This Republican’s Marijuana Legalization Bill Aims To Build Bipartisan Support for Repealing Federal Prohibition

When Senate Majority Leader Chuck Schumer (D–N.Y.) unveiled a “discussion draft” of a marijuana legalization bill last July, he said he wanted to start a conversation that would eventually produce legislation resolving the longstanding conflict between the Controlled Substances Act (CSA) and state laws that allow medical or recreational use of cannabis. But his 163-page Cannabis Administration and Opportunity Act was full of unnecessarily contentious provisions that seemed likely to alienate potential Republican allies. A bill unveiled today by Rep. Nancy Mace (R–S.C.) tries to address that problem by outlining a simpler and less burdensome approach that entails less federal involvement, lower taxes, and greater deference to state policy choices.

Mace’s bill, the States Reform Act, has five initial co-sponsors: Reps. Tom McClintock (R–Calif.), Peter Meijer (R–Mich.), Don Young (R–Alaska), Kenneth Buck (R–Colo.), and Brian Mast (R–Fla.). It is endorsed by Americans for Prosperity, the Cannabis Freedom Alliance, and the Global Alliance for Cannabis Commerce.

Mace says the bill is designed to accommodate state marijuana policies, which range from complete prohibition to general legalization for adult use. “Every state is different,” Mace says in a press release, noting that her own state, South Carolina, has gone no further than allowing medical use of the nonpsychoactive cannabinoid CBD, while “California and others” allow commercial production and distribution of marijuana for recreational use. “Cannabis reform at the federal level must take all of this into account. And it’s past time federal law codifies this reality.”

Thirty-six states have legalized marijuana for medical use, while 18 states, accounting for more than two-fifths of the U.S. population, also allow recreational use. The latest Gallup poll found that 68 percent of American adults favor legalization, which matches last year’s record level of support. “Washington needs to provide a framework which allows states to make their own decisions on cannabis moving forward,” Mace says. “This bill does that.”

Geoffrey Lawrence, director of drug policy at Reason Foundation (which publishes this website), provided model language for the bill and technical feedback on Mace’s drafts. He hopes the States Reform Act will prove more appealing to Republicans than Schumer’s bill, which so far has not attracted any GOP support, and the Marijuana Opportunity Reinvestment and Expungement (MORE) Act, which the Democrat-controlled House approved last December with support from just a handful of Republicans. “The States Reform Act is a relatively simple bill that gets to the heart of what most people can agree on when it comes to legalizing cannabis at the federal level,” Lawrence says.

At 131 pages, Mace’s bill is just 20 percent shorter than Schumer’s, and it includes several similar provisions. Both bills would remove cannabis from the CSA’s schedules of controlled substances, and both would establish a nationwide minimum purchase age of 21. Both would require automatic expungement of federal criminal records related to nonviolent marijuana offenses, bar the Small Business Administration (SBA) from discriminating against state-licensed cannabusinesses, and allow Veterans Health Administration doctors to recommend medical marijuana. Both would leave states free to ban marijuana but would bar interference with shipments between jurisdictions where cannabis is legal.

One big difference is the level of federal taxation. Schumer’s bill would impose a federal excise tax on marijuana starting at 10 percent and rising to 25 percent by the fifth year, which would be in addition to frequently hefty state and local taxes. The tax would be based on either the wholesale price per ounce or, for “any THC-measurable cannabis product,” the price per gram of THC. Mace’s bill, by contrast, would impose a straightforward 3 percent excise tax, which would remain at that level for at least 10 years.

According to Mace’s summary of the bill, the 10-year moratorium on raising the excise tax is meant to “ensure competitive footing in the market.” In other words, a relatively low tax rate will help legal marijuana businesses compete with black-market dealers, who do not collect taxes.

Schumer’s bill would use revenue from the marijuana tax to create three new grant programs aimed at helping “economically disadvantaged individuals” and “individuals adversely affected by the War on Drugs.” Mace’s bill would create a Law Enforcement Retraining and Successful Second Chances Fund, which would funnel marijuana tax money to three existing programs: the Crisis Stabilization and Community Reentry Grant Program, the Edward Byrne Memorial Justice Assistance Grant Program, and the Community-Oriented Policing Services Program. Some of the money also would be assigned to “veterans’ mental health,” “state opioid epidemic responses,” “preventing underage use of cannabis,” and the SBA “for supporting newly licensed small [marijuana] businesses through its various programs.”

Under Schumer’s bill, state-licensed marijuana businesses, which already are regulated by state and local governments, would also be supervised by the Food and Drug Administration (FDA), the Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau (TTB), and the Justice Department’s Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF). Mace’s bill likewise imagines roles for all of those agencies, but it says the FDA “shall have the same authorities with respect to cannabis products that it has with respect to alcohol,” such as label regulation for certain beverages, “and no more.”

According to the summary, that provision “ensures that cannabis products in interstate commerce will be treated like alcohol and that the regulatory issues harming the industrial hemp-derived CBD industry will not be repeated in the cannabis space.” The bill also “grandfathers ‘designated state medical cannabis products,'” including “those produced consistent with state law,” to ensure “continued access” for patients. The FDA “may still prescribe serving sizes, certify designated state medical cannabis products as a ministerial duty, and authorize new drugs or approved new uses of drug applications to create new pharmaceutical grade products, but may not prohibit the use of cannabis or its derivates in non-drug applications, such as in designated state medical cannabis products, dietary supplements, foods, beverages, non-drug topical solutions, or cosmetics.”

Continuing the analogy to alcohol, the TTB “will be the primary regulator of cannabis products in interstate commerce,” while the ATF “will serve as the primary law enforcement agency supporting the TTB’s work, exactly as it does in the alcohol space.” The Department of Agriculture would regulate cannabis crops in the same way it regulates raw materials for alcoholic beverages, such as grain and hops. The bill “applies to cannabis the same recordkeeping, liability, reporting, packaging, and labeling requirement[s]” that apply to the alcohol industry under the Internal Revenue Code. The bill would prohibit cannabis advertising that is false, misleading, or aimed at minors.

Mace is playing up the aspects of the States Reform Act that should appeal to her fellow Republicans without alienating Democrats. A poster she used at today’s press conference says the bill, in addition to descheduling marijuana and regulating it “like alcohol,” imposes a low excise tax, “protects kids,” “protects veterans,” “protects each state’s unique laws & reforms,” and implements “safe criminal justice reform.”

Mace’s bill summary elaborates on that last point, noting that the States Reform Act “provides opportunities for reentry for non-violent, non-DUI cannabis offenders who had no relation to a foreign drug cartel and pose no further threat to society, consistent with the policies of the Department of Justice under President Trump for clemency for non-violent cannabis offenders.” Mace also could have noted that Trump supported drug sentencing reform and, unlike his successor, said he favored reconciling state and federal marijuana laws.

“The States Reform Act completely removes federal prohibition and allows states to compete and decide how they wish to treat cannabis,” Lawrence notes. “It removes federal tax penalties against marijuana companies and opens up banking. It recognizes that legal markets must compete with black markets on price and therefore charges only a 3 percent excise tax, along with licensing fees not to exceed $10,000. Finally, it extends these changes back in time by expunging the records of those who have been arrested for nonviolent federal cannabis crimes.”

Rather than “going too far in any direction by including elements that splinter the realm of agreement,” Lawrence says, “the beauty of the States Reform Act is that it’s both simple and reasonably comprehensive. Enacting major social change requires broad, bipartisan agreement, and the States Reform Act checks that box.”

This article was originally published by Reason.com

Nearly entire CA House delegation – including 4 Republicans – backs cannabis banking

More than three-quarters of California’s local governments have declined to authorize retail stores to sell cannabis, as permitted by state voters with their 2016 approval of Proposition 64. Opposition has been led by moderate Democrats and conservative Republicans unconvinced that making the drug readily available for recreational use is good for society.

But much of California’s House delegation is supportive of helping the marijuana industry achieve a key goal: access to the banking system. Even with cannabis now legal in some form in 33 states, the great majority of banks and credit unions in the Golden State and elsewhere have declined to do business with marijuana-related businesses because possession and sale of the drug remain illegal under federal law.

Last week, the House passed the Secure and Fair Enforcement Banking Act 321 to 103. Every California Democrat backed the measure and so did four of the state’s seven Republican members: Majority Leader Kevin McCarthy of Bakersfield, Tom McClintock of Elk Grove, Devin Nunes of Tulare and Duncan Hunter of Alpine.

The passage of the bill after past efforts went nowhere was widely credited to a change in focus in lobbying. Leading the push this time was lobbyists for the financial services industry itself – not the cannabis industry. They argued that making a multibillion-dollar industry use cash only created headaches and safety risks for the many legitimate, longstanding businesses that dealt with cannabis companies.

Bankers say other businesses shouldn’t be inconvenienced

American Bankers Association President and CEO Rob Nichols told Politico, “The most compelling arguments have been centered around these secondary relationships. It’s the local plumber, it’s the local electrician, it’s the attorney, it’s the accountant who are doing business with a cannabis grower or dispensary who are then having challenges associated with getting banking products and services.”

The American Financial Services Association focused its lobbying on McCarthy and Speaker Nancy Pelosi, D-San Francisco, also emphasizing the need to stop inconveniencing so many established businesses.

The fate of the SAFE bill in the Senate is unclear. Senate Banking Committee Chairman Mike Crapo, R-Idaho, has said that he will schedule a hearing on the bill, but his aides said that should not be interpreted as support.

California’s Democratic senators, Dianne Feinstein and Kamala Harris, are expected to be supportive. After 35 years as a staunch supporter of the drug war, Feinstein reversed course in spring 2018.

“My state has legalized marijuana for personal use, and as California continues to implement this law, we need to ensure we have strong safety rules to prevent impaired driving and youth access, similar to other public health issues like alcohol,” she told a McClatchy reporter.

Harris has also changed her position. In 2010, while running for California attorney general, she opposed an initiative to legalize recreational marijuana use. 

“Spending two decades in courtrooms, Harris believes that drug selling harms communities,” her aide told Capitol Weekly. “Harris supports the legal use of medicinal marijuana but does not support anything beyond that.”

But her position softened over the years, and last year she signed on as a co-sponsor of a bill by Sen. Cory Booker, D-New Jersey, that would make cannabis legal under federal law.

This article was originally published by CalWatchdog.com

California Officials Struggling to Regulate Weed Market

The agency overseeing California’s legal marijuana market has been overmatched by the job and is struggling to hire sufficient staff and set an overall strategy for the nation’s largest cannabis economy, an audit found.

About two-thirds of the 219 staff positions authorized for the Bureau of Cannabis Control remain unfilled, according to an audit by the state Finance Department. A shortage of staff in the enforcement unit is hindering the agency’s ability to conduct investigations.

While the cannabis bureau is in its relative infancy and has established a foundation to oversee the market, “the current status and location of personnel is not sustainable to provide effective and comprehensive oversight of cannabis activities throughout California,” according to the audit, which was released earlier this month.

Where does California’s cannabis tax money go?

Drug abuse prevention, public safety, protecting the environment, economic development — these were some of the visionary promises that legalized cannabis would pay for.

Now, 1 1/2 years after the start of legal sales, the lofty goals of Prop. 64 remain only partially fulfilled, deferring the dream of funding major new social programs.

In order to collect the $1 billion a year in state tax revenue promised by backers of the initiative, plus millions of dollars more for cities and counties, California needs to sell at least $7 billion worth of weed. Last year, $2.5 billion was sold.

Hampered by a slow start and strict rules required by the initiative, the state has put a regulatory structure in place. But much else is still on the drawing board. …

Click here to read the full article from the Mercury News

Tax revenue from legal pot sales falls short of projections in California

California’s projections of cannabis tax revenue are coming down from their original highs.

State budget documents released Thursday by Gov. Gavin Newsom slash the administration’s cannabis tax prediction by $223 million through 2020. Industry analysts said tax revenue from the newly legal weed business is lower than expected because of limited access to legal pot in parts of the state, the impact of taxes on price-sensitive consumers and the state’s entrenched black market.

By dropping its expectations of tax revenue, California is simply acknowledging those realities, said John Kagia with New Frontier Data, a cannabis research firm.

“It is, I think, a pragmatic confession that the state still has a lot of work ahead,” he said. …

Click here to read the full article from USA Today

San Francisco will remove more than 9,300 marijuana-related crimes from people’s records


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Marijuana smokingSan Francisco prosecutors announced Monday they would move to expunge 9,300 marijuana-related convictions dating back decades, part of a sweeping effort to rethink “the war on drugs” now that pot is legal in California.

The announcement culminated a year-long review of marijuana convictions in San Francisco, which critics say disproportionately punished minority communities and made it more difficult for those with criminal records to get jobs and other essentials.

Other California counties, including Los Angeles, are considering similar efforts, though none have gone as far as San Francisco. The Los Angeles County district attorney’s office estimates there have been 40,000 felony convictions involving pot-related offenses since 1993, but prosecutors have not said how many of those could be eligible for being expunged. …

Click here to read the full article from the L.A. Times

Gov. Newsom Shifts National Guard to Fighting Marijuana Black Market


Marijuana1Gov. Gavin Newsom is shifting the California National Guard from border enforcement to cracking down on the illegal marijuana industry — even though he was an advocate for the legalization of the drug.

After announcing earlier this month that he was scaling down the National Guard presence near the border, Newsom shifted resources to fighting illegal marijuana farms, which are maintaining a black market that makes it difficult for legal suppliers to thrive, and that deprives the state of tax revenues that it expected legalization would provide.

The Los Angeles Times reported Tuesday:

ast week, Newsom announced an expansion of efforts by the California National Guard to work with federal officials to target the black market, including illegal drug grows in Northern California operated by international drug cartels.

The governor proposed that at least 150 California National Guard troops would be redeployed from the U.S.-Mexico border to join a federally funded Counterdrug Task Force. The new forces would focus on illicit cannabis activity in Northern California.

As much as 80% of the marijuana sold in California comes from the black market, according to an estimate by New Frontier Data, a firm that tracks cannabis sales and trends. Analysts also found that California’s illicit pot market was valued at an estimated $3.7 billion last year, more than four times the size of the legal market.

In addition to black market woes, marijuana entrepreneurs in California are frustrated at the slow pace of local permitting processes for dispensaries.

California voters approved the legalization of recreational marijuana by passing Proposition 64 in 2016.

Joel B. Pollak is Senior Editor-at-Large at Breitbart News. He is a winner of the 2018 Robert Novak Journalism Alumni Fellowship. He is also the co-author of How Trump Won: The Inside Story of a Revolution, which is available from Regnery. Follow him on Twitter at @joelpollak.

This article was originally published by Breitbart.com/California

Will tax breaks and banks help California’s struggling marijuana industry?


marijuanaUnfriendly banks, high taxes and black-market competitors are some of the obstacles that licensed cannabis companies say hold them back as they try to cultivate a new industry in California.

Some California lawmakers want to give them a hand, and they’re considering a set of bills that would in ways great and small fine tune the law governing recreational marijuana.

“We’re all in this for the long haul,” Assemblyman Rob Bonta, D-Alameda, said at a press conference Monday. “It’s incumbent on us to continue to monitor what’s happening and course correct if necessary.”

Some of the bills aim to give cannabis businesses the same opportunities as others — such as access to state tax deductions or the ability to bank — while others look to provide relief to legitimate businesses locked in a losing battle with the black market. …

Click here to read the full article from the Sacramento Bee

California Cannabis Delivery in Headed Toward Legal Battle


Marijuana StoreIn 2016, many California police chiefs and sheriffs opposed to legalized recreational marijuana use were placated by a provision in Proposition 64 that said local governments would have the right to block recreational sales.

The Ballotpedia overview of Proposition 64 reflected the conventional wisdom at the time it passed: “Local governments were also allowed to completely ban the sale of marijuana from their jurisdictions.” The text of the ballot measure stated: “Allows local regulation and taxation of marijuana.”

And as CalWatchdog has reported, 80 percent of local governments have declined to authorize the opening of local pot stores.

But last week, the state Office of Administrative Law approved rules crafted by the state Bureau of Cannabis Control that say marijuana sales by delivery services can operate in any community – even if local governments object.

This led to an immediate backlash – and strong hints that the rules will lead to a court fight.

“This decision puts the public safety needs of communities across the state at risk,” Carolyn Coleman, executive director of the League of California Cities, said in a statement.

“We are deeply concerned with the adoption of the new cannabis regulations, which allow for the delivery of cannabis anywhere in the state. We are already having trouble enforcing a new and complex industry, and this allowance will only make enforcement even more difficult,” California Police Chiefs Association President David Swing told the Sacramento Bee.

Marijuana industry officials disputed the idea that the deliver-anywhere ruling went against the spirit of Proposition 64 or its language. They said the ruling reflected the will of Californians, who approved the measure 57 percent to 43 percent – a 2 million vote cushion.

But even some supporters of Proposition 64 appeared unsure if the cannabis bureau’s ruling squared with what the ballot measure said. Assemblyman Ron Bonta, D-Oakland, told the Associated Press that he thought only medicinal marijuana deliveries should be allowed. Bonta thinks clarifying new legislation may be in order.

Even with such legislation, lawsuits over the state regulations appear inevitable. California has decades of history of courts being asked to interpret poorly or vaguely written ballot measures approved by voters.

City attorney says Sonoma should defy state

The city of Sonoma could also be a flash point for local defiance of the state. After the cannabis bureau concluded that there should be no limits on recreational marijuana deliveries, the Sonoma Index-Tribune reported last month that Sonoma City Attorney Jeff Walter recommended to City Council members that they maintain their ban on recreational pot deliveries.

Walter criticized the rules as being “very vague” and said he did not consider them a legally binding “statute.”

“I think we should stay that course [of banning recreational deliveries] pending outcome of that regulation and the challenges that are likely to be against it,” he said.

Questions about the legality of marijuana deliveries are also coming from other quarters. On Monday, the Sacramento Bee reported that California Highway Patrol officers continue to arrest drivers and seize cannabis that they find during traffic stops of vehicles used for deliveries.

A CHP spokesperson told the Bee that “in order to legally transport cannabis in California for commercial purposes, a person must possess the appropriate [state] license and comply with [cannabis bureau] administrative regulations.”

Two licensed marijuana distributors who had $257,000 seized from them by the CHP have filed a lawsuit to try to get the money back. They insist that they had the proper credentials when the money was taken.

This article was originally published by CalWatchdog.com

Legal Cannabis Industry Struggling in California


Marijuana StoreCalifornia’s first year with legal recreational sales of marijuana is wrapping up with a series of downbeat reports on a new industry struggling to find its footing.

An Associated Press analysis posted Sunday said estimated legal sales of cannabis would total just $2.5 billion in 2018 – in a state of 40 million people in which 13 percent of adults admit to use, significantly higher than in most states. State officials will be lucky if they receive half the $630 million in pot taxes anticipated in the 2018 state budget.

When tax revenue goals went unmet early last year, one assumption was that this was primarily the result of resistance to legal cannabis. An estimated 80 percent of local governments have not authorized recreational sales, as is their right under Proposition 64, the 2016 ballot measure that cleared the way for such sales. And in some of the cities that have issued permits, only a handful have been issued.

But as the year wore on – and costly state regulations kicked in mandating careful testing and child-resistant packaging of marijuana and marijuana products, such as edibles – reporting on the California pot beat increasingly focused on the huge price advantage that illegal sellers have.

Medical marijuana law led to sales networks

A recent Southern California News Group article pointed out that with voters’ approval of medicinal marijuana in 1996, growers and sellers had a 20-year head start in establishing sales and distribution networks that were poised to fill demand when cannabis possession and use became legal on Jan. 1, 2018. These networks are able to sell marijuana that is up to 50 percent cheaper than the marijuana available in licensed stores.

These growers and sellers don’t just balk at going the legal route because of fees, regulations and paperwork. They’re emboldened by the weakening of criminal penalties related to marijuana in recent years, according to the Southern California News Group analysis.

A San Francisco Chronicle report published last week quoted Steve DeAngelo, a co-founder of Oakland’s huge Harborside marijuana dispensary, as saying “the unrolling of legal adult-use cannabis has reinvigorated the underground market rather than curtailed it.”

“Because we are up against high taxes and the proliferation of illegal shops, it is difficult right now,” pot shop owner Javier Montes told the Los Angeles Times last week. “We expected lines out of our doors, but unfortunately the underground market was already conducting commercial cannabis activity and are continuing to do so.”

Shop owners in the Los Angeles and Bay areas have urged authorities to crack down on illegal storefront and delivery sellers. But while state regulators say that is a priority in 2019, it’s unclear how much of a priority it will be for local law enforcement agencies who are strapped by pension costs and often have difficulty maintaining police staffing because of recruiting woes.

Among those who anticipated that legal California sellers were going to be seriously undercut by illegal sellers is Gov.-elect Gavin Newsom, who led the Proposition 64 push.

Newsom: Addressing black market to take ‘5 to 7 years’

While on the campaign trail in May, Newsom said he thought it would take “five to seven years to substantively address the black market” issue.

As governor, Newsom could order stepped-up efforts to target growers and sellers, as well as seek new funding for such enforcement.

But the legal marijuana industry also wants help on another front. The Chronicle reported there is a huge backlog at the state office processing permits to legally grow marijuana, with no action yet on about 90 percent of applicants.