As Senate leaders work to draft a bill to federally legalize marijuana, there’s an elephant in the room: even with Democrats in control of the chamber, the votes might not be there to enact comprehensive reform.
Recognizing the potential challenges of mustering 60 votes to overcome a filibuster for standalone legislation on the floor, advocates are urging leadership to pursue the policy change through a process known as budget reconciliation that would require a simple majority of 51 votes for a broader, must-pass package.
Senate Majority Leader Chuck Schumer (D-NY), who is spearheading the legalization push in his chamber, didn’t rule out that possibility at a press conference last week.
Asked whether senators might try to incorporate the cannabis proposal into reconciliation, he said “you will hear in a few weeks the legislation that’ll answer” that question.
“This is an option the Marijuana Justice Coalition shared” with the majority leader, Maritza Perez, director of the office of national affairs for the Drug Policy Alliance, told Marijuana Moment. “The way we see it, a must-pass bill is the only vehicle that can ensure we pass a marijuana justice bill in this Senate.”
Chris Lindsey, director of government relations for the Marijuana Policy Project, told Marijuana Moment that it’s clear “Leader Schumer is taking seriously his commitment to see legalization happen at the federal level, and address the ongoing harm from prohibition.”
“We have no doubt he is looking at all vehicles that can accomplish reform,” he said.
But while going the reconciliation route might seem like a simple workaround that would relieve pressure to garner Republican supporters, the legislative process is complex, with a series of rules that limit what kind of measures can be enacted under the procedure in the first place.
The so-called Byrd rule determines whether a given proposal is an “extraneous matter” that’s not germane to the budget process. There are several criterion that are used to make that determination, including whether the legislation would add to the deficit beyond a 10-year “budget window.”
If a senator opposed to legalization wanted to block the marijuana language from being included in the broader package based on this procedural rule, they would have to raise a point of order. The Senate Parliamentarian would then make a determination, in consultation with the presiding officer of the chamber. If they deemed the language in violation of the Byrd rule, it would be stricken from the reconciliation bill.
Assuming that the forthcoming legalization measure survives a challenge under those reconciliation limitations, it’s possible it will face a separate hurdle. Under the process, any member can introduce an amendment, and they must all be considered on the floor in a lengthy process known as “vote-a-rama.”
That means, if a senator opposed to marijuana reform chooses to, they could force a vote on an amendment calling for the legalization language to be stripped, which would then require a simple majority to defeat it. That might sound easy enough given that Democrats now hold the majority, but there’s yet another complication: some members of the party have signaled that they’re not on board with federal legalization.
Sen. Jeanne Shaheen (D-NH), for example, told Politico last week that she doesn’t support legalization and that “we’re in the middle of an opioid epidemic, and the research that I’ve seen suggests that that is a way that more people get into drugs.” Sen. Jon Tester (D-MT) said he thinks legalization would “cause more problems than it solves.” Sens. Joe Manchin (D-WV), Bob Casey (D-PA) and Mark Kelly (D-AZ) all told the outlet that they remain undecided on the issue.
What’s more, a number of other Democratic senators such as Sens. Ben Cardin (D-MD) and Debbie Stabenow (D-MI) told Business Insider in March that they hadn’t looked closely enough at the issue of federal legalization to say how they would vote. Sen. Dianne Feinstein (D-CA), a longtime opponent of legalization who in recent years came around to sponsoring some reform legislation, represents another question mark for Democratic leaders.
Losing any single one of those lawmakers would jeopardize the bill even it only 50 votes are required, with Vice President Kamala Harris as the tie-breaker. For any Democrat legalization loses, Schumer would have to pick up a Republican to get back to 50.
Sen. Rand Paul (R-KY) supports cannabis reform and said he is “one of the possible gets” this session, though he questioned why his Democratic colleagues haven’t reached out to him on the issue—and his libertarian leanings could give him pause about supporting any proposal to tax marijuana and use the proceeds to repair the harms of the war on drugs.
Put simply, if senators move to incorporate legalization into a budget package via reconciliation, things could get messy—but it may be their only possible path to success given the alternative standalone route and the 60-vote threshold to end a filibuster.
Meanwhile, Sen. Cory Booker (D-NJ) said on Tuesday that he’s “pretty confident that we could get the 50 votes of the Democrats” for broad cannabis reform, but also seemed to suggest that the bill might actually be brought to the floor under regular order and would need to overcome a filibuster.
“We’ve got to pick up another 10 votes. Now, the good news is, is that there are Republican bright red states that have legalized marijuana,” he said at a 4/20 event hosted by the ACLU of New Jersey. “And that should give us some advantage in trying to cobble together the kind of majority that we need. .. I’m going to do everything I can to cobble together the 60 votes necessary. Unless of course, we somehow get rid of the filibuster, which would be wonderful.”
Justin Strekal, political director for NORML, told Marijuana Moment that no senators’ vote should be taken for granted and that supporters need to make it clear that they expect their elected officials to represent their views no matter how cannabis reform proceeds to the floor.
“As all procedural possibilities are explored, one thing is certain: far too many U.S. senators believe it to be acceptable to arrest and incarcerate Americans for marijuana possession,” he said. “Now is the time for each and every supporter of cannabis policy reform to contact their elected officials and make it clear that they will be watching.”
Democrats were cleared by the Senate parliamentarian to do another reconciliation bill this year and seem poised to pursue the option in the coming months—but cannabis isn’t the only issue that could be attached to the procedurally complicated legislation.
Drug pricing, immigration reform, climate policy and other issues are all on the table as Democrats step up their push to deliver wins on infrastructure and jobs before the midterms. House Budget Chairman John Yarmuth (D-KY) said the upcoming reconciliation package will be tantamount to a “kitchen sink” approach—throwing everything in. As such, advocates say cannabis should be included.
Despite the possible challenges, legalization advocate Sen. Bernie Sanders (I-VT) told The Washington Post that he’s open to using reconciliation to enact the reform. However, “there are a whole lot of questions out there” and “it’s a little bit more complicated” procedurally.
Schumer isn’t alone in drafting the reform legislation this session. He’s teamed up with Booker and Senate Finance Committee Chairman Ron Wyden (D-OR) to get the job done. The majority leader said the bill will be released “shortly” and put to the floor “soon.”
The majority leader told Marijuana Moment in an interview last week that one thing they want to avoid is to enact a policy change that’s temporary, such as attaching amendments to appropriations legislation. Schumer said their “first goal is not to settle for just partial measures.”
On the House side, Judiciary Chairman Jerrold Nadler (D-NY) said recently that he plans to reintroduce his legalization bill, the Marijuana Opportunity, Reinvestment and Expungement (MORE) Act, which cleared the chamber last year but did not advance in the Senate under GOP control.
Another factor that’s frustrating advocates is a more long-term concern: President Joe Biden opposes federal legalization, and his press secretary on Tuesday wouldn’t say whether he would sign or veto a reform bill if it’s sent to his desk. She did note, however, that his position is at odds with the proposals that congressional leaders are working on.
Photo courtesy of Philip Steffan.
Top IRS Official Says Marijuana Banking Reform Would Help Feds ‘Get Paid’
The Internal Revenue Service (IRS) would like to get paid—and it’d help if the marijuana industry had access to banks like companies in other legal markets, an official with the federal department said. She also talked about unique issues related to federal tax deductions for cannabis businesses.
At an event hosted by UCLA’s Annual Tax Controversy Institute on Thursday, IRS’s Cassidy Collins talked about the “special type of collection challenge” that the agency faces when it comes to working with cannabis businesses while the product remains federally illegal.
While IRS isn’t taking a stand on federal marijuana policy, Collins said that the status quo leaves many cannabis businesses operating on a cash-only basis, creating complications for the agency, in part by making it harder for banks to “pay us.”
“The reason why [the marijuana industry is] cash intensive is twofold,” she said. “Number one, a lot of customers don’t want a paper trail showing that they’re buying marijuana, and number two, the hesitancy of banks to allow marijuana businesses to even bank with them.”
Of course, the reason why many financial institutions remain hesitant to take on cannabis companies as clients is because the plant is a strictly controlled substance under federal law.
“There’s been a number of legislative bills that have been introduced—and I am definitely not expressing any opinion personally or on behalf of the IRS about any pending or proposed legislation,” Collins, who is a senior counsel in the IRS Office of Chief Counsel, said. “But it is interesting to note that, if the law changed so that the marijuana businesses could have banks, that would make the IRS’s job to collect [taxes] a lot easier. As part of collection, we want the money. That’s our end goal there.”
A major part of what makes cannabis businesses unique is that they don’t qualify for traditional tax credits under an IRS code known as 280E. That policy “prohibits them from claiming deductions for business expenses because they’re technically being involved in drug trafficking,” Collins explained at the event, from which small excerpts of her comments were reported by Bloomberg.
There are some options available to lessen the burden on marijuana firms, however. At the end of the day, “IRS will work with marijuana companies because, again, we want to get paid,” Collins said.
One of the ways the agency works with marijuana business operators is to have them visit designated IRS “tax assistance centers” that accept cash payments in excess of $50,000. But the official warned businesses to “be prepared to be there for a little while” as the center checks—and double checks—the amount of cash being submitted.
“Revenue officers will assist the marijuana companies in paying us,” she said.
IRS officials could also help cannabis firms by having officials accompany them “to the bank in order to try to help the taxpayer secure a cashier’s payment to pay the IRS, as well as using money orders,” she said, adding that “our revenue officers are are wanting to work with the marijuana companies to help assist them to pay us.”
“When the revenue officers are there in person with the taxpayer, that could potentially help increase the likelihood that the bank will cooperate and help the taxpayer transition into a cashier’s check,” she continued. “And that has been a trend since this first became legal [at the state level], that more and more banks are allowing cannabis companies to bank with them.”
In a report published earlier this year, congressional researchers examined tax policies and restrictions for the marijuana industry—and how those could change if any number of federal reform bills are enacted.
IRS, for its part, said last month that it expects the cannabis market to continue to grow, and it offered some tips to businesses on staying compliant with taxes while the plant remains federally prohibited.
As it stands, banks and credit unions are operating under 2014 guidance from the Financial Crimes Enforcement Network (FinCEN) that lays out reporting requirements for those that choose to service the marijuana industry.
Leaders in both chambers of Congress are working on legalization bills to end federal marijuana prohibition. But stakeholders are hopeful that, in the interim, legislators will enact modest marijuana banking reform. Legislation to protect financial institutions from being penalized for working with cannabis businesses passed the House for the fifth time last month.
Rodney Hood, a board member of the National Credit Union Administration, wrote in a Marijuana Moment op-ed this month that legalization is an inevitability—and it makes the most sense for government agencies to get ahead of the policy change to resolve banking complications.
IRS separately hosted a forum in August dedicated to tax policy for marijuana businesses and cryptocurrency.
Earlier this year, IRS Commissioner Charles Rettig told Congress that the agency would “prefer” for state-legal marijuana businesses to be able to pay taxes electronically, as the current largely cash-based system under federal cannabis prohibition is onerous and presents risks to workers.
Former Treasury Secretary Steven Mnuchin said in 2019 that he’d like to see Congress approve legislation resolving the cannabis banking issue and he pointed to the fact that IRS has had to build “cash rooms” to deposit taxes from those businesses as an example of the problem.
IRS released updated guidance on tax policy for the marijuana industry last year, including instructions on how cannabis businesses that don’t have access to bank accounts can pay their tax bills using large amounts of cash.
The update appears to be responsive to a Treasury Department internal watchdog report that was released earlier in the year. The department’s inspector general for tax administration had criticized IRS for failing to adequately advise taxpayers in the marijuana industry about compliance with federal tax laws. And it directed the agency to “develop and publicize guidance specific to the marijuana industry.”
Luxembourg Set To Become First European Country To Legalize Marijuana Following Government Recommendation
Luxembourg is poised to become the first European country to legalize marijuana, with key government agencies putting forward a plan to allow the possession and cultivation of cannabis for personal use.
The ministers of justice and homeland security on Friday unveiled the proposal, which will still require a vote in the Parliament but is expected to pass. It’s part of a broader package of reform measures the agencies are recommending.
Under the marijuana measure, adults 18 and older could grow up to four plants. However, under the non-commercial model that is being proposed, possessing more than three grams in public would still be a civil offense, carrying a fine of €25-500 ($29-581). Currently, the maximum fine for possession is €2,500 ($2,908).
In terms of access, adults would be able to buy and trade cannabis seeds for their home garden.
Justice Minister Sam Tamson said the government felt it “had to act” and characterized the home cultivation policy change as a first step, The Guardian reported.
👉🏻élaboration du projet de loi usage privé du #cannabis : jusqu’à 4 plantes à domicile & décorrectionnalisation <3g
👉🏻renforcement de la prévention & de l’accompagnement
👉🏻⬆️des moyens de la police
👉🏻élaboration d’un projet de production/vente #Luxembourg pic.twitter.com/8yre0Udt8J
— Sam Tanson (@SamTanson) October 22, 2021
“The idea is that a consumer is not in an illegal situation if he consumes cannabis and that we don’t support the whole illegal chain from production to transportation to selling where there is a lot of misery attached,” he said. “We want to do everything we can to get more and more away from the illegal black market.”
While limited in scope, the reform would make Luxembourg the first country in Europe to legalize the production and possession of marijuana for recreational use. Cannabis has been widely decriminalized in certain countries in the continent, but it has remained criminalized by statute.
Government sources in Luxembourg told The Guardian that plans are in the works to develop a program where the state regulates the production and distribution of marijuana. Tamson said they are working to resolve “international constraints” before taking that step, however, referring to United Nations treaty obligations that multiple U.S. states and other countries like Canada and Uruguay have openly flouted.
The measures include:
🟢 Regulation of cannabis use and cultivation: adults will be able to legally cultivate up to four cannabis plants for their own use, provided the cultivation is happening at their place of residence.
— European Greens (@europeangreens) October 22, 2021
For now, the country is focusing on legalization within a home setting. Parliament is expected to vote on the proposal in early 2022, and the ruling parties are friendly to the reform.
This has been a long time coming, as a coalition of major parties of Luxembourg agreed in 2018 to enact legislation allowing “the exemption from punishment or even legalization” of cannabis.
Meanwhile in the U.S., congressional lawmakers are working to advance legalization legislation. A key House committee recently approved a bill to end marijuana prohibition, and Senate leadership is finalizing a separate reform proposal.
In Mexico, a top Senator said this week that lawmakers could advance legislation to regulate marijuana in the coming weeks. The Supreme Court has already ruled that adults cannot be criminalized over possession or cultivation, but there’s currently no program in place to provide access.
Photo courtesy of Mike Latimer.
New Bipartisan Marijuana Research Bill In Congress Would Let Scientists Study Dispensary Products
A bipartisan group of federal lawmakers introduced a bill on Thursday to remove barriers to conducting research on marijuana, including by allowing scientists to access cannabis from state-legal dispensaries.
The Medical Marijuana Research Act, filed by the unlikely duo of pro-legalization Rep. Earl Blumenauer (D-OR) and prohibitionist Rep. Andy Harris (R-MD), would streamline the process for researchers to apply and get approved to study cannabis and set clear deadlines on federal agencies to act on their applications.
“Congress is hopelessly behind the American people on cannabis, and the quality of our research shows why that is an urgent problem,” Blumenauer told Marijuana Moment. “Despite the fact that 99 percent of Americans live in a state that has legalized some form of cannabis, federal law is still hamstringing researchers’ ability to study the full range of health benefits offered by cannabis, and to learn more about the products readily available to consumers.”
“It’s outrageous that we are outsourcing leadership in that research to Israel, the United Kingdom, Canada, and others. It’s time to change the system,” he said.
Late last year, the House approved an identical version of the cannabis science legislation. Days later, the Senate passed a similar bill but nothing ended up getting to the president’s desk by the end of the last Congress. Earlier this year, a bipartisan group of senators refiled their marijuana research measure for the current 117th Congress.
Meanwhile, lawmakers are also advancing a separate strategy to open up dispensary cannabis to researchers. Large-scale infrastructure legislation that has passed both chambers in differing forms and which is pending final action contains provisions aimed at allowing researchers to study the actual marijuana that consumers are purchasing from state-legal businesses instead of having to use only government-grown cannabis.
The new bill filed this week by Blumenauer and Harris, along with six other original cosponsors, would also make it easier for scientists to modify their research protocols without having to seek federal approval.
Marijuana Moment is already tracking more than 1,200 cannabis, psychedelics and drug policy bills in state legislatures and Congress this year. Patreon supporters pledging at least $25/month get access to our interactive maps, charts and hearing calendar so they don’t miss any developments.
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It would additionally mandate that the Drug Enforcement Administration (DEA) license more growers and make it so there would be no limit on the number of additional entities that can be registered to cultivate marijuana for research purposes. It would also require the U.S. Department of Health and Human Services (HHS) to submit a report to Congress within five years after enactment to overview the results of federal cannabis studies and recommend whether they warrant marijuana’s rescheduling under federal law.
“The cannabis laws in this country are broken, including our laws that govern cannabis research,” Blumenauer said in remarks in the Congressional Record. “Because cannabis is a Schedule I substance, researchers must jump through hoops and comply with onerous requirements just to do basic research on the medical potential of the plant.”
The new legislation will “both streamline the often-duplicative licensure process for researchers seeking to conduct cannabis research and facilitate access to an increased supply of higher quality medical grade cannabis for research purposes,” he said, adding that expanded studies will help make sure “Americans have adequate access to potentially transformative medicines and treatments.”
For half a century, researchers have only been able to study marijuana grown at a single federally approved facility at the University of Mississippi, but they have complained that it is difficult to obtain the product and that it is of low quality. Indeed, one study showed that the government cannabis is more similar to hemp than to the marijuana that consumers actually use in the real world.
There’s been bipartisan agreement that DEA has inhibited cannabis research by being slow to follow through on approving additional marijuana manufacturers beyond the Mississippi operation, despite earlier pledges to do so.
In May, the agency finally said it was ready to begin licensing new cannabis cultivators. Last week, DEA proposed a large increase in the amount of marijuana—and psychedelics such as psilocybin, LSD, MDMA and mescaline—that it wants produced in the U.S. for research purposes next year.
Under the new House bill, the agency would be forced to start approving additional cultivation applications for study purposes within one year of the legislation’s enactment.
HHS and the attorney general would be required under the bill to create a process for marijuana manufacturers and distributors to supply researchers with cannabis from dispensaries. They would have one year after enactment to develop that procedure, and would have to start meeting to work on it within 60 days of the bill’s passage.
In general, the legislation would also establish a simplified registration process for researchers interested in studying cannabis, in part by reducing approval wait times, minimizing costly security requirements and eliminating additional layers of protocol review.
Read the full text of the new marijuana research bill below: