, introduced by Rep. Pete Stark (D-CA), would allow medical marijuana dispensaries to deduct business expenses from their federal taxes like any other business. It is designed to prevent unnecessary audits of medical marijuana businesses by the IRS and put an end to the dozens of industry audits already underway. The bill is cosponsored by Reps. Rohrabacher  and Paul, as well as Frank and Polis.

"Our tax code undercuts legal medical marijuana dispensaries by preventing them from taking all the deductions allowed for other small businesses," Stark said. "While unfair to these small business owners, the tax code also punishes the patients who rely on them for safe and reliable access to medical marijuana prescribed by a doctor. The Small Business Tax Equity Act would correct these shortcomings."

"It is time to get the federal government out of state criminal matters, so states can determine sensible drug policy for themselves," said Rep. Paul. "It is quite obvious the federal war on drugs is a disaster. Respect for states' rights means that different policies can be tried in different states and we can see which are the most successful. This legislation is a step in the right direction as it removes a major federal road block impeding businesses that states have determined should be allowed within their borders."

The congressional action was welcomed by drug reformers and medical marijuana advocates.  "All of these bills will have a positive effect on hundreds of thousands of Americans and only a negligible impact to the rest of the country," said Steph Sherer, executive director of Americans for Safe Access, the country's leading medical marijuana advocacy group. "This kind of policy shift is a no-brainer and should garner the bipartisan support of Congress."

"The Justice Department thinks it can bully not just state elected officials but also patients and those who provide for them," said Bill Piper, director of national affairs for the Drug Policy Alliance (DPA). "Members of Congress need to stand up for patients and the will of the American people and push back against this federal overreach."

"The Department of Justice's new policy is forcing the public and patients to deal with a chaotic, unregulated medical marijuana market," said DPA staff attorney Tamar Todd. "It is beyond question that states want to and have the right to legalize medical marijuana under state law. The question now is whether states should be able to implement medical marijuana programs consistent with the needs of patients and of public safety and health.  The legislation introduced today would allow states to implement reasonable, responsible regulations."

The Obama administration, with its ambivalent approach to medical marijuana, has left a political opening. Reps. Frank, Polis, Stark and their congressional allies are now rushing to fill it.

Bills to Ensure Fair Treatment of Medical Cannabis Industry Members Are Introduced in U.S. House (Press Release)

National Cannabis Industry Association

For Immediate Release -- WEDNESDAY, MAY 25

Bills to Ensure Fair Treatment of Medical Cannabis Industry Members Are Introduced in U.S. House

The logic behind the introduction of the “Small Business Tax Equity Act of 2011” and the “Small Business Banking Improvement Act of 2011” stands in sharp contrast to the actions of U.S. Attorneys who hope to keep medical cannabis sales underground, untaxed and unregulated

CONTACT: Steve Fox, NCIA dir. of public affairs at 202-379-4861 ext. 2 or Steve@TheCannabisIndustry.org

WASHINGTON, D.C. – Today, for the first time in history, two bills that would benefit members of the medical cannabis industry were introduced in Congress. The introduction of the bills, which address banking and tax issues faced by medical cannabis providers, follow months of advocacy by the National Cannabis Industry Association (NCIA). The bills were part of a coordinated introduction of three bills to protect and support medical marijuana patients and providers in states where the use of medical marijuana is legal. The third bill, the “States’ Medical Marijuana Patient Protection Act,” would modify federal law so that individuals acting in compliance with state law are immune from federal prosecution.

            The industry bills were introduced with bipartisan lead sponsors. Rep. Pete Stark (D-CA) and Rep. Dana Rohrabacher (R-CA) are the lead sponsors of the “Small Business Tax Equity Act of 2011,” which would amend Section 280E of the Internal Revenue Code so that medical marijuana providers can take standard business deductions like any other business. The “Small Business Banking Improvement Act of 2011,” sponsored by Rep. Jared Polis (D-CO) and Rep. Ron Paul (R-TX), would allow financial institutions to work with medical marijuana businesses without the fear of running afoul of federal banking regulations.

            These bills have been introduced at a time when the nation is witnessing a strange reaction by U.S. Attorneys to the development of state-regulated systems of medical marijuana distribution. In October 2009, the Department of Justice issued a memo to federal prosecutors, instructing them to de-prioritize the prosecution of individuals acting in compliance with state medical marijuana laws. This has given states like New Mexico, Colorado and Maine the ability to establish tightly regulated system. Yet some U.S. Attorneys, faced with the prospect of sensible regulations being established in other states, have issued misleading and threatening letters to sidetrack legislative and administrative progress.

            “There are hundreds of thousands of medical marijuana patients in this country who benefit when they are able to purchase their medicine from safe, reliable and regulated establishments,” said Steve Fox, NCIA’s director of public affairs. “It is time for the federal government to acknowledge that these businesses are providing a service to their communities, not causing them harm. Without these regulated, tax-paying businesses, all medical marijuana sales would occur underground. The profits would bolster the criminal market and local, state and federal governments would receive no tax revenue. These medical marijuana providers are not looking for special treatment. They just want to be able to function in a manner similar to any other legal business. That is what these tax and banking bills would allow.”

*     *     *     *     *

            The mission of the National Cannabis Industry Association is to defend, promote and advance the interests of the cannabis industry and its members. NCIA publicly advocates for the unique needs of the emerging cannabis industry and defends against those aiming to eliminate the legal market for cannabis and cannabis-related products. For more information, please visit www.TheCannabisIndustry.org.

####

NCIA logo

US Cattle Inspectors Leave Mexico Amid Drug Prohibition War

Location: 
Mexico
For years, these inspections have been conducted before cattle cross the border, but the drug prohibition war has prompted the U.S. to move some of its operations north. The change, instituted over the past year at three of the 11 ports along the U.S.-Mexico border, is drawing concern from some cattle raisers, who fear infections long eradicated in the U.S. but still showing up in Mexico will spread before inspection. The change is supposed to be temporary, although there are no immediate plans for the American inspectors to return to Mexico.
Publication/Source: 
The Associated Press
URL: 
http://www.google.com/hostednews/ap/article/ALeqM5idZkYEkvtry2zUF_gDH9ojmssENQ?docId=cb6535c7b06342aea72a47456c12c103

Montana Medical Marijuana Industry Fights Back [FEATURE]

In the wake of the passage of a medical marijuana "reform" bill that would criminalize dispensaries and large, multi-patient grows, some dispensary operators and growers are already closing up shop. But others are organizing to undo the legislature's attempt to destroy the industry.

The battle over medical marijuana is far from over in Montana (Image via Wikimedia.org)
The newly formed Montana Cannabis Industry Association (MCIA) has announced that it is moving forward on two fronts: It has hired an attorney to seek a temporary injunction blocking the law from going into effect and it has begun a signature-gathering campaign to put the issue directly to the voters on the November 2012 ballot.

"We are moving forward on the injunction and the referendum," MCIA board member Kate Cholewa told the Chronicle. "The injunction challenges the law. That's one prong. The other prong is the signature-gathering campaign. If we are successful in gathering those signatures, that would keep the law from going into effect and we would be on the ballot in 2012."

Gov. Brian Schweitzer (D) vetoed an outright repeal bill passed by the Republican legislature, but he has said that while he finds the second bill unpalatable, he will allow it to become law without his signature. Activists hold little hope that Schweitzer can be persuaded to change his mind before his 10-day period to act ends on Friday.

"That is not something we expect to happen," said Cholewa. "You can't say the door is closed until Friday, but the political environment around here is such that it's unlikely."

Montana voters approved medical marijuana in a 2004 referendum, and the issue was relatively non-controversial until the Obama Justice Department released its October 2009 memo saying that going after people in compliance with state law in states where it is legal was not a high priority. After that, the Montana medical marijuana scene exploded, with the number of patients shooting from 2,000 to 30,000 and the now familiar medical marijuana landscape of dispensaries, grow ups, and supply shops expanding rapidly.

Excesses by some operators in the post-memo period led to a virulent backlash, which was reflected in the legislative session this year. A bill to reasonably regulate medical marijuana that had been crafted over a period of months was amended beyond recognition by foes, who instead then passed the repeal bill. When Schweitzer vetoed that, the Republican leadership responded with the current bill, which also bans any medical marijuana sales, makes it more difficult for people claiming chronic pain to get a recommendation, and mandates investigations -- at their own expense! -- of any doctors who recommend it to more than 25 patients in a year.

This year's legislative session revealed a medical marijuana community that was divided and disorganized. The MCIA is an effort to get growers, dispensary operators, and advocates on the same page for the coming battle.

"The day after the session ended, we all got together in a meeting the next day to figure out what we could do," said Cholewa. "We talked about injunctions and referenda and interview lawyers. We raised $20,000 or $30,000 in 48 hours."

The number has since jumped to more than $50,000, and the MCIA has hired prominent Bozeman attorney James Goetz to challenge the law in court.

"The reality is that this group of legislators came in and instead of regulating the industry, they decided to destroy it with this de facto repeal, said Cholewa. "They were saying that medical marijuana in Montana was a mess, but they've created a mess of a whole different order. It’s about more than marijuana now," Cholewa said. "It's about democracy, the Constitution, health care and the fulfillment of compassionate voter intent. This is big."

It's also about money and the economy. Medical marijuana is a multi-million dollar industry in largely rural Big Sky Country. The state's economy could suffer if the new law takes hold, advocates said. The state Labor Department has estimated that dispensaries and growers have created between 1,000 and 2,000 jobs, a not insignificant number in a state whose population is under a million.

"Medical marijuana has created opportunities here, where there are people having a hard time finding work. If you talk to people in the industry here, they are people who were carpenters or contractors before the bottom fell out; now, they're cannabis entrepreneurs," she said.

It's not just direct employment, either Cholewa pointed out. "The impact spreads through the economy. Commercial spaces got rented, paid ad space got sold, the supply stores and ancillary businesses benefited as well."

But that's already starting to change, Cholewa said. "People have just shut down, they're getting out now," she said. "Growers are hurrying to get their last crops before July 1. The reality of wiping out the supply is looming. There is a lot of legitimate demand, but I don't know where the supply will be coming from."

Prohibition has an all-too familiar solution to the supply problem. It's called the black market. That's what the good people of Montana can look forward to if the new law isn’t stopped in the courts or at the ballot box. The MCIA is doing everything it can to ensure that it is. 

Helena, MT
United States

U.S. Pot Insurance Has Canadian Growers Green with Envy

The growing medicinal marijuana business in the United States despite the drug’s illegal status has many insurance firms seeing green — as in money. But north of the 49th, where there is no federal prohibition on medicinal pot, legal growers are green with envy because it’s next to impossible to get insurance coverage in Canada.
Publication/Source: 
The Hamilton Spectator (Canada)
URL: 
http://www.thespec.com/news/canada/article/515019--u-s-pot-insurance-has-canadian-growers-green-with-envy

Pot Politics on Capitol Hill: Proponents Aim to Shift Industry's Image

Location: 
Washington, DC
United States
Supporters of decriminalizing marijuana are hoping to build momentum on Capitol Hill after a historic election that saw the politics of pot take center stage in four states. The marijuana industry's public relations campaign has so far been limited to states, especially California, where a ballot initiative to legalize marijuana almost passed in November. But today, the National Cannabis Industry Association, launched in December to represent the interests of legal marijuana growers and distributors, will hold the first congressional lobbying day in the nation's capital, hoping to shore up support for an industry they say could bring billions of dollars in revenue to the government.
Publication/Source: 
ABC News (US)
URL: 
http://abcnews.go.com/Politics/pot-politics-capitol-hill-proponents-aim-shift-marijuana/story?id=13251446

Medical Marijuana Dispensary Selling 'Joints for Japan'

Location: 
Japan
A medical marijuana business is donating 100 percent of the profit from marijuana joints to earthquake and tsunami victims in Japan. Compassionate Pain Management's two Colorado locations in Lakewood and Louisville are selling joints for $5 a piece to those with a medical marijuana card and recommendation. Owner Shaun Gindi has promised profits from sales for at least the next two to three weeks to go to the Red Cross for recovery efforts in Japan.
Publication/Source: 
KUSA (CO)
URL: 
http://www.9news.com/news/sidetracks/189958/337/Medical-marijuana-dispensary-selling-Joints-for-Japan?odyssey=mod|newswell|text|FRONTPAGE|t

California Medical Marijuana Dispensary Plans to Take IRS to Court

Location: 
CA
United States
The IRS is thought to have begun audits on at least 12 medical marijuana dispensaries in California under the determination that past business deductions are invalid because of a clause in the federal tax code prohibiting any business that traffics in Schedule I or II drugs from making business deductions on their tax returns. Lynette Shaw, founder and owner of the Marin Alliance for Medical Marijuana, is hoping to strike back before the IRS can deliver any more "final determinations" to other dispensaries currently being audited. Shaw intends to file an appeal in U.S. Tax Court within the month. There is actually a precedent for just such a case, when in 2007, a San Francisco dispensary primarily catering to terminal AIDS patients got its payment cut down to just over 1 percent of what the IRS originally said it owed in back taxes.
Publication/Source: 
The American Independent (DC)
URL: 
http://www.americanindependent.com/174367/california-medical-marijuana-dispensary-plans-to-take-irs-to-court

Feds Squeeze Banks in Bid to Freeze Out Medical Marijuana [FEATURE]

Special to the Chronicle by Clarence Walker

[Editor's Note: Houston-based crime and criminal justice journalist Clarence Walker is an occasional contributor to the Chronicle. He can be reached at cwalkerinvestigate@gmail.com.]

Federal regulators ignited a firestorm of controversy recently when they ordered banks located in the North Coast area of California to spy on transactions of customers who are suspected of making money in the marijuana business. In a bid to crack down on California's marijuana industry, regulators have ordered banks to look out for suspicious activity by those running such operations, but that is leaving legal -- under state, but not federal law -- medical marijuana businesses out in the cold.

The G-men are putting the squeeze on the banksters over pot proceeds (Image via Wikimedia)
Although DEA and FBI officials are not specifically targeting medical marijuana, they say they are looking for drug traffickers and money launderers, and they regard any marijuana-related banking activities with suspicion. The banks are not being ordered to not do business with dispensaries, but are instead closing accounts rather than put up with the hassles of investigating and reporting those transactions.

Banks in the North Coast region, including Savings Bank, Wells Fargo, the Exchange Bank, and Ukiah Bank, as well as other financial institutions in the Sacramento and San Joaquin areas are scrambling to comply with the government's order as the feds continue their onslaught against the legal marijuana trade.

The enforcement action is the result of the North Coast's widespread reputation for marijuana production and also includes the arrest of citizens in the area operating legal medical marijuana businesses under California state law. California voters passed Proposition 215 in 1996, legalizing the medical use of marijuana for patients whose doctors have recommended they use it.

According to the Santa Rosa Press-Democrat, the policy took effect last month when the largest bank in Mendocino County informed shareholders that federal banking regulators would now require the North Coast banks to scrutinize deposit accounts because the area had been designated a high-risk area for money laundering, particularly from those in the medical marijuana business.

"This area in general has been targeted by Washington because the amount of cash that comes out of here," said Charles Mannon, chief executive of the Ukiah Bank.

Mike Johnson, an entrepreneur in the marijuana industry who requested that this article not identify the name of his business, felt the squeeze from the federal regulators when Wells Fargo and the Umpqua Bank closed his accounts last year. "They think we're all drug dealers," Johnson said.

Those in the trade familiar with the feds' regulation policy complain of how the government has forced banks and financial institutions to enlist as foot soldiers in the war on drugs. The new requirements force banks to expend unnecessary time and money probing clients' accounts for evidence of illegal activity associated with the marijuana business, they say.

To bypass the stringent rules, several banks closed the accounts of medical marijuana dispensaries. Bank officers said that since medical marijuana is a violation of federal law, they are required under the Bank Secrecy Act to report on businesses involved in the state authorized medical marijuana industry.

Last year, Exchange Bank issued a policy which prohibits medical marijuana businesses from opening up accounts because of the time-consuming scrutiny they would have to undergo and because of the expense of having to purchase pricey monitoring systems.

"State and federal law are in conflict with each other," said Bill Schrader, president of Exchange Bank. "If there are suspicious activities under federal law, we have to report it."

No room at the bank for medical marijuana? (Image via Wikimedia)
The extensive monitoring of bank accounts works this way: If a bank agent or its anti-laundering system detects suspicious activity, the feds have required banks and credit unions to file a report with the Financial Crimes Enforcement Network (FINCEN), which operate massive databases available to the FBI and DEA.

Currently there are 14 states including the District of Columbia allowed to sell medical marijuana legally under state law, but under the federal Controlled Substances Act of 1970, marijuana is classified as an illegal Schedule 1 drug.

The federal government cannot force states to comply with federal law or require states to enforce federal law, but the US Department of Justice has the authority to prosecute offenders and organizations in violation of federal law against sales or possession of marijuana. This law effectively blocks banks from dealing with those in the legal marijuana business who must operate business accounts to accept credit and debit cards for their services.

"Our organization is regularly contacted by cannabis businesses that can't make daily deposits or have credit card processing," Allen St. Pierre, executive director of NORML, told the Chronicle. "The inability of cannabusinesses to gain access to regular banking and financial services continues to hamper the expansion of medical cannabis dispensaries."

St. Pierre took a shot at the Department of Justice. "Despite the 2009 'Ogden' memo from the Obama administration's attempt to allow greater autonomy for states to regulate medical cannabis, the memo didn't address the legal concerns expressed by banks and financial services who fear they are violating federal laws if they do business with cannabis businesses."

In May 2010, following several attempts to pass legislation to eliminate federal penalties for medical marijuana, 15 members of Congress, led by Rep. Barney Frank (D-MA) issued a letter written by Rep. Jared Polis (D-CO) to Treasury Secretary Timothy Geithner.

"Legitimate state-legal businesses are being denied access to banking services, which does not serve the public interest," the letter said. The letter also requested "formal written guidance" to assure banks would not be federally targeted for conducting business with medical marijuana dispensaries.

"They were trying to ensure that medical marijuana dispensaries could have banking services provided to them because there's so much capital involved," said Mike Meno, director of communications for the Marijuana Policy Project.

It's not just Northern California. Sue Harank is the co-owner of Alpine Herbal Wellness in Denver Colorado. This medical marijuana dispensary has been operating less than a year. Within this time, Harank has been forced to switch banks four times after the institutions closed her accounts without prior warning.

Harank called situation as "one heck of a nightmare." According to Banktime.com, Harank now does business with Colorado State Bank, the only bank in the state allowing people in the legal marijuana trade to hold business accounts.

Don Duncan feels the adverse treatment as well, when dealing with financial institutions. Duncan, the California director of the pro-medical marijuana advocacy group Americans for Safe Access, had his bank accounts shut down without notice. "Banks can't figure out if it's okay to do business with medical cannabis organizations," he said.

US Attorney General Eric Holder issued a memo in October, 2009, expressing administration policy of not utilizing federal resources to pursue "individuals whose actions are in clear and unambiguous compliance with existing state laws providing for the medical use of marijuana." Despite Holder's direct orders the federal troops still pursue those legally operating marijuana businesses.

"It doesn't make sense. It is an un-American thing for the feds to do," said Mike Johnson. "Every major bank in California has been told not to handle marijuana accounts."

Legal conflicts surrounding the bank's secrecy laws forcing banks to report customers making suspicious deposits has created a "boom" in business for lesser known financial services. According to Banktime.com, Marijuanapos.com  is one of the few institutions to offer banking services, including credit and debit card processing, for legal marijuana businesses.

Jesse Cretaro, the marketing director of Marijuanapos.com, said they work with banks that deal with high-risk clients. Another financial service, Direct Bancard of Livonia, Michigan, offers medical marijuana providers a prime-time Cadillac service. Executive Vice President Martin Khemmoro explained that Direct Bancard often uses merchant services located overseas to bypass legal conflicts.

Guardian Data Systems offer similar services but deals only with medical marijuana dispensaries legal under California state law. Lance Ott, Guardian's chief executive officer said he's been trying for years "to offer honest and secure services to an emerging industry."

Meanwhile dedicated advocates for the medical marijuana industry insist that all they want is for those in the industry to have access to safe and transparent banking services, like other professional entrepreneurs.

"All medical marijuana merchants wants to do is obey the law and do what's normal," said Duncan.

But that's unlikely to happen as long as federal marijuana prohibition remains intact. While the federal raids on medical marijuana dispensaries have decreased -- if not ended completely -- the feds have demonstrated that they are determined to use all the weapons in their arsenal to continue to go after what they consider to be a criminal industry.

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