(Editor’s note: This story is part of a recurring series of commentaries from professionals connected to the cannabis industry. Joe Caltabiano is a cannabis entrepreneur and co-founder of Cresco Labs, a Chicago-based multistate operator where he served as president until he resigned in March 2020.)
On July 10, presumptive Democratic presidential nominee Joe Biden released the Biden-Sanders Unity Task Force plan outlining policy recommendations on multiple fronts, including criminal justice reform.
When it comes to such reform, the Unity plan boldly states: “It is past time to end the failed ‘War on Drugs.’”
We can all agree on that.
However, the plan falls short when it comes to creating a vision for the future that includes federal legalization of cannabis.
Put simply, it fails to address the lack of banking services available to state-legal cannabis companies.
What the plan does
The plan proposes urgently needed steps to address inequities in the U.S. criminal justice system.
Cannabis use would be decriminalized and past convictions for use and possession would be expunged, representing a significant win for people living in states where possession of any amount of cannabis can result in prison and a permanent criminal record.
Decriminalization is also in line with what’s already happening in many states, including Illinois, that have legalized adult-use cannabis.
The plan also broadly embraces drug courts, harm reduction and diversion programs.
Importantly, the plan encourages “states to invest tax revenue from legal marijuana industries to repair damage to Black and brown communities hit hardest by incarceration.”
Where the plan falls short
For many people, these incremental steps bolster a glass-half-full perspective, keeping a path open for eventual full legalization of cannabis.
There’s no doubt that Biden’s plan is better than what we have under the Trump administration.
However, in this unique moment, we have the opportunity to create something even more substantial, a plan that charts a course forward and moves beyond merely righting past wrongs.
When it comes to legalizing cannabis, public opinion is on our side.
The cannabis industry also has incredible potential to create a better future for our country, generating both jobs and tax revenue – if we level the playing field through federal legalization.
Cannabis resilient despite coronavirus
The COVID-19 pandemic represents a black swan event if ever there was one, seizing up the economy and instantly rippling across all sectors.
In the face of this challenge, the legal cannabis market has proved to be remarkably resilient.
Most states and cities quickly deemed cannabis as essential. Sales figures backed up the demand for cannabis, as people sought out alternatives to help with anxiety, stress and isolation.
As an industry, cannabis stepped up its game, quickly adopting stringent public-health precautions to ensure the safety of workers and customers.
Underneath this resilience, though, lies an undeniable fact – the legal cannabis market is sharply constrained by federal prohibition, even in states where it is legal and fully embraced by community members.
Banking problem must be addressed
Why isn’t decriminalization alone enough? Decriminalization won’t address the most significant challenge faced by the industry – the lack of banking services.
Federal regulations prohibit banks from knowingly engaging in transactions that involve unlawful activity, including the sale of illegal drugs.
Cannabis remains an illegal Schedule 1 drug at the federal level, even if decriminalized.
Banks run the risk of running afoul of federal law, even if both the bank and the cannabis business are located in a legal state.
The federal government has attempted to remedy this disconnect in the past through the Obama administration’s Cole Memorandum, which was subsequently rolled back by the Trump administration.
As long as the legal cannabis industry’s access to banking depends on the whims of the latest administration, banks will understandably stay away, as will investors.
The U.S. cannabis market will remain a cash-heavy operation, making individual businesses a target for organized crime.
Legalizing cannabis at the federal level provides a path for access to banking services.
It would also be an important first step toward tax-code reform, moving cannabis away from onerous Section 280E regulations created as part of the war on drugs.
These changes, in turn, would allow the cannabis industry to fully participate in the U.S. economy, contributing even more jobs, tax revenue and social equity opportunities.
Legalizing cannabis the right way
The Unity Plan supports legalization of medical cannabis, though it’s not clear whether this action would be federally driven or simply encouraged at the state level.
Regardless, the devil is in the details.
One only needs to look at the wide variation in state medical cannabis programs – from Oklahoma’s lenient qualifying medical conditions to New York’s strict regulations limiting medical cannabis patients to nonsmokable products – to anticipate how complex it would be to carve out medical cannabis legalization from full legalization.
Simply shifting cannabis to the U.S. Drug Enforcement Administration’s Schedule 2 or Schedule 3 could cause profound unintended consequences for both patients and state medical cannabis markets.
Bringing the industry to the table
Federal cannabis legalization won’t be a fast or easy process, a lesson we’ve learned from the 2018 Farm Bill’s legalization of hemp.
But just because it’s not easy doesn’t mean it shouldn’t be done.
There’s too much at stake in terms of potential revenue and jobs, at a time when the country is desperately seeking creative, visionary solutions for an entirely novel problem.
As Biden and his team work to fill in details of their criminal justice reform plan, they would be wise to reach out to leaders in the legal cannabis industry who’ve worked through many of the issues around safety, equity and sustainability.
States can serve as models for building a robust legal cannabis industry that addresses all of the priorities in the Unity plan.
For example, Illinois’ new adult-use program prioritizes social equity, reversing the harm wrought by the war on drugs.
We face a historic opportunity to not only right the wrongs of the past century but also to build something better.
It’s time for our politicians to lead the way with federal legalization of cannabis.
Joe Caltabiano is a cannabis entrepreneur and co-founder of Cresco Labs, a Chicago-based multistate operator where he served as president until he resigned in March 2020. He can be reached at firstname.lastname@example.org.
The previous installment of this series is available here.
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