The governor of Colorado on Friday sent a letter to the Senate sponsors of a federal marijuana legalization bill, urging them to pass incremental cannabis banking and tax reform first before moving forward with the comprehensive legislation to end prohibition.
Gov. Jared Polis (D) is supportive of the Cannabis Administration and Opportunity Act (CAOA)—a bill to deschedule marijuana and promote social equity that’s being sponsored by Senate Majority Leader Chuck Schumer (D-NY), Senate Finance Committee Chairman Ron Wyden (D-OR) and Sen. Cory Booker (D-NJ). But he insisted that there are more modest and practical steps that should be taken first to support state-legal markets and protect businesses.
“I am thrilled that you are bringing forward a long-term, comprehensive solution that deschedules cannabis while enhancing social equity pathways,” the governor wrote. “I hope that you will first focus your efforts on the two biggest barriers to the success of the cannabis industry: banking and IRS Code Section 280E.”
That latter statute has precluded state-legal marijuana businesses from making federal tax deductions that are available to other traditional industries.
Polis said the Secure and Fair Enforcement (SAFE) Banking Act, which has passed in the U.S. House of Representatives on several occasions, “has more bipartisan support than ever before and can be passed in the short-term as you continue to work on the details of the CAOA.”
The senators behind the CAOA recognize that banking reform has an easier path to passage, but they’ve insisted on prioritizing the legalization bill first, in part to avoid jeopardizing support for broader reform from on-the-fence members. Some advocates have also protested putting the SAFE Banking Act to a vote first, as it’s viewed as primarily friendly to the industry without concrete social equity provisions.
Booker said in July that he “will lay myself down” to block any other senators who seek to pass marijuana banking legislation before the body approves comprehensive cannabis reform
But Polis said that passing the banking bill is an important public safety issue because existing cannabis businesses operate on a largely cash-only basis. That makes them “targets for crime” and put them at a disadvantage “compared to other legal businesses by being unable to open bank accounts or obtain loans at reasonable rates.”
“The cannabis industry is simply too large to be prohibited from banking opportunities, and the Senate must remedy this harm by bringing this measure up for a vote in the Senate Committee on Banking, Housing, and Urban Affairs immediately,” the governor wrote.
“Similarly, the cannabis industry has been stymied by 280E, which prevents these businesses from taking business-related deductions associated with the sale of cannabis,” he continued. “Congress must swiftly act to pass any measure, a number of which have been introduced in past sessions, to make an exception for legal cannabis businesses from 280E. While the CAOA would address this issue by descheduling cannabis, a narrow measure focused on relieving cannabis businesses from the detrimental effects of 280E would expeditiously solve this problem.”
“Congress has the power and traction to address these inequities in the near-term while continuing to refine the CAOA, and I encourage you to efficiently take any opportunity to pass legislation concerning banking or 280E,” he said.
The letter is responsive to a public comment request from the senators on the draft legalization legislation. The comment period ends on September 1.
With regard to the legalization bill, Polis urged the senators to rethink the high tax rate that would be created by the draft legislation.
“It is critical that the tax level is not so cost prohibitive that it undermines the federal legal cannabis systems both already in place and being developed in emerging regulated cannabis states,” he wrote.
That’s a key point given that Colorado voters will see a measure on their ballots this November that would further raise state marijuana taxes to fund education programs.
The governor also wants to make sure that states be “empowered to retain their regulatory authorities” over most aspects of the cannabis trade.
“It is clear from the discussion draft that you are deeply considering the multifaceted aspects of this issue,” Polis concluded. “As a pioneer and leader in cannabis regulation, I would like to offer our state’s support and decade long leadership as you work to resolve challenging problems concerning taxes, regulatory overlay, enforcement, and more.”
This letter comes days after the attorney general of Colorado sent a separate message urging congressional leaders to ensure that small marijuana businesses are protected from being overtaken by Big Tobacco and other major industries as federal cannabis reform legislation advances.
Attorney General Phil Weiser (D) wrote that his state is “heartened” to see efforts on Capitol Hill to end federal cannabis prohibition and create a regulatory framework that still empowers states to make their own policy decisions. But he expressed concerns about large corporations potentially gobbling up the industry if preventative steps aren’t taken.
Schumer, for his part, has emphasized that his bill will specifically seek to restrict the ability of large alcohol and tobacco companies to overtake the industry.
Weiser concluded by saying that state attorneys general, and his office in particular, are ready and willing to support lawmakers in crafting federal reform legislation that takes into account all of these opportunities and challenges.
Weiser has previously led letters to Congress voicing support for bipartisan legislation to protect banks that service state-legal marijuana businesses. That effort was noted in this latest letter to lawmakers on broader reform.
Polis, for his part, has been a leader on marijuana issues dating back to when he was in Congress. Since becoming governor, he has signed numerous cannabis bills into law concerning equity and industry assistance.
Earlier this month he held a press conference at a hemp field to announce that the state’s hemp plan won federal approval.
Also this month he made a number of marijuana-related comments at an appearance with the creators of the TV show South Park.
Read Polis’s letter to the marijuana legalization bill sponsors below:
Governors Across The U.S. Tout Marijuana Reform Progress In State Of The State Speeches And Budgets
Governors across the U.S. have been taking the opportunity to tout marijuana reform accomplishments as part of their annual State of the State speeches and budget requests this month.
From New York to South Dakota, the comments and proposals from state executives demonstrate how cannabis has become more mainstream and is being talked about in high profile venues alongside more traditional fare such as taxes, education and infrastructure.
It’s also part of a growing theme, as governors have increasingly brought up marijuana policy in State of the State addresses each year to kick off the new year as the legalization movement spreads.
Here’s a look at what governors are saying about marijuana policy in 2022:
While adult-use marijuana retail sales have yet to launch in New Jersey after voters approved a 2020 legalization referendum, the state’s top executive said in his State of the State address that he’s expecting an economic boon.
“Many jobs await in the cannabis industry ready to take off,” Gov. Phil Murphy (R) said.
The governor also said separately in his second inaugural address this month that “businesses in the new cannabis industry that we are setting up in the name of social justice” are part of efforts to “continue growing the innovation economy that will power our future and make us a model for the nation and the world.”
Businesses on the cutting edge of new technologies that will revolutionize our grasp of the possible.
Businesses in the new cannabis industry that we are setting up in the name of social justice.
In online gaming and sports betting, which we now dominate.
— Governor Phil Murphy (@GovMurphy) January 18, 2022
As the state prepares to implement legal cannabis sales, Murphy said late last year that he’s open to giving adults the right to cultivate marijuana for personal use even though it’s not currently written into the law.
New Mexico Gov. Michelle Lujan Grisham (D) talked in here State of the State speech about the economic potential of the marijuana industry under the legalization law she signed last year.
“We’re expanding our economic footprint into every single community,” the governor said in her State of the State address. “Legal cannabis is going to create thousands of jobs and serious tax revenue for local governments to support local services in every corner of our state.”
Legal cannabis is going to create thousands of jobs & serious tax revenue to support local services.
Clean hydrogen will support thousands of jobs, especially in rural New Mexico, while helping us sprint toward our net-zero carbon deadlines and decarbonize transportation.
— Michelle Lujan Grisham (@GovMLG) January 18, 2022
New York Gov. Kathy Hochul (D) released a State of the State book earlier this month that called for the creation of a $200 million public-private fund to specifically help promote social equity in the state’s burgeoning marijuana market.
The governor said that while cannabis business licenses have yet to be approved since legalization was signed into law last year, the market stands to generate billions of dollars, and it’s important to “create opportunities for all New Yorkers, particularly those from historically marginalized communities.”
That proposal was also cited in Hochul’s executive budget, which was released last week. The budget also estimated that New York stands to generate more than $1.25 billion in marijuana tax revenue over the next six years.
The briefing book for the executive budget touts how Gov. Kathy Hochul (D) has “prioritized getting New York’s cannabis industry up and running” since marijuana was legalized under her predecessor last year. That includes appointing key regulators who’ve been “creating and implementing a comprehensive regulatory framework.”
The governor of Rhode Island included a proposal to legalize marijuana as part of his annual budget plan—the second time he’s done so. And time around, he also added new language to provide for automatic cannabis expungements in the state.
Gov. Dan McKee (D) released his request for the 2023 fiscal year on Thursday, calling for adult-use legalization as lawmakers say they’re separately nearing a deal on enacting the reform. It appears that an outstanding disagreement between the governor and legislators concerning what body should regulate the program remains unresolved based on the new budget proposal, however.
In general, McKee’s plan would allow adults 21 and older to purchase and possess up to one ounce of cannabis, though it would not provide a home grow option. Adults could also store up to five ounces of marijuana in secured storage in their primary residence.
“The governor recommends creating a strictly regulated legal market for adult-use cannabis in the state,” an executive summary states. “This proposal would create a weight-based excise tax on marijuana cultivation, an additional retail excise tax of 10 percent, and also apply sales tax to cannabis transactions.”
South Dakota Gov. Kristi Noem (R) isn’t a fan of adult-use legalization, going so far as to fund a lawsuit against a voter-approved 2020 reform initiative that ultimately led to a court ruling voiding the law. Her office has even suggested that activists behind the successful legalization campaign should front the legal bills for the case.
However, she seems to recognize the popularity of the issue and has recently attempted to associate herself with the implementation of the separate medical cannabis legalization law that voters also approved, as she did in her State of the State address this month.
“I take our citizens’ health seriously. I don’t make these decisions lightly. And when we create new policy, we’re going to do everything we can to get it right from day one,” Noem said. “Our state’s medical cannabis program is one example.”
“It was launched on schedule according to the timeline passed by South Dakota voters,” she said. “I know there will be some debate about that program this session. My focus is on making sure South Dakota has the safest, most responsible, and well-run medical cannabis program in the country.”
Noem tried to get the legislature to approve a bill to delay implementation of the medical cannabis program for an additional year, but while it cleared the House, negotiators were unable to reach an agreement with the Senate in conference, delivering a defeat to the governor.
In response, her office started exploring a compromise last year, with one proposal that came out of her administration to decriminalize possession of up to one ounce of cannabis, limit the number of plants that patients could cultivate to three and prohibit people under 21 from qualifying for medical marijuana.
Advocates weren’t enthused with the proposal, and now they’re taking a two-track approach to enacting broader legalization legislatively and through the ballot.
In his final State of the Commonwealth address this month, now former-Gov. Ralph Northam (D) talked about the criminal justice implications of his state’s move to legalize marijuana last year.
“We also worked closely with you to make sure our criminal justice system reflects the Virginia that we are today. Too often, our modern-day punishments and practices have their roots in a more discriminatory and unfair past,” he said. “That’s why we’ve made marijuana use legal.”
Too often, our modern-day punishments and practices have their roots in a more discriminatory and unfair past.
That’s why we’ve made marijuana use legal. That’s also why we have ended use of the death penalty in Virginia—the first southern state to do so. #VASOTC
— Governor Ralph Northam (@VAGovernor73) January 13, 2022
He also thanked the legislators who championed the reform “for their work on this policy, which is complicated, but important.”
Meanwhile, the new governor of Virginia, Glenn Youngkin, said recently that while he’s not interested in re-criminalizing marijuana possession, which became legal in the state last summer, but he feels there’s “still work to be done” before he gets behind creating a market for commercial sales and production.
Photo courtesy of Mike Latimer.
Virginia GOP Lawmakers Begin Forming Plans For Marijuana Sales Launch
“There will be a bill. There may be multiple bills. But something is going to come out of this chamber.”
By Ned Oliver, Virginia Mercury
GOP lawmakers in the Virginia House of Delegates are taking their first stab at legislation to open the retail marijuana market, introducing bills that would lower the tax rate on sales and redirect proposed social equity funding to school infrastructure.
But leadership in the chamber stressed that the effort remains very much a work in progress and that they expect plenty of changes as the legislation makes its way through the committee system.
“We’ll come up with something,” said Garren Shipley, a spokesman for House Speaker Todd Gilbert, said last week. “There will be a bill. There may be multiple bills. But something is going to come out of this chamber.”
Republicans unanimously opposed legalization when Democrats voted last year to allow people to grow and possess small amounts of marijuana. But Democratic lawmakers’ decision to leave it until this year to finalize the particulars of how a legal retail market would work—combined with the loss of their House majority in November—has left the once-reluctant GOP with a key role in deciding how to proceed.
Gilbert said that while his caucus opposed legalization, he views it as imperative to come up with a mechanism for legal sales, complaining that the legal framework left in place by Democrats has only empowered the black market.
The party has so-far left the heavy lifting on that front to Del. Michael Webert, R-Fauquier, who was among a handful of GOP lawmakers to support reducing penalties for marijuana possession two years ago and is the only member of the party to introduce a comprehensive bill governing retail sales.
While his bill largely tracks with legislation introduced by Democrats in the House and Senate, it diverges in a few key areas.
First, it halves the proposed tax rate on retail sales from 21 percent to 10 percent, which would be the lowest in the country. Webert called the step important to compete with the black market, citing the experience of California, where the combined tax rate on sales is just over 36 percent.
“They have an ungodly huge black market,” Webert said. “So we don’t want the taxes so high that we drive things to the black market.”
His bill also changes how the money would be spent.
Social equity and schools
Democrats centered their legalization effort around social equity provisions aimed at making amends for disproportionate enforcement of marijuana laws in Black communities. To that end, they proposed that 35 percent of tax revenue from marijuana sales be dedicated to a Cannabis Equity Reinvestment Fund, which the law proposed be dedicated to providing scholarships, community programs and business loans to people and communities “historically and disproportionately targeted and affected by drug enforcement.”
Webert’s bill eliminates that fund, instead proposing the revenue for a new grant program to help local governments pay for the cost of repairing or replacing roofs.
Finding more state funds to fix decrepit school buildings has been a focus for some Republicans recently and Webert said his approach would benefit both rural and urban areas that have struggled with the issue.
Webert also proposes tweaking—but not eliminating—a program devised by Democrats to give people negatively impacted by prohibition priority access to marijuana business licenses.
His legislation strikes criteria that would have extended preference to people convicted of marijuana crimes in the past — something that GOP lawmakers vocally opposed last year. But it maintains language that would allow priority access for people who live in areas that were subject to higher than average enforcement or are economically disadvantaged. It also maintains eligibility for people who attended a Virginia historically black college or university.
Referendums, unions and resentencing
The bill also includes subtler departures from the approach proposed by Democrats. For instance both bills allow localities to hold referendums to opt out of marijuana sales, but the GOP bill would bind towns to the decision of their surrounding county while the Democratic bill treats them as independent jurisdictions. (Legislation from two GOP delegates goes further, barring any retail marijuana stores unless sales are specifically approved by a local referendum.)
The GOP bill also drops languages that would block local governments from passing new zoning rules that apply only to marijuana businesses.
And it strikes language that was aimed at promoting unionization in the new industry by refusing to license business owners who oppose unionization efforts by employees or rely heavily on independent contractors.
For now, Republicans and Democrats have proposed similar stances on resentencing for people currently imprisoned on marijuana charges, allowing them to petition a judge to reconsider their sentence, though the GOP bill excludes people convicted of distributing the drug to minors.
A bill authored by Del. Carrie Coyner, R-Chesterfield, goes further, proposing automatic resentencing hearings.
Both chambers have also introduced separate legislation to move the date retail sales can begin from 2024 to 2023—a key recommendation from lawmakers tasked with studying the issue over the summer.
The chambers differ, however, on whether to include large hemp processors in the stop-gap program. The House version limits early sales to existing medical producers. The Senate version allows large industrial hemp processors to also enter the market early.
So far, none of the bills have been docketed in the House of Delegates and it remains unclear when debate on the measures will begin in earnest.
Bipartisan Pennsylvania Senators File Bill To Let Medical Marijuana Patients Grow Their Own Plants
A bipartisan group of Pennsylvania senators introduced a bill on Thursday that would allow medical marijuana patients to cultivate their own plants for personal use.
Sens. Dan Laughlin (R) and Sharif Street (D) first announced their intent to file the legislation in November, arguing that it is a necessary reform to ensure patient access by giving people a less costly alternative to buying from dispensaries.
Registered patients who are 21 and older, and who have been residents of the state for at least 30 days, could grow up to six plants in an “enclosed and locked space” at their residence, according to the text of the bill. They would be allowed to buy cannabis seeds from licensed dispensaries
SB1024 – Senator Sharif Street and I worked diligently to get our Medical Marijuana Home Cultivation Bill introduced.
— Senator Dan Laughlin (@senatorlaughlin) January 21, 2022
In an earlier cosponsorship memo for the new home grow bill, the lawmakers said that letting patients cultivate their own medicine would “help ease the cost and accessibility burdens for this important medicine.”
The new legislation has three other initial cosponsors in addition to Street and Laughlin.
Street had attempted to get the reform enacted as an amendment to an omnibus bill this summer, but it did not advance.
The senators argue that patients in particular are deserving of a home grow option, as some must currently travel hours to visit a licensed dispensary and there are financial burdens that could be alleviated if patients could grow their own plants for medicine.
Late last year, Laughlin and Street also unveiled a separate adult-use legalization proposal that faces significant challenges in the GOP-controlled legislature. And Street is behind another recent cannabis measure to provide state-level protections to banks and insurers that work with cannabis businesses.
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In the interim, Lt. Gov. John Fetterman (D), who is running for U.S. Senate this year, said one of his key goals in his final year in office is to ensure that as many eligible people as possible submit applications to have the courts remove their cannabis records and restore opportunities to things like housing, student financial aid and employment through an expedited petition program.
Pennsylvania lawmakers could also take up more modest marijuana reform proposals like a bill filed late last year to expand the number of medical marijuana cultivators in the state, prioritizing small farms to break up what she characterized as a monopoly or large corporations that’s created supply problems.
Rep. Amen Brown (D) separately announced his intent to file a legalization bill that he’ll be working on with Sen. Mike Regan (R), who expressed his support for the policy change a day earlier.
Additionally, another pair of state lawmakers—Reps. Jake Wheatley (D) and Dan Frankel (D)—formally unveiled a legalization bill they’re proposing last year.
Philadelphia voters also approved a referendum on marijuana legalization in November that adds a section to the city charter saying that “the citizens of Philadelphia call upon the Pennsylvania General Assembly and the Governor to pass legislation that will decriminalize, regulate, and tax the use, and sale to adults aged 21 years or older, of cannabis for non-medical purposes.”
Gov. Tom Wolf (D) said last year that marijuana legalization was a priority as he negotiated the annual budget with lawmakers. However, his formal spending request didn’t contain legislative language to actually accomplish the cannabis policy change.
The governor, who signed a medical cannabis expansion bill in June, has repeatedly called for legalization and pressured the Republican-controlled legislature to pursue the reform since coming out in favor of the policy in 2019. Shortly after he did that, a lawmaker filed a separate bill to legalize marijuana through a state-run model.
A survey from Franklin & Marshall College released last year found that 60 percent of Pennsylvania voters back adult-use legalization. That’s the highest level of support for the issue since the firm started polling people about it in 2006.
An attempt to provide protections for Pennsylvania medical marijuana patients from being charged with driving under the influence was derailed in the legislature last year, apparently due to pushback by the state police association.
Photo courtesy of Mike Latimer.