Federal law still treats marijuana as an illegal drug, creating headaches for states

Most states in the United States violate a major federal drug law.

The Controlled Substances Act of 1971 classifies marijuana in the most dangerous category defined by law, on par with cocaine and heroin because of its potential for alleged abuse and lack of medical applications.

But 36 states plus the District of Columbia allow either full legalization for adult use or full-scale medical use, putting them at odds with federal law. So far, Congress has not been able to come up with a solution, despite the support of the Main Democrats for a more harmonious relationship between the states and the federal government.

State acceptance happened quickly, with Colorado and Washington being the first to legalize adult use less than 10 years ago. By the first of the year, possession of marijuana will be legal for all adults in 18 states – including Arizona, Colorado, Maine, Michigan, Montana, Nevada, New Jersey, New -Mexico, Oregon and Virginia – which represent 44% of the national population. population.

That number has recently increased: The governors of New Mexico and Virginia signed their legalization laws just this year. Montana, enacted by voting measure in 2020, will go into effect on New Years Day.

The mismatch between a federal ban and increasing state liberalization hasn’t stopped the marijuana industry from thriving where it’s legal. Since actions taken by Colorado and Washington in December 2012, the federal government has largely refrained from enforcing federal law in states where drugs are legal.

But the political gap is widening as more states join in legalization, spanning everything from banks to tribal jurisdiction.

“While the federal cannabis ban clearly does not prevent states and territories from passing cannabis legalization laws, the federal ban still creates a number of hurdles for states, businesses and consumers. “said JM Pedini, director of development for the advocacy group. National Organization for Marijuana Law Reform, or NORML, and executive director of the Virginia chapter of the group.


One of the most obvious problems – and the lowest fruit for legalization advocates – concerns banking.

Marijuana companies, and some that sell related products, are denied credit, small business loans, and even checking accounts.

That’s because the banks fear that federal authorities will prosecute them for working with companies that technically meet the federal definition of drug traffickers, said Mason Tvert, communications advisor to the law firm specializing in drug trafficking. Denver-based cannabis Vicente Sederberg, and the firm’s separate public policy partner. office, VS Strategies.

“A lot of financial institutions will look at the law and determine it’s not worth the risk because cannabis is illegal at the federal level,” he said. “They are concerned that there is a potential risk of facing federal charges of money laundering and drug trafficking.”

Banks and insurers who work with marijuana companies often add a significant mark-up to their services, Tvert added.

Nick Kovacevich, CEO of Greenlane Holdings, said it affects even companies like his, which sell marijuana-related products but don’t grow or sell the plant itself.

A proposal in Congress to allow banks to do business with legal marijuana sellers would provide insurance to the banking industry, advocates say.

The bill, known as SAFE Bank Act, was passed by the House this year as part of the annual Defense Authorization Bill, but was withdrawn from the Senate. This would go a long way in promoting acceptance of the marijuana industry by mainstream businesses, Kovacevich said.

“It’s a risk-reward thing,” he said. “A lot more banks are saying, ‘OK, now I’m comfortable,’ and I think the risk / reward profile changes dramatically for them. “

Dropped defense bill

Getty Images.

The banking bill, first introduced in the Senate in 2017 by a bipartisan group, has advanced in previous congresses, but supporters hoped the new Democratic Senate would pass it this year.

“There were very high hopes that it would be included in the national defense bill,” Tvert said. “But ultimately he was not included.”

Kovacevich, Tvert and others accuse Democratic allies of blocking the bill in the Senate.

Senator Cory Booker of New Jersey and Majority Leader Chuck Schumer of New York released their own bill with Ron Wyden of Oregon this year to lift the federal ban, clear criminal records of those convicted of marijuana-related offenses and create an investment fund for communities affected by the lingering war on drugs for decades.

Asked about Booker’s stance on the bank bill, a spokesperson made a statement.

“While the SAFE Banking Act is a common sense policy that I support, it must be coupled with strong restorative justice provisions that aim to correct the many injustices suffered by black and brown communities as a result of the failure to our nation’s war on drugs, ”Booker said in the release.

“To this end, I have worked with Majority Leader Schumer and Senator Wyden to propose … comprehensive legislation that would reverse decades of unjust, unjust and discriminatory drug policy.”

Schumer representatives did not immediately respond.

We do not know where the legislation stands by 2022.

The Schumer-Booker-Wyden bill remains only a talking point and has not been officially introduced, although The Hill reported this month that Schumer can present his bill for a floor vote this spring.

Many Republicans are unlikely to support full legalization, at least in part because their Senate leader Mitch McConnell of Kentucky strongly opposes it, said Justin Strekal, political director of NORML.

Tribal rights and interstate sales

While banking reform is Congress’ primary focus, the federal ban also makes it harder to legalize states in other ways – for example, in states like Montana and New Mexico with large Native American populations and reservations. .

Federal authorities with the Office of Indian Affairs have jurisdiction over tribal lands, meaning they could potentially enforce federal drug laws there, even within state borders where it would otherwise be legal.

This was the case in a September raid on tribal lands in New Mexico – after the state’s legalization law came into effect.

Citing the raid in New Mexico, Montana State Senator Shane Morigeau, Democrat and member of the Confederate Salish and Kootenai tribes of the Flathead Nation, said in an interview that the tribes do not even enjoy the level of certainty. granted to states that federal authorities will allow them to conduct their own regulation of marijuana.

Morigeau defended a provision included in Montana’s marijuana law to give the state’s eight tribes a unique opportunity to obtain licenses to grow and sell marijuana products to consumers.

Morigeau, who highlighted the revenue potential of legalized marijuana, said the provision was an attempt to involve tribes, who he said were generally “at the bottom of every social indicator,” in the new revenue stream. .

“The state of Montana, they can sleep a little easier at night because of this memo saying we’re going to be out of touch with you guys,” he said, referring to the US Department of Justice. Justice. advice to leave the legal activity of the State alone. “It just doesn’t exist for the tribes… For us, it was very simple: these are areas of the state that could benefit from income. “

The federal ban also means that produce grown in one state cannot be shipped to another, even to neighboring states where both have a legal program, like Oregon and Washington, for example.

This may be good for growers in states with relatively small marijuana grow industries.

But in Oregon, a relatively fertile ground for growing marijuana, with a relatively small population, growers overproduce and lower prices.

Montana could have the opposite problem, Morigeau said. With limited producers and a ban on moving outside state borders for supply, there could be a shortage after legal sales begin on Jan. 1, he said.

The Virginia Quagmire

(Photo by Sean Gallup / Getty Images)

Not all complaints about a national marijuana program are the product of federal policy.

Many states have shown how to run successful programs, said Virginia delegate Glenn Davis, a Republican unhappy with the Democratic leadership’s deployment of the state’s marijuana policy.

Virginia should have turned to programs in Colorado and elsewhere, he said. Instead, when the Commonwealth legalized marijuana possession this year, the legislation didn’t create a legal market until 2024. This means that marijuana is legal to own and even use, but not to buy or sell for three years.

Davis called the situation a “quagmire”.

“Obviously there are challenges because of the federal government,” he said. “But the quagmire the Democrats created was not because of the federal government.”

Yet the various complications with state marijuana programs caused by the federal ban have frustrated those who want to see the industry treated like any other approved by a particular state.

“Given the trajectory of public support and the growing number of states that have passed these laws and the extent to which this debate has progressed, the industry clearly appears here to stay,” Tvert said. “But it has to be protected and it has to be treated as a legal business.”


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