Much of the cannabis industry supported Joe Biden’s presidential campaign, and for Democrats to regain control of the Senate. Now that both have happened, what can legalization supporters expect from the new administration and Congress?
Biden is one of the few Democrats with a national profile who hasn’t endorsed full legalization. But he has called for decriminalization, legal MED and for states to be able to make their own decisions about REC. This leaves big questions for weed businesses who hope to operate as a regulated industry akin to tobacco or alcohol.
- Vice President Kamala Harris has staked out a more progressive position than her boss. As a senator she co-sponsored the Marijuana Opportunity Reinvestment and Expungement (MORE) Act, which would deschedule cannabis, essentially legalizing it, and create a national cannabis tax to benefit communities victimized by the war on drugs.
- The MORE Act would thrill the industry, but it’s not clear whether anything like it can pass even a Democratic controlled Senate.
A few points to keep in mind:
- Compared with issues like gun control or abortion, views on legalization are much less closely tied to party affiliation. While support is stronger among Democrats, majorities of voters in both parties want legal REC.
- The voting bloc least likely to support legalization is older Americans, who have spent their lives in a “just say no” climate and make up influential blocs of the Biden administration and Congress.
- The power of anti-cannabis stigma shouldn’t be underestimated. As I’ve previously written, it’s hard to think of another position shared by Biden and former President Donald Trump that probably cost both votes in November.
While many senior officials and lawmakers have come to accept legalization as inevitable, relatively few have given it a full-throated endorsement. As Dai Truong and others have pointed out, in their relatively minor brushes with cannabis, neither Treasury Secretary nominee Janet Yellen nor Attorney General nominee Merrick Garland indicated an eagerness to accelerate the process.
- Boston Mayor Marty Walsh, Biden’s nominee for Labor Secretary, and Rhode Island Gov. Gina Raimondo, the nominee to lead the Commerce Department, have had to deal more closely with the industry. Neither could be characterized as gung-ho.
Still, under Biden, the overall tone differs sharply from the Trump. The latter largely continued Obama administration’s policy of benign neglect, even as it became increasingly untenable.
- Some Trump officials took opportunities to complicate life for cannabis businesses. This can be seen in attorney General Bill Barr’s interest in anti-trust cases against pot companies and a DEA rule that alarmed CBD manufacturers.
So, what happens now?
A generally bullish white paper released from venture capital firm Key Investment Partners, says it’s “highly unlikely” that legalization will happen in one fell swoop, as the MORE Act would achieve. Instead it predicts a legislative process of up to three big steps:
- The SAFE Banking Act, already passed by the U.S. House of Representatives, would enable the industry to access the financial system.
- The STATES Act, would allow states to establish their own cannabis laws. Key expects a bill like this to pass in the second half of 2021 or the first half of 2022. As currently written, Key says the bill would end two significant drags on plant-touching companies: industry-hated tax rule 280E and the lack of federal bankruptcy protection.
- The MORE Act, or something like it, would effectively legalize federally. Key sees it as unlikely to pass before the mid-term elections in November 2022.
Whenever the MORE Act or something like it passes, Key anticipates it would lead to “several years of complicated regulatory machinations,” similar to what the hemp industry has experienced since it was legalized in the 2018 Farm Bill.
- “We do not expect states to willingly give up the economic benefits they currently receive from their cannabis programs,” the report says. This could delay interstate commerce and cannabis benefitting from the economies of scale that other industries take for granted.
- The MORE Act would also still create a geographical patchwork of legality, one much more pronounced than the one that still exists with alcohol, 90 years after the end of that prohibition.