A Historic Vote and the Future of Federal Cannabis Policy

Last Friday, the U.S. House of Representatives took the historic step of voting on and passing the MORE Act. The legislation would legalize cannabis within the United States and remove criminal penalties associated with cannabis. Although the law has little chance of passing the U.S. Senate by years end, the vote in favor of this bill cannot be overstated. First, it ends the decades old probation of cannabis, thus federally legalizing the use of cannabis in the United States where 2 out of 3 Americans already live in states where cannabis is legal. Second, it rightly applies criminal reform to cannabis, removing often times harsh criminal penalties associated with cannabis. Finally, it sets a marker for the U.S. Representatives priorities on cannabis issues moving into the next Congress.


As noted, the current republican controlled U.S. Senate remains an obstacle to federal cannabis legalization. In fact, U.S. Senator Mike Rounds (R-SD) indicated that the recent approval of an adult use cannabis measure by his constituents was a “mistake”. In other words, Senate Republicans even from states that have legalized cannabis will likely not be supportive of the MORE Act this year or in the next Congress.


Many may ask then the following question: what will the Senate do regarding federal cannabis policy moving forward? Much of it depends on which party controls the chamber. As of today, party control of the U.S. Senate in the upcoming 117th Congress is not yet determined. Georgia has two races for Senate seats that will occur in early January where the winners of these contests will determine the control of the U.S. Senate.


Senate Minority Leader Chuck Schumer (D-NY) has already indicated that the MORE Act will be a priority for a Senate controlled by democrats. If the democrats were to win these two Senate races in Georgia, expect the MORE Act to likely move forward. Conversely, if the Senate remains in Republican control, do not expect the MORE Act to carry much weight in a U.S. Senate next Congress.


However, even if federal legalization of cannabis is not on the immediate horizon within a republican controlled Senate, there are several issues that are important to the growing cannabis industry as well as cannabis policy advocates that the U.S. Senate can tackle.


One of these issues is cannabis-banking reform. The SAFE Banking Act, which provides protections to financial institutions that bank cannabis orientated businesses, overwhelmingly passed the U.S. House last year with strong bi-partisan support. Senator Pat Toomey (R-PA) who would be the Senate’s Banking committee chair in a Republican Senate has indicated his support for moving this legislation. The bill should also add language that allows cannabis businesses the ability to access the U.S. capital markets as well as parameters that would allow them to engage with the broader financial system. Such action would allow cannabis businesses to grow their companies just like any other entrepreneurial enterprise.


Moreover, the 280e tax, the unfair and unequal tax treatment towards cannabis businesses should be removed. This oppressive tax prevents these businesses from taking normal business deductions. As a result, cannabis companies cannot re-invest in their supply chain, grow their businesses, hire more workers, and serve more patients and consumers in the states that have legalized them to do so. In fact, equal tax treatment would increase revenue for the U.S. Treasury since more growth, jobs and sales would occur with its removal. Such reform is a matter of fair and equal tax treatment, not a tax break. Cannabis businesses should be treated the same as any other business.


Finally and most importantly, there is strong bi-partisan interest in amending America’s policy on criminal penalties associated with cannabis. As noted above, nearly 67% of Americans live in states where cannabis is legal. Many states have already decriminalized the possession of cannabis and the Federal Government should do the same. Many individuals who have served jail time for cannabis offenses are non-violent offenders. The Senate recently passed a significant overhaul regarding many criminal justice issues and there is bi-partisan support to do more. The Senate should take the reasonable measures as outlined within the MORE Act and look to incorporate them into a broader piece of criminal justice reform. It is a matter of fairness and is the right thing to do while the industry continues to grow.


Legislating is difficult and there are many competing views on federal cannabis legalization within the next Congress. However, if divided government does occur, the policy reform issues outlined above are sensible and necessary as the cannabis industry and community continue its march towards full legalization.

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