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Who benefits from incremental cannabis reform?

By Alex Halperin Mar 5, 2021
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Alex Halperin is the founder, editor and publisher of WeedWeek. Before he started covering marijuana legalization in 2014 he reported on topics such as fracking, health care, technology a...
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Alex Halperin is the founder, editor and publisher of WeedWeek. Before he started covering marijuana legalization in 2014 he reported on topics such as fracking, health care, technology and finance. His work has appeared in The Guardian, Slate, Fast Company, Quartz, the Washington Post, Mother Jones, The New Yorker and many other publications. His first book, The Cannabis Dictionary, was published in March. He lives in Los Angeles.
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For the first time in decades, federal cannabis legalization is a live issue in Congress.

Senate Majority Leader Chuck Schumer (D-N.Y.) called ending prohibition a priority for Democrats and he is working on a bill with Sens. Cory Booker (D-N.J.) and Ron Wyden (D-Ore.). It’s widely expected to include some form of reparations for the minority communities which have suffered a disproportionate number of arrests and other difficulties associated with the criminalization of cannabis.

However, in a Senate evenly divided between Democrats and Republicans, there could be significant differences between a bill progressives want to pass and a bill that has a chance of becoming law. The gap between the ideal and the reality has divided legalization supporters in Washington.  

The Marijuana Opportunity Reinvestment and Expungement Act, or MORE Act, which passed the House of Representatives in December, and has support from some progressives, gives an idea of what restorative cannabis justice might look like. 

However, it’s not clear that the MORE Act could win the support of all 50 Democratic Senators, let alone the 10 Republicans necessary to pass the bill (if the filibuster remains in place.) As a result, legalization supporters disagree about what kind of bill is worth settling for. 

Incremental vs. comprehensive reform

The dilemma boils down to the difference between comprehensive and incremental reform. The MORE Act, which would essentially legalize the industry in states that allow it and implement various social justice reforms, is an example of comprehensive reform. Incremental reform would likely involve a series of bills over several years. 

In an interview with WeedWeek, Stephen Miles, the CEO of Sharp Capital Advisors, a firm that advises cannabis companies on mergers and acquisitions, said big cannabis companies tend to favor incremental reform. 

In his view, large cannabis operators’ top priority is gaining access to the banking system, and, ideally, American stock exchanges. If big cannabis companies can normalize their finances, Miles said ongoing federal illegality actually benefits them: Keeping the market illegal, protects cannabis operators from competition with much larger alcohol and tobacco companies, which are unlikely to enter an illegal industry.  

WeedWeek recently asked several major companies about this idea. They largely didn’t respond.  

The Perfect or the good?

Twice last year, the House of Representatives passed the SAFE Banking Act, an incremental reform which would enable cannabis companies to access banks, (but not capital markets.) It never received a Senate vote when Kentucky Republican Mitch McConnell was majority leader, but that could change now that Schumer leads the chamber. And banking reform may stand a stronger chance of passing the upper chamber than a comprehensive reform like the More Act. 

Virtually all legalization supporters, including industry groups, claim to support social justice and equity measures as part of legalization. The question dividing advocates in Washington is whether legislation like the SAFE Banking Act — which does not include any social justice elements — is worth supporting if comprehensive reform isn’t immediately realistic. 

It makes sense to focus on what’s possible, argues Saphira Galoob, CEO of cannabis lobbying firm The Liaison Group. “Proportionately the people who are going to get the most help [from bank access] are the smaller players,” including minority-owned businesses, she said. Bigger companies, according to this line of thinking, are better equipped to deal with the current financial services blockade. 

Amber Littlejohn, executive director of the Minority Cannabis Business Association, agrees.  “Every social equity program and many applicants and operators have been harmed by the lack of access to funding necessary to apply, let alone compete, with large companies,” she wrote in an email. “If we have to wait for Congress to create and implement a comprehensive federal framework there will be nothing left of minority cannabis.”

By contrast, Queen Adesuyi, national affairs policy manager at the non-profit Drug Policy Alliance, says comprehensive reform is worth waiting for. With limited opportunity to pass federal cannabis bills, “The benefits of our comprehensive effort are far too significant to risk in exchange for an industry band-aid that will disproportionately benefit large corporations.”  

Senators Schumer, Booker and Wyden could release their bill within weeks.

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Alex Halperin
Editor/Publisher