Update: On July 14th, Senate Majority Leader Chuck Schumer released a draft proposal of the Cannabis Administration and Opportunity Act, alongside co-authors Sen. Cory Booker (D-N.J.) and Sen. Ron Wyden (D-Ore.). Here are links to the discussion draft, a one-page outline and a detailed summary.
Original Story Below:
Imagine a scenario in which any state that wanted to sell orange juice had to ensure all oranges were grown and juiced within state lines.
“You would be able to give it away for next to nothing in Florida, but it would be next to gold in Massachusetts,” suggested Justin Strekal, political director for NORML, the National Organization for the Reform of Marijuana Laws.
It may sound bizarre, but this is a fitting analogy for cannabis in the U.S., where the plant still can’t be shipped across state borders. It’s just one of many idiosyncrasies that come with marijuana remaining in the same category as heroin under federal law. Those buds meanwhile are already legalized for adult use in 17 states and Washington, D.C.
According to Senate Majority Leader Chuck Schumer, it’s high time for things to change. With the Senate under Democratic control, Schumer (D- N.Y.) is vowing to introduce legislation to change marijuana’s federal status and bring the issue to a vote. He told Politico earlier this month that he’s drafting a package of reforms with Senators Corey Booker (D-N.J.) and Ron Wyden (D-Ore.) that will be introduced soon, although he did not provide a specific timeframe.
Ending federal prohibition of the drug through a Congressional bill was out of the question as long as Senator Mitch McConnell (R-Ky.) was the majority leader, though paradoxically, the Republican leader supports hemp and CBD cultivation.
“I am for it, and a large majority of my caucus is for it, but it’s also getting support from some places you wouldn’t expect,” Schumer said of marijuana reform during a press conference in Midtown on Sunday. “The Libertarian right is for it, and there was a referendum in a very conservative state, South Dakota, and they voted to legalize.”
As New York sets up its adult-use industry in the coming months, the specter of federal prohibition will affect everything from which cannabis brands are available on dispensary shelves to marijuana business owners’ ability to take out a line of credit from a bank (they can’t).
Read more: What You Need To Know About Legal Marijuana In New York
Strekal says that federal legislation could facilitate the creation of universal standards for legal marijuana, such as indicating what product labels should contain. But each state would likely retain authority over whether to set up a legal industry.
“Technically, alcohol is not mandated to be legal nationwide, which is why we still see a couple of dry counties,” Strekal noted.
While marijuana reform does have some bipartisan support in Congress, it is not yet widespread among Republicans. When the House passed the MORE Act to decriminalize marijuana last year, only five GOP representatives voted in favor of the bill (it didn’t come to a Senate vote). Some observers take even that level of support as a sign that a shift might be coming. The Hill pointed out that 188 U.S. House members now represent constituents in states that have legalized adult use, making up 44% of the chamber. Meanwhile, Virginia recently became the first southern state to fully legalize marijuana, and influential right-wing groups—including Libertarian think tank the Reason Foundation and the Koch brothers-backed Americans for Prosperity—recently formed the pro-marijuana industry Cannabis Freedom Alliance.
Schumer has said that, at the very least, a vote on marijuana reform will force senators to publicize their stances.
While it’s unclear exactly what will be included in Schumer’s legislation, he will likely seek to change the status of marijuana under the Controlled Substances Act. The federal Drug Enforcement Administration has for years resisted calls to edit weed’s categorization as a Schedule I drug that has “no currently accepted medical use and a high potential for abuse,” a status that greatly restricts researchers’ ability to study the plant. Even with the limited clinical trials available, the National Academies of Science, Engineering and Medicine found enough evidence in 2017 to conclude that cannabis is effective for treating chronic pain, multiple sclerosis, and nausea from chemotherapy. The report also notes that because of federal limitations on research, the marijuana used in the studies bears little resemblance to the products that are commercially available in legal states, which come in many different forms with varying levels of THC and CBD.
Marijuana’s federal status also prevents cannabis businesses from accessing tax credits and write-offs and impacts how entrepreneurs raise capital, often pushing them toward private investors that may have less interest in small startups.
U.S. companies that peddle the plant generally can’t trade on the NASDAQ or New York Stock Exchange, but several of the marijuana companies that currently have medical licenses in New York have opted to go public in Canada (Canopy Growth, a Canadian company with a footprint in New York, is conversely able to trade on the NASDAQ).
“Going public gives you some access to funds, but we’re kind of isolated north of the border on the [Canadian Securities Exchange],” said Dr. Kyle Kingsley, founder and CEO of Vireo Health, one of the 10 licensed medical marijuana companies in New York.
Vireo Health operates in other states, and Kingsley says he has the scale to absorb the extra costs associated with running a cannabis business. But the restrictions associated with federal prohibition make it difficult for smaller operators to enter and succeed in the industry.
Still, Allan Gandelman, founder of the New York Cannabis Growers and Processors Association, says he’s conflicted about changing marijuana’s federal status before the New York industry is set up. He advocates for small and mid-size cannabis growers and processors to enter the industry and says if large, established cannabis brands are allowed to ship in their products before that happens, it could make it hard for them to compete.
“We would be at a serious disadvantage if tomorrow, they could just start importing cannabis from California,” said Gandelman, who added that he’s raising the issue with Schumer’s office. “There would be no incentive for anyone to invest in the infrastructure for New York cannabis cultivators.”
The SAFE Banking Act, which aims to allow financial institutions to take on cannabis businesses without fearing federal consequences, previously stalled in the Senate but has been reintroduced this year with better prospects. Schumer told Politico he wants to change banking regulations but added that he would prefer to pass a comprehensive package of reforms rather than piecemeal legislation.
Kingsley said he hopes the process moves forward quickly.
“If you told me five years ago we’d still be here, I’d say no way,” said Kingsley of federal prohibition.
