Property of IGC, Inc. CANNABIS POLITICS AND OVERVIEW OF BILLS IN CONGRESS. Introduction. Public Opinion

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1 CANNABIS POLITICS AND OVERVIEW OF BILLS IN CONGRESS Introduction This segment explores current attitudes towards cannabis and outlines several initiatives that could prove critical in shaping the legal cannabis industry in the U.S. The political climate related to cannabis regulation in the U.S. is rapidly evolving and prospects of game-changing reform appear imminent. The implications of such reforms are substantial and widespread for citizens, the medical profession, industry, investors, politicians, the federal government, and law enforcement agencies. Public Opinion Attitudes towards cannabis have transformed substantially across the U.S. Support for cannabis legalization is rapidly outpacing opposition; 53 percent of Americans believe cannabis should be made legal, compared with 44 percent supporting illegality of cannabis. However, not all segments of society support legalization. Approximately 39 percent of Republicans support legalization, compared to 63 percent of Democrats. 48 Opposition to legalization is much higher among those aged 65 and older, and among Hispanics than non-hispanic whites or blacks. 49 Majorities across nearly all partisan and demographic groups believe possession of small amounts of cannabis should not result in jail time. Furthermore, approximately 69 percent of Americans believe alcohol is more harmful to health than cannabis, whereas 15 percent perceive cannabis to be worse. Additionally, majority of Americans believe that if tobacco is legal despite proven dangers to health and hundreds of thousands of deaths yearly across the nation, so should be cannabis, which has not been linked to any deadly disease. 50 That nearly half of Americans admit having tried cannabis is indicative of just how mainstream it has become. Concerns seem to prevail over use in public places following further legalization (63 percent of Americans would be bothered if people used cannabis in public) whereas Americans are generally not opposed to citizens using cannabis in their own homes (83 percent support this view, including 60 percent of those who oppose medicinal or recreational Pew Research Center. (2014). Section 2: Views of Marijuana Legalization, Decriminalization, Concerns. Retrieved from Galston, W. A., & Dionne Jr, E. J. (2013). The New Politics of Marijuana Legalization: Why Opinion is Changing. Governance Studies at Brookings. Boffey, P. (2014). What Science Says About Marijuana. Retrieved from 16

2 legalization). Critically, 60 percent of Americans believe that federal cannabis laws should not supersede state laws. 51 An understanding of the persistently transforming attitudes towards cannabis and its regulation is useful to provide context to the various ongoing reform measures discussed below. Reform measures, as always in a democratic society, can be seen as a byproduct of public opinion. Ongoing Reform Various initiatives are underway to address the current inconsistencies between federal- and state-level laws; regulate the cannabis industry; develop socially and economically feasible strategies; improve research and distribution of medical cannabis; and address the challenges faced by the cannabis industry. This subsection discusses some of these measures. Banking Reforms -- Cole Memo To understand properly the Cole Memo, the memorandum issued by James M. Cole, Deputy Attorney General, on August 29, 2013, an understanding of the Ogden Memo of 2009, the Cole Memo of 2011, and the implications of these statements is essential. The Ogden Memo was the federal government s original hands-off policy issued by the Justice Department in October The Ogden Memo sought to protect medical cannabis patients and their caregivers operating in clear and unambiguous compliance with state law whilst targeting drug traffickers and medical dispensaries engaged in criminal conduct. States reacted by swiftly licensing and regulating dispensaries, giving medical cannabis unprecedented legitimacy. However, in January 2011, the DEA updated their paper known as The DEA Position on Marijuana. The paper, which contained subject headings such as The Fallacy of Marijuana for Medicinal Use, resulted in the operations of cannabis growers acting in full compliance with state laws being halted and numerous raids on cannabis dispensaries. 52 Cole then replaced Ogden as Deputy Attorney General, clarified the definition of caregiver, and effectively further legitimized federal targeting of medical cannabis dispensaries and growers, whilst leaving patients alone. The Cole Memo of 2011 resulted in numerous raids across the nation. The Cole Memo of 2013 was issued to clarify points regarding federal cannabis-related law enforcement under CSA in light of limited investigative and prosecutorial resources. The Memo identified key areas of particular importance to the federal government, including preventing the distribution of cannabis to minors; preventing revenue from the sale of cannabis from going to criminal enterprises, gangs, and cartels; preventing state-authorized cannabis activity from being used as a cover or pretext for the trafficking of illegal drugs or other illegal Pew Research Center. (2013). Majority Now Supports Legalizing Marijuana. Retrieved from Dickinson, T. (2012). Obama s War on Pot. Retrieved from 17

3 activity; and preventing violence and the use of firearms in the cultivation and distribution of cannabis. These federal priorities aside, the Cole Memo gives states wide discretion on cannabis-related prosecution, regulation, and enforcement. Arguably the Cole Memo regards jurisdictions that have legalized cannabis and implemented strong and effective regulatory and enforcement systems to be of minimal threat to the federal government s enforcement priorities and suggests that it would be inefficient use of federal resources to prosecute state-legal businesses. Sections 538 and 539 of the $1.1 trillion spending Bill passed in December 2014 further support this notion. The Bill prohibited the Department of Justice (DOJ) from using funds to target state-legal medical cannabis programs. This measure includes use, distribution, possession, and cultivation of cannabis, implying that the DEA would not intervene either. Importantly, the Bill prohibits DOJ and DEA from interfering in legal hemp production as well. With several states having legalized cannabis in some form, the Cole Memo can be seen as the all-important guide to understanding the federal government s attitudes, its tolerance to statelevel cannabis schemes, and its enforcement of CSA. It is useful in understanding the current situation and legality of operations nationwide and can be seen as a preamble to several reform measures. Ending Federal Marijuana Prohibition Act of 2013 (H.R. 499) H.R. 499 is a federal cannabis decriminalization law introduced by Jared Polis (D-CO) on February 5, The Bill would decriminalize cannabis on a federal level, liberalize perspectives towards cannabis on several fronts, and treat it akin to alcohol. Congress has not yet approved the Act. The Act proposes removal of cannabis in any form from all Schedules of CSA via a final order from the Attorney General. Among the changes proposed by the Act are revision of the definition of felony drug offense to exclude cannabis-related conduct and elimination of cannabis from provisions setting forth penalties under CSA. The Act reflects a desire to eliminate cannabis as a controlled substance for purposes of the Controlled Substances Import and Export Act and the National Forest System Drug Control Act. Additionally, H.R. 499 proposes that cannabis no longer be considered a dangerous drug for purposes of federal criminal code provisions authorizing interception of communications. H.R. 499 suggests that cannabis should no longer be considered a targeted drug for the provisions of the national youth anti-drug campaign under the Office of National Drug Control Policy Reauthorization Act of Additionally, the Bill would rename the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) as the Bureau of Alcohol, Tobacco, Marijuana, Firearms and Explosives. Under the Act, the renamed agency would regulate cannabis and the DEA would no longer be involved. 53 Congress.gov. H.R Ending Federal Marijuana Prohibition Act of Retrieved from 18

4 Furthermore, the Act grants FDA the same authorities with respect to cannabis as it has for alcohol. The proposed legislation would require individuals and companies in the cannabis industry to obtain permits from the government. Permit fees would help cover costs of federal regulation of cannabis. Amendment of the Federal Alcohol Administration Act would result in issuance of permits by the Secretary of Treasury for importing; shipping or selling in interstate or foreign commerce; purchasing for resale; or producing, packaging, or warehousing cannabis. H.R. 499 is structured in a manner that would permit states to exercise their own judgment on the legalization of cannabis. The Bill currently has 18 co-sponsors (17 Democrats and one Republican) and although chances of its enactment have been estimated as low as one percent, public opinion is critical and has yielded unexpected results in the past. 54 With constantly changing attitudes towards cannabis and organizations such as NORML supporting the Bill, 55 enactment of H.R. 499 is one of few distinct possibilities. Respect State Marijuana Laws Act of 2013 (H.R. 1523) Dana Rohrabacher (R-CA) introduced H.R on April 12, It passed the House of Representatives on May 30, 2014, and still awaits approval from the Senate. The Bill has 11 cosponsors from both major political parties and proposes that the federal government should not prosecute individuals and businesses for crimes when they are in compliance with their states cannabis laws. If signed into law, the Act s protection would extend to medical cannabis businesses and individual users (medicinal and recreational) as long as they are acting in compliance with state laws. In light of vast legalization and decriminalization measures across the U.S., Rohrabacher stated: The American people, through the 35 states that have liberalized laws banning either medical marijuana, marijuana in general, or cannabinoid oils, have made it clear that federal enforcers should stay out of their personal lives It s time for restraint of the federal government s over-aggressive weed warriors. 56 The Bill seeks to amend CSA by adding an exclusion clause related to cannabis stating the provisions of this subchapter related to marijuana shall not apply to any person acting in IBT. (2013). Will HR 499 Pot Bill Finally Legalize Marijuana In America. Retrieved from Altieri, E. (2013). Take Action to End Marijuana Prohibition!. Retrieved from Ferner, M. (2015). House Bill Would Force Feds To Respect State Marijuana Laws. Retrieved from 19

5 compliance with State laws relating to the production, possession, distribution, dispensation, administration, or delivery of marijuana. 57 Steve Fox, National Political Director of the Marijuana Policy Project expressed support for H.R. 1523, stating states should be able to devise systems for regulating marijuana without their citizens having to worry about breaking federal law. 58 Concerns are well founded as despite the Cole Memo and a statement from the Attorney General s office urging federal prosecutors to refrain from targeting state-legal cannabis operations, 59 approximately $80 million have been spent annually targeting medical cannabis 60 under the Obama administration through raids of hundreds of dispensaries, resulting in jail time for individuals acting in accordance with state law. H.R carries substantial promise as an instrument for rectification of the gross imbalance between federal- and state-level laws related to cannabis across the U.S. Arguably this is the appropriate pathway forward as most Americans support the concept of cannabis-permitting states acting as a safe haven from federal laws restricting cannabis. No Welfare for Weed Act of 2014 (H.R. 4142)/ Preserving Welfare for Needs Not Weed Act of 2014 (H.R. 4137) H.R was introduced by Paul Gosar (R-AZ) on March 4, 2014, and was approved by the House of Representatives in September The Bill, if enacted, would prevent citizens from using federal aid to purchase medical cannabis through amendment of the Food and Nutrition Act and the Social Security Act. The Bill is co-sponsored by four other Republicans and one Democrat. The Bill would prohibit medical cannabis purchases by individuals using the Temporary Assistance for Needy Families (TANF) program and the Supplemental Nutrition Assistance Program (SNAP). TANF is the federal welfare program and SNAP is commonly referred to as the federal food stamp program Congress.gov. H.R Respect State Marijuana Laws Act of Retrieved from Barabbi, T. (2013). What Is HR 1523?: Respect State Marijuana Laws Act Introduced In Congress. Retrieved from Reilly, R. (2013). Eric Holder Says DOJ Will Let Washington, Colorado Marijuana Laws Go Into Effect. Retrieved from Americans for Safe Access. (2013). What s the Co$t? The Federal War on Patients. Retrieved from Kasperowicz, P. (2014). Lawmakers offer 'no welfare for weed' bill. Retrieved from 20

6 Gosar regards this measure as a common-sense update to federal law to ensure that programs designed to provide subsidies for food and other basic living essentials for the needy are not misused by unscrupulous people to obtain cannabis. H.R. 4137, proposed by David Reichert (R-WA) with the support of 11 Republicans, including Gosar, is limited to preventing cannabis purchases through federal welfare benefits; food stamps are beyond its scope. The Bill would prevent use of government-issued welfare debit cards to make cannabis purchases and would prohibit cash withdrawal from ATMs in dispensaries, although individuals could still withdraw cash elsewhere to purchase cannabis. 62 H.R and H.R are the results of a continuing policy to restrict use of federal welfare funds towards what are regarded as undesirable expenditures. A 2012 federal law restricts use of welfare debit cards at liquor stores, casinos, and strip clubs. Whilst it can be argued that these policies do not acknowledge the medical benefits of cannabis and that individuals should be able to spend welfare allocated money as they please, the intention appears to be protective in nature, seeking to limit unnecessary expenditures to ensure necessities are obtained. Regulate Marijuana Like Alcohol Act of 2015 (H.R. 1013) Jared Polis introduced H.R on February 20, Alongside the widespread descheduling measures and the renaming of ATF cited in H.R. 499, Polis suggests that cannabis should be regulated under the provisions that apply to intoxicating liquors under the Original Packages Act, the Webb-Kenyon Act, and the Victims of Trafficking and Violence Protection Act. Additionally, the Bill would subject cannabis to the provisions applicable to distilled spirits under the Federal Alcohol Administration Act. The Act sets out guidance for issuance of permits to work in the cannabis industry and penalties for not obtaining required permits. Most importantly, H.R proposes a redesignation of the Alcohol and Tobacco Tax and Trade Bureau to the Alcohol, Tobacco, and Marijuana Tax and Trade Bureau. Polis stated [r]ather than be a medicinal substance, it would be a controlled substance like alcohol and tobacco so there s still a federal interest in enforcement Over the past year, Colorado has demonstrated that regulating marijuana like alcohol takes money away from criminals and cartels, grows our economy, and keeps marijuana out of the hands of children Ohlemacher, S. (2014). House Passes 'No Welfare For Weed' Bill. Retrieved from Congress.gov. (2015). Regulate Marijuana Like Alcohol Act of Retrieved from Steffen, J. (2015). U.S. Rep. Polis introduces Regulate Marijuana Like Alcohol Act. Retrieved from 21

7 When seen in conjunction with H.R. 1014, discussed below, these measures represent important opportunities for federal and state governments to generate substantial revenue. Colorado alone generated $44 million in tax revenue in 2014 through its booming recreational cannabis industry. This figure of $44 million represents revenue from new taxes on recreational cannabis (ten percent special sales tax and 15 percent excise tax on wholesale cannabis transfers). When combined with income from medical cannabis, Colorado earned approximately $76 million in 2014 in taxes and business fees. 65 Marijuana Tax Revenue Act of 2015 (H.R. 1014) H.R. 1014, introduced by Earl Blumenauer (D-OR) on February 20, 2015, amends the Internal Revenue Code to impose an excise tax on the sale of cannabis by producers or importers. The Bill also imposes a separate tax on each person engaged in the cannabis enterprise. Those in the cannabis enterprise include producers; importers; manufacturers; distributors; retailers; or anyone who transports, stores, displays, or otherwise participates in any business activity handling cannabis or cannabis products. 66 The Act also requires those in the marijuana enterprise to obtain permits and imposes civil penalties for violation of the Act. Additionally, criminal penalties are proposed for working in the cannabis trade without a permit, failing to keep records or falsifying records, or refusing to pay cannabis tax. Blumenauer stated [it s] not just the people who use marijuana, but a lot of other people are recognizing that it s insane to shuffle billions of dollars to Mexican drug cartels when we could just be taxing it. He estimated that the federal government could make $10 billion annually between the cannabis tax and money saved on cannabis-related law enforcement and incarceration. 67 The Bill would initially tax recreational cannabis at ten percent and gradually raise the rate to 25 percent; it would not tax medical cannabis at the federal level. Neither H.R nor H.R would force states to legalize cannabis but a federal regulatory framework would be developed for those states that decide to legalize it. Compassionate Access, Research Expansion, and Respect States (CARERS) Act of 2015 (H.R. 1538/S. 683) The CARERS Act is a truly groundbreaking Bill with significant chances of enactment. In fact, it was the focal point of Dr. Sanjay Gupta s discussions with President Obama as part of Weed 3. It is perhaps the single most attractive option for Democrats, Republicans, and citizens of all backgrounds Wyatt, K. (2015). Colorado pulls in $76M in marijuana taxes and business fees for Retrieved from Congress.gov. (2015). Marijuana Tax Revenue Act of Retrieved from Devaney, T. (2015). House Bills would Legalize Recreational Marijuana. Retrieved from 22

8 S. 683, the Senate version, was introduced in early March 2015 by Senators Cory Booker (D- NJ), Rand Paul (R-KY), and Kirsten Gillibrand (D-NY). The Bill has gained further traction since. 68 H.R. 1538, the House version, was introduced in late March 2015 by Steve Cohen (D- TN) and co-sponsor Donald Young (R-AK). 69 The Bills are identical. The CARERS Act is by far the most comprehensive cannabis-related bill introduced in Congress. If enacted, it will have widespread effective consequences for all those with an interest in cannabis. Among the goals of the Act are for patients, doctors, and businesses to be able to participate in their states medical cannabis programs without fear of prosecution by the federal government, which continues to list cannabis under CSA as a Schedule 1 (I) substance with no medicinal benefit alongside drugs such as heroin, lysergic acid diethylamide (LSD), and ecstasy. 70 Under the legislation, CSA would be amended to allow states to set their own policies for medical cannabis, clarifying many of the currently contentious issues related to federal guidance, congressional intent, and state laws related to cannabis. The Act would not force states to legalize cannabis, but would protect those deciding to do so. The Bill would protect state laws and those acting in compliance with these regulations. Additionally, the Bill would reclassify cannabis as a Schedule 2 (II) drug under CSA, a classification for less dangerous drugs with accepted medical use. Such rescheduling would be the federal government s first acknowledgement of cannabis medical benefits and would likely result in a significant reduction in cannabis-related law enforcement. This could ease restrictions on cannabis research significantly, although it would still be illegal under federal law. Critics of the Bill cite various issues with rescheduling, including possible destruction of the dispensary system as we know it due to strict standards associated with Schedule 2 (II). Further criticisms include that the Act does not address recreational users, leaving them vulnerable and unprotected. 71 Another major reform measure of the Act would be completely descheduling low-thc cannabis strains. The Bill would remove cannabis with less than 0.3 percent THC from CSA s schedules, allowing states to import low-thc, high-cbd strains for patients. This would assist states that have adopted a middle ground, legalizing low-thc strains of cannabis for limited medical use. It would put an end to patients having to risk resorting to the black market or other states with more relaxed laws (crossing state lines remains illegal) Congress.gov. (2015). Compassionate Access, Research Expansion, and Respect States Act of Retrieved from Congress.gov. (2015). CARERS Act of Retrieved from Pardes, A. (2015). Marijuana Is Still a Schedule 1 Drug, Judge Rules. Retrieved from B. DeKeuster. (2015). CARERS Doesn t Seem to Care about Patients. Retrieved from 23

9 The Bill would effectively ease concerns of banks and industry by expanding banking access for medical cannabis businesses, allowing them to function like traditional businesses. At the moment research on cannabis is hindered because it must go through a Public Health Service review. This process applies to no other Schedule 1 (I) substance and has been heavily criticized by researchers and lawmakers for limiting knowledge. Under the Bill, this step would be removed entirely and the federal monopoly on cannabis for research purposes would come to an end. This would be truly groundbreaking as there is currently only one federally legal cannabis garden for research, located at the University of Mississippi and overseen by the National Institute on Drug Abuse. The Bill would permit no less than three other licensed sources for research-grade cannabis and could boost medical research enormously. Importantly, the DEA, which has reportedly obstructed cannabis research, would no longer be able to do so. 72 The CARERS Act would also facilitate easier access to cannabis for veterans. The current situation prohibits doctors working under the Department of Veterans Affairs (VA) from assisting patients in need of medical cannabis, even in states where it is legal. This legislation would lift the ban and permit doctors from VA to recommend cannabis to their veteran patients in states where it is legal. The American Civil Liberties Union, Americans for Safe Access, Marijuana Policy Project, Drug Policy Alliance, and numerous other important organizations capable of influencing policy support the Bill. The measure has also gained widespread support amongst citizens of varying backgrounds and political affiliations, 73 resulting in substantial chances of enactment. Conclusion All factors considered it appears that the federal government will regulate cannabis through one of the discussed measures in the near future. Rescheduling or descheduling of cannabis under CSA is particularly important for multiple reasons and resistance appears a growing pain for the federal government. Much of the future of cannabis depends on agreement between political parties and federal-level change. It remains to be seen if traditional prohibitionist ideologies can be trumped by the opinions of the masses. One thing is certain: The combined recreational and medical market for cannabis is large in size, consistently growing, and represents an abundance of opportunities Chawla, D. (2015). Congress Rethinks Policy on Medical Marijuana. Retrieved from Ferner, M. (2015). Senate Bill Would Effectively End The Federal War On Medical Marijuana. Retrieved from 24