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Roadmap to Federal Marijuana Legalization

07 Dec Roadmap to Federal Marijuana Legalization

Although 31 states have legalized medical marijuana, it is still illegal under federal law. This means that the federal government can prosecute violations of federal law, even in states like California where marijuana is legal.

However, this may change as early as 2019. In October 2018, Oregon Representative Earl Blumenauer put together a memo outlining his blueprint for how the House can move toward federal legalization.

House Committee Hearings

First, Rep. Blumenauer proposes that House Committees spend the first six months of the new Congressional term holding hearings on cannabis issues in order to discuss policy issues with experts.

For example, the House Judiciary Committee should hold a hearing on descheduling marijuana and the House Energy and Commerce Committee can hold hearings on marijuana research.

Narrowing the Legalization Gap

Beginning in April 2019, Rep. Blumenauer suggests that House Committees should begin proposing legislation to narrow the gap between federal and state marijuana laws. He suggests a number of different items, including:

  • Protecting employment opportunities;
  • Protecting state marijuana laws;
  • Taxing marijuana businesses equally;
  • Removing barriers to marijuana research; and
  • Providing access to financial services for marijuana businesses.

Descheduling and Legalizing Marijuana

As the legislation gap closes, the memo suggests that the House begin to pass legislation aimed at descheduling and ultimately legalizing marijuana. This memo argues that this should be a top priority, and compares legalization to ending alcohol prohibition, in that it will not affect state or local laws.

There are a number of bills already on the table designed to do this in both the House and Senate. Rep. Blumenauer believes there is a significant amount of momentum toward legalization and encourages his colleagues to work quickly.

Although the proposed timeline of full federal legalization by the end of 2019 may be optimistic, Canada‚Äôs recent move to legalize marijuana may be a sign that things will change soon in the United States as well. 

Helping Small Businesses Succeed

One of the important pieces to legalizing marijuana at the federal level is finding ways to help businesses succeed. Rep. Blumenauer notes two bills that can do this.

First, the Secure and Fair Enforcement (SAFE) Banking Act would allow cannabis-related businesses to access financial services in the banking system. California, for example, has issued over 5,000 commercial licenses related to cannabis businesses. However, because cannabis is still a Schedule 1 drug under federal law, many banks will not provide traditional financial and lending opportunities offered to other businesses.

Second, the Small Business Tax Equity Act would allow businesses operating in compliance with state law to claim tax deductions and credits associated with the sale of marijuana. This would allow cannabis-related businesses to take advantages of federal tax laws designed to encourage business development. If passed, this act would allow businesses to deduct expenses, including rent, as well as take advantage of tax credits related to research and development.

This article does not provide legal advice. If you are interested in understanding the relationship between state and federal marijuana laws and policy, speak with our cannabis law and regulation attorneys today. You can contact Heerde Blum LLP online or by phone at (212) 920-5858 or (213) 770-5757.