Public opinion on marijuana continues to lean in favor of the substance as a useful alternative to some medical treatments. As such, states are adjusting by relaxing their cannabis restrictions. There are six federal legalization bills in 2021 leading to developments in the marijuana industry:
- The SAFE Banking Act
- Veterans Medical Marijuana Safe Harbor Act
- VA Medicinal Cannabis Research Act of 2021
- The Cannabis Administration and Opportunity Act (CAOA)
- MORE Act
- States Reform Act
The SAFE Banking Act, Veterans Medical Marijuana Safe Harbor Act, and VA Medicinal Cannabis Research Act of 2021 focus exclusively on single issues, i.e. cannabis banking, research, veterans’ access to medical cannabis, and medical cannabis research, respectively;
The Cannabis Administration and Opportunity Act (CAOA), MORE Act, and potentially States Reform Act are comprehensive bills that touch on most aspects of the industry, starting with the declassification of cannabis and moving on to complex issues such as banking, taxes, and criminal and social justice. Of these, the CAOA is by far the most progressive proposals, with the legislation firmly centered around racial justice and allowing for opportunities to reinvest in people and communities unfairly targeted during the War on Drugs. It builds on previous iterations of the MORE Act, which has similar goals as the CAOA but did not address issues such as criminal justice reform to the same extent; and
The States Reform Act would be the most moderate of the proposals and, if introduced, would be the only legislation proposed by a Republican author. While limited in the number of social and criminal justice reforms, tax structures, and reporting requirements proposed, the States Reform Act does signal an attitude shift in Congress that makes federal legalization seem plausible in the near future.
SAFE Banking Act
The Secure and Fair Enforcement Banking Act of 2021 is a defense bill that prohibits federal banking regulators from penalizing depository institutions for providing banking services to authentic marijuana businesses. This act was passed in the House on April 19, 2021.
In general, the SAFE Banking Act protects financial institutions that work with cannabis-related businesses. Historically, most banks are unwilling to deal with marijuana-centered companies. So, getting funding is a challenge for many marijuana businesses looking to break into the industry. Some businesses turn to private investors and non-bank financing institutions that offer high-interest rates.
With this act, proceeds from legitimate marijuana businesses would classify as legal profits rather than proceeds from unlawful activity. So, its revenue is no longer under the umbrella of anti-money laundering laws.
The SAFE Banking Act’s protections for depository institutions include exemption from asset forfeiture. As long as lenders provide financial services (such as loans) to a legitimate cannabis-related business, the depository institution has legal protection from losing assets.
In addition, lenders can keep customer accounts that deal with cannabis-related operations. The federal banking agency cannot order a depository institution to terminate its services for marijuana businesses.
The agency must have a valid reason for termination not based solely on reputation risk. Valid account termination reasons include:
- Threats to national security
- Involvement in terrorist financing (including state-sponsored terrorism)
Veterans Medical Marijuana Safe Harbor Act
The Veterans Medical Marijuana Safe Harbor Act allows veterans to use, possess, or transport medical marijuana products. It also allows them to discuss the use of medical marijuana with a physician of the Department of Veterans Affairs as authorized by a State or Indian Tribe, among other purposes. Practitioners will have the authority to issue medical marijuana recommendations as alternative treatments for veterans.
The act dedicates a section to studies on veterans’ use of medical marijuana products. It describes that the Secretary of Veterans Affairs must conduct a study on the effects of medical marijuana on veterans in pain no later than two years after the date of this act’s enactment.
The Secretary must also conduct a study on the relationship between treatment programs involving state-approved medical marijuana, veterans’ access to such programs, and veterans’ reduction in opioid use and abuse. The Secretary must conduct the study within the same two-year timeframe.
This bill’s authors introduced it to Congress on April 15, 2021. On July 14, 2021, the Subcommittee on Health received the act upon referral.
VA Medicinal Cannabis Research Act of 2021
The VA Medicinal Cannabis Research Act of 2021 requires the Department of Veterans Affairs (VA) to conduct clinical trials of the effects of medical-grade cannabis on the health outcomes of veterans who are enrolled in the VA health care system. Veterans eligible for the trial include those diagnosed with chronic pain and those with post-traumatic stress disorder. The bill provisions do not impact a covered veterans’ eligibility or entitlement to other VA benefits.
There are identical versions of the bill moving through Congress. S.1467 was introduced on April 29, 2021 and heard in the Senate Committee on Veterans’ Affairs on June 23, 2021. Its twin, HR 2916, was introduced on April 30, 2021 and was heard in the House Committee on Veterans Affairs’ on November 4, 2021, receiving 18 votes in favor it, and 11 in opposition.
Cannabis Administration and Opportunity Act (CAOA)
Senators Cory Booker, Charles Schumer, and Ron Wyden introduced the Cannabis Administration and Opportunity Act on July 14, 2021. This act aims to end the war on drugs, which is essentially a war on people — particularly people of color. Its main proposal is to decriminalize marijuana at the federal level.
The act would decriminalize marijuana by stripping the substance of its Schedule I classification. Schedule I controlled substances are drugs without any accepted medical use in the United States, even under medical supervision, and also have a high potential for abuse.
In the U.S., marijuana or cannabis is in the same category as:
- Lysergic acid diethylamide (LSD)
This declassification at the federal level would allow states to enact laws involving cannabis-related business. However, they could not interfere with interstate commerce where legal cannabis product deliveries must cross state borders.
In addition, this act proposes that federal marijuana tax revenue should fund restorative justice, public health, and safety research efforts. The people whom the War on Drugs has severely affected would benefit the most through reinvestment initiatives.
Voting for this bill began on the week of September 26, 2021. Results are yet to come.
The Marijuana Opportunity Reinvestment and Expungement Act of 2021 is a bill that decriminalizes marijuana. It would remove cannabis from the Controlled Substances Act by declassifying its Schedule I status.
In addition, the MORE Act would expunge cannabis convictions from a person’s records, including marijuana manufacture, distribution, and possession.
Further, the MORE Act would prohibit the denial of federal public benefits to a person based on their cannabis-related conduct or convictions. Likewise, the same people would still have legal rights to benefits and protections under immigration laws should they have involvement in cannabis-related events.
More changes under the MORE Act include:
- Replacing statutory references to marijuana and marihuana with cannabis
- Requiring the Bureau of Labor Statistics to publish demographic data on cannabis business owners and employees regularly
- Establishing a trust fund to support programs and services for individuals and businesses in communities impacted by the War on Drugs
- Imposing an excise tax on cannabis products produced or imported into the U.S.
- Imposing an occupational tax on cannabis production facilities and export warehouses
- Making Small Business Administration loans and services available to legitimate cannabis-related businesses or service providers
- Directing the Government Accountability Office to study cannabis legalization’s societal impact
State Reforms Act
According to Marijuana Moment, a new bill to decriminalize marijuana at the federal level – the States Reform Act – is expected to be introduced by the end of the month as a compromise measure to the CAOA and MORE Act.
Those who have seen the leaked draft state the measure proposes cannabis be regulated similarly to alcohol, primarily under the Alcohol and Tobacco Tax and Trade Bureau. Other federal agencies, including the Food and Drug Administration (FDA), would have limited regulatory authority.
The States Reform Act would also impose a 3.75% excise tax on cannabis sales with revenue allocated through grant programs for community reentry, law enforcement, and Small Business Administration aid for new cannabis businesses. Adult use sales would be limited to those 21 years of age and older, and advertising would be restricted.
The measure also proposes to enact criminal and social justice reforms. Individuals with federal cannabis convictions and nonviolent records would be eligible for expungement. The draft contains provisions protecting veterans from discrimination for federal employment due to cannabis use.
Stakeholders and other members of Congress are said to be currently providing the author feedback on the draft. As such, if the States Reform Act is introduced, the provisions may differ from those described above.
Individuals and businesses involved in marijuana-related operations will be glad to know about the latest federal reforms of cannabis laws. As public opinion gradually increases in support of the substance as an alternative treatment method, state laws adjust accordingly, perhaps due to pressure from the public.
The recent updates to the cannabis federal legalization bills mostly cite community restoration through the potential revenue the marijuana industry would generate. The War on Drugs has impacted many individuals and businesses, so these laws serve as initiatives to compensate these people.
Our cannabis law experts can help you determine your legal options if you have any cannabis-related convictions. Get in touch with us so we can review your situation and help you find your next steps.
Disclaimer: This article has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice.
Cannabis Administration and Opportunity Act: https://www.democrats.senate.gov/imo/media/doc/CAOA%20Detailed%20Summary%20-.pdf
SAFE Banking Act: https://www.congress.gov/bill/117th-congress/house-bill/1996
Veterans Medical Marijuana Safe Harbor Act: https://www.congress.gov/bill/117th-congress/house-bill/2588/text