Marijuana Reform, Led by States, Puts Pressure on Congress to Legalize

Bill Barlow

Across the United States, states are taking a new look at marijuana, with an unprecedented number of legislatures considering bills in 2019 to allow licensed sales or at least approve of medical use. 

But under federal law, cannabis remains illegal from sea to shining sea.

Eventually, the nation may reach a tipping point, when change at the federal level becomes inevitable.

“I don't think that we've ever been in a better place,” said Morgan Fox, the media relations director for the National Cannabis Industry Association (NCIA), a trade advocacy group. 

Legalization has advocates in the Senate and the House of Representatives, with bills being presented on banking reform, criminal record expungement, updates to medical marijuana uses, and even permitting doctors to recommend cannabis in place of opioids. A 2018 Gallup poll showed two-thirds of Americans now approve of marijuana legalization, with support at an all-time high.

“Things are looking really good right now,” Fox said.

Still, the federal government continues to list cannabis as a Schedule I drug under the Federal Controlled Substances Act (CSA), a category reserved for substances deemed to have no medical benefit and a high potential for abuse.



“I think it should be de-scheduled altogether,” said Roseanne Scotti, the state director for the New Jersey Drug Policy Alliance (DPA), a group advocating for legalization. “Certainly, removing it from Schedule I would be a step in the right direction.”

She called states laboratories of innovation, which at times lead the federal government.

With an increasing number of states pushing for reform, “The reality is it's eventually going to become impossible for the federal government to maintain its position,” Scotti said.

Millions of Americans now have access to legal, taxed, and regulated marijuana. Most expect that availability will only increase. Ten states plus Washington, D.C., have approved adult-use cannabis bills with more expected in 2019. Include medical marijuana and 33 states allow use for health conditions.

States Lead the Way

The fight has moved from referendum questions to the U.S. Capitol and to the statehouses around the U.S., with Vermont becoming the first to legalize through legislative action instead of a ballot question, when Republican Gov. Phil Scott signed Act 86  into law on Jan. 22, 2018.

In New Jersey, Democrats with a pro-legalization governor in Phil Murphy and majorities in the Legislature are widely expected to approve SB 2703, the New Jersey Cannabis Regulatory and Expungement Aid Modernization Act, which legalizes cannabis for adult use. Supporters continue to wrangle the last few votes for passage.

In New York, Democratic Gov. Andrew Cuomo has presented a plan for legalization, while some lawmakers such as Assembly member Crystal Peoples-Stokes, eye a plan of their own.

Acknowledging that a majority of his constituents favor legalization, Democratic Pennsylvania Rep. Jake Wheatley Jr. has introduced HB 50 to expand reforms. Democratic Gov. Tom Wolf has given fresh signals that he's willing to consider legalization.



Meanwhile, new bills were recently introduced in Maryland and New Mexico, while one report sees the potential for new adult-use laws this year in Connecticut, Illinois, Minnesota, and New Hampshire.

“A number of states are considering ending prohibition this year. If just half of them move forward it will send a very strong message to Congress,” said Mason Tvert, spokesman for the Marijuana Policy Project (MPP). He sees substantial momentum for federal action in 2019.

“The more states that enact laws regulating for adult use, the more support we see among members of Congress and the greater the sense of urgency that we need to take action,” he said.

Federal Prohibition Remains an Obstacle

In more than two decades since California voters approved Proposition 215 to legalize medical marijuana, federal authorities have taken little action to stop sales that are approved at the state level.

But the federal prohibition still limits the industry, preventing interstate commerce, limiting research, and creating unique financial headaches for businesses.

In the short term, Tvert hopes to see banking reform and protections for the burgeoning industry. 
Some steps have already been made in that direction, with a House Finance Subcommittee digging into banking issues related to the cannabis industry on Feb. 13, 2019.

“It's highly unlikely we would see any policy requiring marijuana to be legal in every state,” Tvert said. States could also decide to ban alcohol if they wanted to, he said, and there are “dry” counties and towns throughout the U.S.

Instead, his organization wants to see protections for interstate commerce for the industry and the reform of Section 280E of the federal tax code, which governs tax deductions for businesses trading in Schedule I or II controlled substances. Unlike other businesses, no one in the cannabis industry can deduct any business expenses from federal taxes.

Some banks also are unwilling to handle accounts from the cannabis industry. Technically, the banks could be open to federal charges of money laundering, a fact that hangs over every legal marijuana purchase and every cash deposit.  

“We've not seen banks face any sort of penalties for doing business with cannabis companies, but they still perceive the risk to be too great in many cases,” Tvert said.

Given the volume of pending cannabis legislation, Tvert said he sees change on the horizon on Capitol Hill. Some moves have been made already. On Feb. 8, 2019, Democratic U.S. Sen. Ron Wyden of Oregon, a Senate Finance Committee member, introduced the Marijuana Revenue and Regulation Act, or S 420 — choosing the bill's number intentionally. It's one of two cannabis reform bills in Congress to carry that number. Wyden's bill would set an excise tax for state-legal cannabis producers and regulate the industry similar to the way alcohol is regulated.

But few expect restrictive marijuana laws to return, with more lawmakers advocating the once-taboo concept of legalization at the state and local level and several pro-legalization advocacy groups steadily gaining ground.

According to the NCIA, a package of cannabis policy initiatives could see the removal of most federal penalties for cannabis businesses that are in compliance with state law. The organization cites the Marijuana Revenue and Regulation Act, along with the Responsibly Addressing the Marijuana Policy Gap Act, which would remove most federal criminal penalties for businesses acting in compliance with state law, while addressing other issues. The Small Business Tax Equity Act would amend section 280E of the tax code.

“Momentum is clearly building for comprehensive cannabis policy reform in Congress, and this legislation will help push lawmakers closer to ending federal prohibition in the near future,” said Aaron Smith, executive director of the NCIA. “It is time to let states determine their own cannabis policies without fear of interference and allow regulated businesses to replace the illicit market.”