A bipartisan effort in Congress to ease federal restrictions on cannabis, which President Trump said Friday he is inclined to support, would solve a few of the biggest problems facing the nascent industry in California, experts say.
Most importantly, they say, the bill introduced Thursday — which gives states the authority to create their own marijuana laws — would open the door to banking for businesses by declaring that cannabis activities that comply with state rules do not constitute “trafficking” and their proceeds, therefore, are not the fruits of illegal transactions.
“It’s a really elegant solution,” said Hezekiah Allen, executive director of the California Growers Association, an advocacy group for hundreds of marijuana farmers, business owners and patients in the state. “It doesn’t go all the way, but it does alleviate some of the day-to-day challenges we face.”
The Strengthening the Tenth Amendment Through Entrusting States Act, or STATES Act, from Sens. Elizabeth Warren, D-Mass., and Cory Gardner, R-Colo., and Reps. David Joyce, R-Ohio, and Earl Blumenauer, D-Ore., would keep in place restrictions such as the bans on the sale of recreational marijuana to people under 21 and on employing anyone under 18 in a cannabis-related job.
The bill would also prohibit marijuana distribution at places such as rest areas and truck stops. By allowing states to control what happens with cannabis within their borders, the bill could also usher in new medicinal research into the drug. And industrial hemp, which can be turned into oils or fabrics, wouldn’t be classified as marijuana under the proposal.
“This is allowing the states to determine for themselves what they are going to do under recreational marijuana or medical marijuana … and oils, anything else that they may decide, in this area of the law,” Gardner said in a joint interview with Warren on Fox News. “This is not a legalization bill. This doesn’t change the schedule. This just says that if a state like Massachusetts or Colorado decides to legalize, then that would be allowed under federal law. If a state like Oklahoma doesn’t want to do that, nothing changes.”
Trump suggested Friday he could get behind it, telling reporters, “We’re looking at it. But I probably will end up supporting that, yes.” The position put him at odds with his attorney general, Jeff Sessions, who earlier this year encouraged federal prosecutors to file criminal charges for marijuana crimes, even in states that have legalized sale and use of the drug.
Michael Liszewski, a policy adviser with the antidrug-criminalization Drug Policy Alliance, said there are still hurdles in committees and elsewhere that need to be crossed, but was optimistic that broader marijuana reforms at the federal level are within reach.
“The fact that we had the president give some very encouraging remarks about its prospects less than a day after it was introduced — we think that changes the landscape for the better,” he said. “This would spell the end of federal interference as long as the state laws and the businesses operating under them stayed within the guard rails of the STATES Act.”
California and eight other states, as well as Washington, D.C., have legalized all adult use of marijuana. Twenty other states permit medical marijuana use.
But because of the federal prohibition, many businesses are locked out of traditional banking and lending activities. Retailers in California are known to stuff piles of cash into shopping bags and suitcases when trucking payments to state tax collectors. Lawmakers are working on a bill that would create a state charter bank for the industry.
Cities such as Oakland require cannabis business applicants to submit detailed security plans to lessen the chances of getting robbed.
“There are huge public safety implications to an all-cash industry,” Allen said.
The STATES Act could not only permit businesses to get bank accounts — since their operations would no longer be considered federal crimes — it could also allow them to deduct ordinary business expenses from their taxes, Liszewski said.
And a broader fear — that the feds could simply shut everything down someday — would potentially be abated, at least for the businesses that are licensed and in compliance with state regulations. Alex Traverso, spokesman for the California Bureau of Cannabis Control, said that worry, along with banking problems, are the chief concerns the state office hears.
The proposed law doesn’t explicitly address whether cannabis could be sold across state lines. Liszewski, though, said it might leave room for that possibility, if the states sending and receiving the product both authorized those operations.
Right now, Allen said, “The industry is crippled by the fact that we can only sell here in the state. … What if you told the almond industry they could only sell in the state? That would be a disaster.”