WORKWEEK

Change in Cannabis

One way or another, change is coming to the U.S cannabis industry.

Currently, there are several bills that have been proposed that would very significantly impact the U.S cannabis industry such as the MORE Act, SAFE Banking, and the States Reform Act.

These proposals would forever change the American and subsequently the global cannabis industry, however, there are many differences when we compare these proposals to each other.

The MORE Act

Here’s a snapshot of what The MORE Act would do for cannabis:

• Most notably, The MORE Act would remove cannabis from the list of Schedule I substances outlined under the Controlled Substances Act.
• Replace statutory references to marijuana and marihuana with cannabis (this seems small, but is truly a huge win!)
• Require the Bureau of Labor Statistics to publish regular data on cannabis business owners and employees.
• A fund would be created for those most impacted by the War on Drugs.
• Imported cannabis products or those produced in the U.S. will have an excise tax, cannabis production facilities and export warehouses will have an occupational tax. 
• People with past cannabis convictions would no longer be denied federal public benefits, solely for their cannabis charges.
• Small Business Administration loans and services become available to state legal cannabis companies.

Removing cannabis as a Schedule I drug does not necessarily legalize it at the federal level, but it does remove a huge bulk of the barriers cannabis businesses face under this current classification. 

Additionally, the MORE Act would make tax code 280e a non-issue for cannabis businesses, putting millions of dollars back in their pocket every single year.

Curaleaf, for example, would go from a reported net loss after taxes of $61.735 million to a net profit of $235,000 with this single piece of legislation. 

SAFE Banking Act

The primary problem the SAFE Banking Act is seeking to solve is to make it possible for U.S banks to work with U.S cannabis companies, without the threat of being penalized by federal law makers.

The SAFE Banking Act’s language has been passed by the House five times, but continues to fail the Senate. This bill would prevent federal regulators from penalizing banks who serve compliant, state-legal cannabis businesses. 

Most recently, SAFE Banking was included in the National Defense Authorization Act (NDAA), a bill that Congress must pass & often includes other issues lawmakers need resolved. 

Senate Majority Leader Chuck Schumer (D-NY), is painted as a primary reason why the legislation didn’t advance. 

“I don’t really quite know what the hell his problem is,” said Rules Committee Chairman, Jim McGovern (D-MA), in reference to Sen. Chuck Schumer not including SAFE Banking in the final NDAA. 

While the SAFE Banking act is a very important piece of legalization for cannabis companies, certain policy makers perceive it’s insufficient to address the core problems the war on drugs has created.

As such, it remains to be seen whether this stepping stone will receive the support it needs to become law in the United States anytime soon.

The States Reform Act

The States Reform Act would federally decriminalize cannabis, similar to the MORE Act, as well as expunging past cannabis offenses and empowering victims of the War on Drugs. Veterans would be protected from being denied employment at a federal agency based solely on their cannabis consumption. 

Unlike the MORE Act, this legislation would create a pathway for interstate commerce within the United States, which is strictly prohibited right now, and purchases would include a 3% federal excise tax. 

The States Reform Act would regulate cannabis at the federal level, very similar to alcohol, however, it’s important to note that states can choose to participate in interstate commerce or not.

The Alcohol and Tobacco Tax and Trade Bureau (TTB) is currently identified as the primary regulatory body for cannabis under The States Reform Act, taking on the responsibility of tracking cannabis inventory through a seed-to-sale tracking software, similar to state regulatory programs. 

Looking Forward

Today, both the Republicans and the Democrats are seeking to claim the political points associated with legalizing cannabis on a federal level, however, despite this consensus — little progress has been made to resolve these issues.

In the meantime, many American cannabis businesses will continue to suffer the consequences of the federal government’s failure to take action.

Our Take

There’s an ongoing debate about which proposed policy change would be best for the country and in our opinion, the best legislation is one that prioritizes providing patients & consumers with access to cannabis.

That said, substantial change does not occur overnight, and recognizing that this industry will be built in decades vs years, we would be willing to accept progress in any shape or form such that the industry continues to gain more momentum.