Why The Marijuana Industry Wants Friends Like John Boehner

Photo Credit: Slate

Americans want marijuana to be legal, or at least more legal. A recent Quinnipiac poll found 70 percent of Americans oppose federal interference in state-legal marijuana markets, and even more want some form of access for medical use.

In one recent sign of the solidifying bipartisan consensus, last month former Republican Speaker of the House John Boehner, who once declared himself “unalterably opposed” to legalization, joined the advisory board of cannabis company Acreage Holdings. Boehner’s thinking evolved, he told Bloomberg, after seeing how cannabis benefited a friend with a bad back. Echoing statements he made as speaker, Boehner added, “We have literally filled up our jails with people who are nonviolent and frankly do not belong there.”

Beginning with California, which became the first state to legalize medical marijuana in 1996 and has since legalized it for recreational use, the states with the most fully developed cannabis industries have tilted Democratic. But the movement has begun to reach even some deep-red states. In June, Oklahoma voters will decide whether to legalize medical marijuana, and Utahans will likely vote on it in November. Polls predict both will pass easily. The important question of legalization is no longer whether to do it but how to do it. The involvement of Boehner in Acreage—as well as its other new adviser, former Republican Massachusetts Gov. William Weld—represents not just an embrace of marijuana by parts of the GOP but the emergence of a distinctly GOP way of regulating it. In a way, that’s encouraging for the normalization of the drug—but it’s also troubling, especially for proponents who want the emerging cannabis industry to reckon with the many racist outcomes of the drug’s past.

While the races use marijuana at approximately equal rates, minorities, especially blacks, are far more likely to be punished for it, and have been for decades. By evangelizing the drug itself and ignoring its history, Boehner is showing Republicans how to make peace, and perhaps make hay, with legalization. As states figure out what kind of policy regimes they want to govern cannabis sales, the industry could be drawn to a Republican view of regulation, one that disadvantages the very groups that have suffered from marijuana’s illegality up until now.

Acreage declined to make Boehner available for an interview, but in a statement with Weld, the former speaker said marijuana has benefited veterans with post-traumatic stress disorder and “numerous other patient groups” including as a safer alternative to opioids.
Federal prohibition makes it far more difficult for researchers to study the plant as a medicine, and Boehner wants to see that change, as well. (Both Boehner and Weld told Bloomberg they’ve never used the drug.)

In 2016, state legal marijuana businesses generated $6.7 billion in sales for their overwhelmingly white owners. In the same year, there were more than 650,000 marijuana arrests nationwide, almost 90 percent for possession only. Blacks are several times more likely than whites to be arrested for a marijuana offense. Despite what Boehner implied, relatively few small-time pot busts lead to long prison sentences. But any kind of criminal record can still have devastating effects on the offenders’ lives by blocking access to jobs, student loans, public housing, and even their own children.

Many within the marijuana industry are eager to be perceived as good. They emphasize the plant’s medical benefits, as well as the taxes it pays and jobs it creates. They speak of the war on drugs’ widely acknowledged failures. But even for those companies and lawmakers that want to make amends for the plant’s past—and ensure it has a more equitable future—making it happen has proved difficult so far.

Jurisdictions including Maryland, Massachusetts, Los Angeles, and San Francisco have set up “equity” programs to support marijuana entrepreneurs of color. These entrepreneurs, the thinking goes, will build wealth in historically disadvantaged communities.

It’s a complex problem. In California, strict affirmative action statutes block cities from awarding business licenses based on a recipient’s race. As a workaround, cities have tried to favor low-income applicants, as well as those with criminal records for nonviolent pot offenses and those who live in neighborhoods disproportionately affected by the war on drugs, based on data like arrest records. Since low-income and minority entrepreneurs struggle to find business loans in the mainstream economy, successful equity programs will likely also require a mechanism for funding companies.

It’s too early to tell whether these programs will work as planned, but they’ve caused delays and tested the patience among even sympathetic entrepreneurs who don’t qualify for prioritized equity status. Marijuana businesses are wary, as virtually any business would be, of a situation where its future depends on elaborate social engineering.

“The industry at large is fraught with issues around race and inequality,” a spokesman for Acreage, the company that enlisted Boehner, wrote in an email. “We are not convinced regulation is the answer.” To address the industry’s injustices, Acreage said it plans to hire a diverse workforce, at an unspecified point in the future. In short, it wants to be regulated by Republicans.

Last year, Sen. Cory Booker, a New Jersey Democrat, introduced the Marijuana Justice Act, which would legalize pot but also expunge federal convictions for marijuana possession and allow federal marijuana offenders still in prison to petition for resentencing.

The bill also includes a modest economic component: a federal “community reinvestment fund” to benefit areas most damaged by federal drug policy. The bill and a parallel measure in the House introduced by Rep. Barbara Lee of California have attracted 41 co-sponsors, none of them Republicans.

No one knows when federal legalization will happen, but in the meantime, the industry’s top two legislative priorities are unrelated to equity and have encountered less trouble attracting bipartisan support.

The first priority is access to financial services. Many cannabis companies still can’t open bank accounts, forcing them to operate in cash. The situation invites armed robbery and facilitates all manner of theft and fraud. Only criminals benefit from the status quo.

The industry’s second priority is the end of a hated tax rule known as 280E, which disallows tax deductions for businesses involved in federally illegal substances. An infuriated Congress passed it in 1982 after a tax court allowed a marijuana and cocaine dealer to deduct business expenses on his taxes. Thirty states have legalized medical marijuana, but since it’s still federally illegal, the IRS imposes 280E on state-legal marijuana businesses. Few marijuana companies reveal their finances, but 280E ensures marijuana companies pay substantially higher taxes than other small businesses and contributes to a difficult business climate, despite rapidly growing demand for weed.

Both priorities are reasonable, and already have bipartisan support. Colorado Republican Sen. Cory Gardner, who initially opposed legalization and states rights on weed, has also evolved in his thinking as he approaches what’s likely to be a tough 2020 re-election fight in a state Hillary Clinton won comfortably. Gardner is also chairman of the National Republican Senatorial Committee, which could help with bringing 2018 candidates around, though there’s unlikely to be much need.

Gardner reportedly plans to introduce a bipartisan bill to protect state marijuana industries with Massachusetts Sen. Elizabeth Warren. For now, both parties can work together to protect the industry. And then this new, wealthy lobby will find its political home with Republicans, which has been the party of “Just say no” from Nancy Reagan to Jeff Sessions.

This likeliest outcome would be a failure of imagination.

In important respects, the marijuana industry seems almost designed to address the country’s most serious economic woes. Unlike virtually every other new industry, marijuana, a high-value crop for which there’s close to bottomless demand, has the potential to create middle-class careers for people without a college degree. And these jobs can’t be outsourced to China, at least not yet. The kind of thinking used to develop equity plans in liberal cities could also benefit struggling white communities in red states.

While President Donald Trump and his people go on about coal and steel, a similar focus on cannabis could deliver real jobs in states like Michigan, Pennsylvania, Florida, and Ohio—all have already legalized medical marijuana—in time to help re-elect Trump. The U.S. marijuana industry already employs between 125,000 and160,000 Americans, approaching the total of U.S. steel and coal-mining jobs combined. (There is an important caveat that these job numbers are inflated by the fact that the state industries are completely separate from each other. If interstate commerce were suddenly legalized, there would be lots of redundant jobs.)

Moreover, this would be a chance for Trump to put his ideas about protectionism and trade to work. Correctly applied, he could be the father of a new American industry, one that generates lasting wealth for the middle class. This would also lead to a more textured industry of more small businesses, better equipped to weather the forces of globalization once they arrive.

This administration, however, repeatedly favors outcomes that concentrate benefits among a small number of the already rich.

In case there was any doubt, the Small Business Administration, led by Trump ally Linda McMahon, recently announced that businesses that derive any revenue from marijuana businesses would not be eligible for SBA loans. “Countless small businesses including architecture firms, accountants, garden supply businesses, and construction companies across the country will be put at a competitive disadvantage, if just one of their clients or customers are part of the burgeoning cannabis industry,” Oregon Rep. Earl Blumenauer responded.

The Republican Party of Donald Trump may not be ready to make its peace with legalization yet—but if it does, it looks like it will only be as long as only those who already have the means to enlist John Boehner can enjoy the profits.