By: Sam Mendez, Strategic Legal Counsel at Cultiva Law
Cannabis policy and politics continue to evolve on both state and federal levels and, in the Trump era, it is not uncommon to experience unexpected and even conflicting developments.
Conservative Republican former Speaker of the House John Boehner joins a cannabis corporation’s board of advisers? President Trump commutes the life sentence of a non-violent drug offender at the urging of reality-TV star Kim Kardashian? The Department of Justice rescinds the Cole Memo? Well, that was not all too surprising.
But heads turned last week when a bipartisan bill was introduced to significantly reform federal law on cannabis. And even more surprising, President Trump said he “probably will end up supporting that.”
The effect of bill, titled the Strengthening the Tenth Amendment Through Entrusting States Act, or “STATES Act,” is a far cry from fully descheduling cannabis – that is, removing it from the purview of the Controlled Substances Act (CSA) – which many advocates perceive as a first step in meaningful reform. Descheduling cannabis would end most federal enforcement activity with respect to cannabis, effectively initiate a multibillion dollar nationwide industry, as well as jumpstart medical research and Food and Drug Administration approval of cannabis products. But the STATES Act still reflects significant progress. According to sponsors Senators Elizabeth Warren (D) Cory Gardner (R), the bill will:
- Amend the CSA so that the federal law will not apply “to any person acting in compliance with State or tribal laws;”
- Deschedule industrial hemp (as defined by the Farm Bill) from the CSA entirely;
- Provide easier access to banking (since state-compliant cannabis businesses would no longer be violating federal law); and
- Maintain prohibition in states without legal cannabis laws.
Trump is known to regularly flipflop on issues, so his comment should be taken with a grain (or, handful) of salt. However, his initial statement speaks loudly to cannabis industry participants and advocates, particularly coming from our conservative President presiding over a Republican-controlled Congress.
Under the STATES Act, all state laws regulating cannabis would be required to meet certain federal minimums, such as preventing sale of cannabis to persons under the age of 21 other than for medical purposes and preventing persons under the age of 18 from working in cannabis businesses. Such regulations set very low bars for compliance, and it is difficult to imagine the federal government enacting regulations more stringent than the state laws already have operating effectively in various states.
The proposed law calls for some important considerations:
- Arbitrary laws surrounding hemp
Hemp and cannabis are the from the same genus Cannabis L.; there is even debate regarding whether there are truly different species within that genus — though that debate rages between Cannabis indica and Cannabis sativa, not between hemp and cannabis. Scientifically speaking, there is no difference between the two. Hemp is a product born out of different uses than cannabis, and any legal distinction is entirely arbitrary.
Hemp is recognized under federal law within the Agricultural Act of 2014 (the “Farm Bill”), which defines hemp as the plant Cannabis sativa L. with “with a tetrahydrocannabinols [THC] concentration of not more than 0.3 percent.” In the law, in industry, and generally, this concentration threshold functions as a bright line rule for distinguishing hemp from cannabis, even though there is no scientific basis for such a distinction.
The STATES Act will further define these terms and codify their distinctions, which would certainly be good news for the hemp industry.
- Cannabidiol (CBD)
Neither the definition described above nor the bright line rule say anything about the increasingly popular cannabidiol (CBD), which is not mind-altering but touts numerous medical benefits. Our office regularly receives inquiries regarding the business (and legal) potential of hemp-derived CBD, which was previously explored pursuant to a loophole that the DEA has recently worked to narrow. But if hemp is descheduled, it can open the door to a nearly unlimited influx of hemp-derived CBD products. Pursuant to such federal action, states and local jurisdictions would likely be permitted to regulate the substance as they see fit.
- Violate state law, and you violate federal law
Under the STATES Act, if an industry participant is not in compliance with state law, then the CSA applies against them in full force. That is, that an actor would not be merely noncompliant with state regulations, that person would then be illegally manufacturing and distributing a Schedule I narcotic under federal law just as before; a federal enforcement agency such as the FBI or the DEA could come knocking. However, if the STATES Act passed, industry insiders expect some codified lenience at the federal level for state-level violations. Still, expect your lawyer to advise you of this risk should the Act pass.
- Future changes to state law
If the STATES Act passes, what state-level reform should be expected? In Washington, which has some of the most restrictive cannabis laws in the country, regulations regarding cannabis are so restrictive largely because cannabis was still illegal at the federal level at the time the state began to regulate it. If that yoke was lifted, would Washington and other states do away with their restrictive regulations, such as residency requirements – that is, requiring cannabis business owners to be Washington residents? Would Washington begin to allow cannabis to cross the border into Oregon, California, and other legal states – and vice versa? Would Washington require such an extensive background check for every true party of interest?
We cannot know at this point how states would react, but industry legal experts expect further state reform in the wake of the passage of something as momentous as the STATES Act.
In predicting how likely the STATES Act is to pass, it is never wise to bet on progress when it is hinged on Congressional action – particularly our current Congress. But we would not have bet on John Boehner coming around on cannabis either, or on Trump being persuaded by a reality-TV star to commute the life sentence of a nonviolent drug offender.
Support for legalization keeps rising––the latest Quinnipiac poll reports 63% of Americans supporting nationwide legalization compared with 33% opposed, and 70% opposing federal enforcement of federal laws of marijuana against states, as compared with 23% in support of such federal enforcement activity. The STATES Act drafters likely had that 70% in mind when they drafted the text of the bill which centers largely on state’s rights. Let us be cautious, but not too pessimistic regarding the slow and hopeful march of progress.