Marijuana’s moment has been undeniable in recent years. Last year, we saw Canada become the first industrialized country in the world to legalize recreational cannabis in the modern era. Now, Mexico looks to be just months away from becoming the third country worldwide to ok the sale and consumption of adult-use weed.
We’ve also seen 33 states since 1996 wave the green flag on medical marijuana in the United States. A third of these medical weed states have also passed legislation allowing the weed consumption and/or sale recreational pot.
Marijuana’s scheduling in the us puts pot businesses at a serious disadvantage
Despite two-thirds of the American public favoring some sort of National legalization program. The U.S federal government continues to classify cannabis as a schedule 1 substance. That means it’s entirely illegal, is deemed to be prone to abuse by users, and it’s considered to have no recognized medical benefits. In fact, cocaine has a less stringent scheduling than marijuana, according to the Controlled Substance Act.
Even thought he federal government has taken a hands off approach to state-law regulation, this isn’t exactly making life easy for companies in the cannabis space. U.S pot businesses have limited nor no access to basic banking services. Since banks are insured by the Federal Deposit Insurance Corporation (FDIC), and the FDIC is a federally created agency, they fear potential financial and/or criminal repercussions if caught aiding cannabis companies. This means limited or no access to everything from loans and lines of credit, to something as simple as a checking account.
The House Aims to Legalize Cannabis in the U.S.
Four months ago, on July 23, Rep Jerry Nadler (D-Ny) and Sen. Kampala Harris (D-California) introduced the marijuana community, Reinvestment and Expungement Act, or MORE Act, in Congress. The MORE Act is on track to be the first comprehensive marijuana reform legislation set to be voted on in Congress after the House Judiciary Committee votes 24-10 in favor of the bill on Wednesday, Nov 20. The MORE Act now moves to the next stage of the process, which would be a vote one the Democratic-dominated House.
Essentially, the MORE Act ensures that states would have the right to regulate their own industries, but it would allow the federal government to collect a 5% tax on legal product. It would help to right the perceived wrongs of the war on drugs by helping those most impacted by the federal government’s efforts to stamp out drug use, including cannabis.
If the MORE Act Has a fatal flaw that may not be apparant at first glance.
If the MORE Act were to pass to house, it would then move on to the senate, where things get considerably cloudier. Senate Majority Leader Mitch McConnell (R-Ky) is certainly no fan of cannabis and has blocked riders specifically targeting marijuana reform in the past. With McConnell at the helm, cannabis reform continues to look unlikely.
Republicans have more adverse view of cannabis than Democrats or Independents. The latest Gallop poll shows that 76% of self-identified Democrats and 68% of self-identified independents support legalize pot in the U.S., which only 51% of self-identified Republicans onboard with legalizing weed. There would need to be strong bipartisan support in the senate for the MORE Actto pass, and that doesn’t seem likely to happen, at least in the way the current bill is written.
The biggest hurdle in recreationally legalized states right now is black market marijuana. Illegal producers don’t have yo wait for cultivation, processing, distribution, or sales licenses to be approved. They don’t pay state or federal income tax, and they avoid state, local excise, and wholesale taxation (depending on state). If the federal government adds yet another layer of taxation atop legal marijuana, its only going to make the price disparity between legal and illegal pot even wider.