Federal marijuana legalization could be only months from becoming reality, spurring Washington DC-based MJ advocates to seriously consider a “post-prohibition” world as they map out political strategies for 2021.
Several DC-based nonprofits and trade associations predict a bill to federally legalize marijuana could pass Congress in the near future – but only if Democrat Joe Biden wins the White House and his party controls the Senate and the House of Representatives.
If that occurs – and it’s not a sure bet – the move could become a game changer for the national marijuana industry.
“If the Democrats do a clean sweep, then descheduling with interstate trade is definitely within the realm of possibility,” said Randal Meyer, the executive director of the Global Alliance for Cannabis Commerce (GACC).
It would simultaneously:
- Legalize marijuana federally.
- End the 280E tax restrictions.
- Open banking access.
- Allow for interstate and international cannabis trade.
“Descheduling unlocks everything else, including banking, relief on 280E, everything,” said Steven Hawkins, the executive director of the Marijuana Policy Project. “It’s a rock that kills three birds.”
How it could play out
Meyer, a former staffer in the office of Kentucky Republican U.S. Sen. Rand Paul, predicted the Marijuana Opportunity Reinvestment and Expungement (MORE) Act “would be the primary vehicle” if the Democrats do take the White House and the Senate, in part because it’s already teed up in the House this year.
While legalizing marijuana federally by removing the plant from the federal Controlled Substances Act, the MORE Act would allow states to continue to choose how to regulate a commercial MJ industry.
Spokespeople from multiple other trade organizations working in Washington DC echoed Meyer’s MORE Act prediction.
But many questions remain, and much could change depending on the election.
If, for instance, Republicans retain control of the Senate or the White House, then the fallback plan for many groups is to focus on piecemeal bills such as the Secure And Fair Enforcement (SAFE) Banking Act.
That legislation would enable financial institutions to serve cannabis-related businesses without fear of federal punishment.
But should Democrats win big on Election Day, the next question – after the presumed passage of the MORE Act or legislation close to it – would become the regulatory framework.
“Cannabis is a food, a drug and a cosmetic. And under the Food, Drug and Cosmetic Act, something cannot be a food, a drug and a cosmetic, by law. So we’re in a very difficult regulatory place,” Meyer said.
But, Meyer added, a solution already exists.
GACC issued a 66-page draft of a bill that “ends cannabis prohibition and creates an all-encompassing regulatory framework” that:
- Allows states to take the lead.
- Also allows the U.S. Food and Drug Administration and the Alcohol and Tobacco Tax and Trade Bureau to oversee interstate marijuana trade.
The National Cannabis Industry Association (NCIA) issued a 48-page white paper touting a similar approach, arguing that a “‘one-size-fits all’ regulatory framework would be ineffective.”
“My goal is to turn this into legislation, because you need a regulatory structure. You look at California’s example. If you get the regulation wrong, you don’t get the outcome you intended,” NCIA lobbyist Mike Correia said, referring to a California cannabis regulatory system that has resulted in a booming illicit market, high barriers to entry for entrepreneurs and skimpy profits for legal operators.
“If we don’t (get this right), we’re going to have 50 Californias out there, and that’s the last thing we want,” Correia added.
Some plans still in the works
Other stakeholders, such as the National Cannabis Roundtable (NCR) and the Cannabis Trade Federation (CTF), are still discussing strategy with members and haven’t chosen a particular approach or bill they want to prioritize next year yet.
“Step One is trying to get folks on the same page,” said Steve Fox, strategic adviser to the CTF.
“At this point, it’s really more a matter of hearing from everyone and seeing what stakeholders think and determining where there’s consensus around the policies that are needed.”
Saphira Galoob, a principal at The Liaison Group, which lobbies on behalf of the NCR, said her priority for 2021 is the SAFE Banking Act.
She noted House Democrats have included it in their latest coronavirus relief package. (That bill has not yet received any notable support or a vote in the GOP-controlled Senate.)
And NCR is in the process of finalizing a regulatory proposal that it will likely present to Congress and the industry, Galoob said.
But, she cautioned, the federal regulatory process will be tricky, with many issues to weigh amid differing opinions from member companies based on where they’re from or how their businesses are structured.
“We’re in the process of finalizing a proposed federal framework that will lead with priority principles,” Galoob said.
“It’s not an uncomplicated landscape. And it’s not one route that gets you from end to end. And you’re also balancing that folks from California see the rollout differently than folks from the Midwest.
“When you’re balancing industry interests, it’s a little more complex than just a one-stop approach.”
Division in the ranks?
There’s also a question of unity behind reform proposals given differing views over interstate commerce, industry insiders said.
Multiple sources, for instance, said some multistate operators had worked to amend the MORE Act in favor of a more restrictive federal paradigm that would maintain marijuana’s status as a Schedule 1 drug.
That would prohibit interstate commerce and protect market share for companies that already dominate their state industries.
Justin Strekal, the political director of NORML, is vocal about that divide.
“Unfortunately, some of the focus by industry actors is protecting the limited market access that currently exists over ending federal marijuana criminalization,” he said.
Strekal said his focus is to protect marijuana consumers first and business interests second.
“There are times when those interests – and the interests being advocated by certain industry actors – do not overlap and are actually in conflict,” Strekal said in a possible foreshadowing of a political showdown between MSOs that want to protect their turf and others who prefer a wide-open national market.
But Strekal and others – including NCIA’s Correia, CTF’s Fox, NCR’s Galoob and MPP’s Hawkins – said they hope to work hand-in-hand as much as possible to present a united front to Congress on marijuana reform.
“The more the industry and other stakeholders are able to speak with one voice about what will be optimal, the more likely we’ll be able to influence Congress in an effective way,” CTF’s Fox said.
John Schroyer can be reached at [email protected]