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US House passes historic bill to legalize marijuana at federal level, but Senate looms

A conversation and analysis focusing on the MORE Act vote will take place at 12:30 PT Friday at MJBizCon 2020.

(This story has been updated with the final vote as well as new comments and information.)

In a groundbreaking vote, the U.S. House of Representatives on Friday passed a comprehensive bill that would remove marijuana from the Controlled Substances Act and end the federal government’s decades-old prohibition on the plant.

Lawmakers in effect voted to legalize marijuana by approving the social justice-focused Marijuana Opportunity, Reinvestment and Expungement (MORE) Act by a margin of 228-164 after an hour of debate. A handful of Republicans voted for the measure. (How each legislator voted is available here.)

The vote – while largely symbolic because the bill still must pass the Senate – comes only two days after the United Nations took the historic step of reclassifying cannabis as a less dangerous drug.

Opponents of the MORE Act criticized Democrats for prioritizing marijuana during the coronavirus crisis and voiced concerns about health risks for youth.

The legislation could potentially open up an already fast-growing, multibillion-dollar industry to billions of dollars of additional business opportunities and interstate commerce over time.

However, the vote Friday will prove to be emblematic unless Democrats gain control of the U.S. Senate by winning two run-off races in Georgia on Jan. 5.

And in the very likely event that the MORE Act dies in the Senate in the current legislative session, it would have to start over in the House in January when the new Congress convenes.

Even with a new Congress, the more conservative Senate might be resistant to such a major change in federal marijuana policy.

Rep. Barbara Lee of California announces passage of the MORE Act on Friday.

“I have been waiting for this historic moment for a long time. It is happening (Friday) because it has been demanded by the voters, by facts and by the momentum behind this issue,” U.S. Rep. Earl Blumenauer, co-chair of the Congressional Cannabis Caucus and a Democrat from Oregon, said in a statement distributed late Thursday.

The House Judiciary Committee advanced the bill a year ago in what then was seen as a landmark development.

Marijuana Business Daily asked a number of industry experts by email and over the phone about the MORE Act and its impact if it were to be enacted into law.

Here are some of the issues they discussed as well as their responses:

What’s misunderstood about the MORE Act

The measure wouldn’t create a federal licensing or federal regulatory framework. States would, however, continue to regulate marijuana as they see fit, without federal interference.

“The MORE Act decriminalizes and deschedules cannabis,” said Randal Meyer, the executive director of the Global Alliance for Cannabis Commerce.

“It would allow state-legal businesses to operate in a federally legal environment, with business-tax deductibility and access to legal processes, and permit states to set their own cannabis policy, be it total prohibition or not.”

Steve Fox, strategic adviser to the Cannabis Trade Federation, said: “The MORE Act is a wonderful piece of legislation that would end cannabis prohibition at the federal level and take some critical and much needed steps toward restorative justice. It would provide major benefits to cannabis businesses, which would become legal at the federal level.”

Businesses, he said, would have greater access to financial services and be freed from Section 280E of the federal tax code, which currently prevents marijuana companies from taking deductions for ordinary business expenses.

“The MORE Act does not, however, establish a regulatory framework for cannabis at the federal level. So, from an industry perspective, the MORE Act is just one step in a longer process,” Fox said.

Vincent Sliwoski, a cannabis attorney at Harris Bricken in Portland, Oregon, echoed Fox, noting that licensed marijuana commerce will remain in place unless changed by states or local jurisdictions.

“What the MORE Act actually does is remove marijuana from control under the federal Controlled Substances Act while adding a 5% federal excise tax and tacking on key provisions like expungement for past marijuana convictions under federal laws. As with alcohol, there will be no federal business licensing element.”

He also emphasized that there would be “a lot of benefits here for state-licensed cannabis businesses, including everything from banking options to tax relief under (Internal Revenue Service) code 280E to federal trademark availability.”

Experts also note that they expect a number of federal agencies, such as the Food and Drug Administration, the Federal Trade Commission, the Department of Treasury and the Department of Agriculture, to weigh in on various issues, including health claims, cultivation standards and banking issues.

What about concerns that the MORE Act would accelerate the decline of medical marijuana markets?

Narmin Jarrous, executive vice president of business development for Michigan-based Exclusive Brands, said she heard such fears before Michigan launched its adult-use program in December 2019.

But she said Exclusive Brands, which has two dispensaries in Michigan, actually has found that medical marijuana sales have remained strong and that many adult-use customers then started getting medical cards to reap benefits such as lower taxes.

Jarrous believes there’s a legacy of commitment to provide access to MMJ patients.

The MORE ACT has social justice provisions, but are they enough to increase industry equity?

Fewer than one-fifth of cannabis business owners identify as minorities and only approximately 4% are Black, Blumenauer noted.

Disproportionate arrest and conviction rates and lack of financial resources make it particularly difficult for people of color to enter the legal cannabis marketplace.

“I don’t think anything we’ve done in cannabis is enough,” said Jarrous, who also is Exclusive Brands’ director of social equity. “We still have people dying behind bars because of nonviolent cannabis offenses.”

But she said the MORE Act would be a great first step to decriminalizing marijuana and targeting tax revenue to fund loan programs for small businesses owned and controlled by socially and economically disadvantaged individuals.

“In the meantime, the companies that are thriving need to help out as well,” she said.

Steve Hawkins, executive director of the Marijuana Policy Project, said in a news release that while the MORE Act is one of the most robust marijuana bills ever introduced in Congress, it’s not perfect – especially in terms of social justice and equity.

An amendment added in the days before Friday’s vote, he noted, would empower the federal government to prevent Americans charged with cannabis-related felonies from working in the marijuana industry.

“This policy could block many of those individuals accused of prior marijuana offenses from participating in the legal market, which will inhibit our ability to create an equitable and fair marijuana industry,” Hawkins said.

Myth or truth: Some multistate marijuana operators would prefer the status quo rather than federal legalization.

Myth, according to Florida-based multistate operator Jushi Holdings.

“We at Jushi stand in proud support of the MORE Act,” said Erich Mauff, company president and co-founder.

“Cannabis legalization will result in billions of dollars in infrastructure investment, create thousands of service-level jobs and add billions of dollars in tax revenues.”

He added that the “groundbreaking” MORE Act would “generate and encourage unprecedented economic stimulus for an America that wants to move past the unconstitutional injustices of its past.”

“Cohesive and meaningful federal oversight is a critical next step,” Mauff said, as “(we) reimagine an industry that cultivates equitable opportunities while embracing diversity and inclusion across every platform.”

Said Victoria Mendicino, chief of staff to the CEO of Chicago-based cannabis company Revolution Global: “We believe the status quo is both unequitable and unsustainable. We have always fought for cannabis reform, and we welcome any competition that could come from the MORE Act or any other legislation that expands cannabis rights.”

Jeff Smith can be reached at [email protected]

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