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Congressional Researchers Highlight Growing Federal-State Marijuana ‘Policy Gap’ In New 100-Page Report



The gap between federal and state marijuana policies continues to widen and shows no signs of stopping, congressional researchers said in a new report that also lays out options for how lawmakers could address the growing schism.

The Congressional Research Service (CRS) published the 101-page analysis just days after the U.S. House of Representatives approved a bill to federally legalize cannabis. It covers a wide range of policy implications caused by the ongoing prohibition of marijuana under federal law as more states move to legalize for medical and adult use.

From banking challenges to trafficking trends, CRS thoroughly covered how the status quo “creates unique consequences for individuals who act in compliance with state law but violate federal law.”

“As organizations and individuals have pressed forward with the manufacturing, sale, and use of marijuana, consequences of the gap have arisen—two of the more publicized consequences for individuals are termination of employment due to marijuana use in states that have legalized medical or recreational marijuana, and a range of implications for researchers and postsecondary students on college campuses,” researchers said.

“Other consequences include, but are not limited to, an inability to obtain or dismissal from certain types of employment, the inability to purchase and possess a firearm, inadmissibility for federal housing, and ineligibility for certain visas,” the report continues.

Congress and federal law enforcement could choose continued inaction, allowing states to set up regulated cannabis markets without enacting reform, but the report makes clear that taking the course will perpetuate cycles of uncertainty and consequences for those who participate in the industry.

“Thus far, the federal response to state actions to legalize marijuana has largely been to allow states to implement their own laws on the drug,” CRS said. “The gap between federal marijuana law and federal enforcement policy and the issues it creates continue each year.”

However, it also acknowledged that Congress has taken at least one step to protect certain marijuana markets by consistently renewing a spending bill rider the prevents the Justice Department from using its funds to interfere in the implementation of medical cannabis legalization.

“DOJ has nonetheless reaffirmed that marijuana growth, trafficking, and possession remain crimes under federal law irrespective of states’ marijuana laws,” the report says. “To date, federal law enforcement has generally focused its efforts on criminal networks involved in the illicit marijuana trade.”

“The marijuana policy gap between the federal government and states has widened almost every year for over 25 years as more states legalize medical and/or recreational marijuana. It has only been a few years since states began to legalize recreational marijuana, but over 25 years since they began to legalize medical marijuana—no state has reversed its legalization, medical or recreational, since California first legalized medical marijuana in 1996.”

Legalization at the state level is “now more the rule than the exception,” it says.

The report says that Congress ultimately has four options available to it with respect to the federal-state marijuana policy gap: 1) inaction, 2) strict enforcement of federal prohibition, 3) make modest changes to protect state markets or 4) federal legalization.

To advocates, the answer is obvious. Lawmakers should heed the will of the public and follow the lead of states by legalizing marijuana. But CRS walked through a number of other reform considerations as well.

Simply lowering the federal classification of cannabis under the Controlled Substances Act (CSA) would allow the government to “devote more resources to the Food and Drug Administration (FDA) to manage and assess the many medical marijuana products available across the country,” for example.

Changing marijuana’s schedule could also affect the “availability of financial services for marijuana businesses, federal tax treatment, and the role of federal law enforcement in marijuana investigations,” CRS said.

“If Congress chooses to remove marijuana as a controlled substance under the CSA and remove criminal provisions, this would at least partly eliminate the policy gap with states that have authorized medical and recreational marijuana programs. Whether Congress decides to address the gap with the states or not, federal control of cannabis has evolved from the strict laws and enforcement policies of the 20th century to allowing most states to implement laws authorizing the production and distribution of marijuana.”

The report further discusses the history of marijuana policy, including the release of a report about 50 years ago from a Nixon-era commission that recommended cannabis decriminalization, only to be ignored by that president and each subsequent administration.

Here are some other features of the new CRS report: 

Trends in marijuana use

While adults may have started to report more frequent marijuana use, the analysis acknowledges that research has found that adolescent cannabis consumption “has remained relatively stable, especially when compared to adult use rates.”

The head of the National Institute on Drug Abuse has acknowledged that her prior concerns about state-level legalization would lead to increased youth use have so far proved unfounded.

Further, several studies have either concluded that state medical and recreational marijuana laws have had no effect on youth use or have shown an association between the enactment of these laws and a subsequent decline in youth use,” CRS said. “Two studies have indicated that adolescent use may decline after state recreational legalization.”

Impact of prohibition on research

As has often been pointed out by advocates and researchers, the status of cannabis as a Schedule I drug under federal law has posed a barrier to studies into the plant’s potential risks and benefits.

CRS reiterated that point in the report, though it acknowledged that certain steps have been taken to resolve the issue, in part by having the Drug Enforcement Administration (DEA) break the marijuana manufacturing monopoly for research purposes and approve additional growers.

Banking issues in the marijuana industry

CRS previously detailed the financial problems that have arisen in state markets as a consequence of federal prohibition in a separate report. Analysts again discussed these conflicts in the new report, explaining how cannabis businesses have been largely cut off from the traditional financial sector even though limited guidance is in place for banks and credit unions.

It said that the policy dilemma means “many financial institutions have been unwilling to provide financial services to state-authorized marijuana businesses because of the legal risks under federal law.”

“Because of these legal risks, many financial institutions are unwilling to provide financial services to the marijuana industry, often leaving marijuana businesses unable to accept debit or credit card payments, use electronic payroll services, maintain checking accounts, or use other common banking services,” CRS said. “Consequently, many marijuana businesses reportedly operate exclusively in cash, raising concerns about, among other things, tax collection compliance and public safety.”

A bipartisan, congressional bill to fix this issue by simply safeguarding financial institutions that service state-legal marijuana businesses has passed the House in some form six times now, though it’s stalled in the Senate under both Democratic and Republican control.

Marijuana policy and traffic safety

Opponents of cannabis legalization often raise concerns about the potential impact of loosening marijuana laws on traffic safety. The report touches on research to that end, though it recognizes that “the connection between marijuana usage and an increase in a driver’s risk of crashing is not clearly established.”

“Some may be concerned that recreational or medical marijuana legalization could be associated with an increase in marijuana-related traffic incidents,” it said. “In Colorado, despite limited traffic data, there are some indicators of marijuana’s impact on traffic safety in Colorado.”

However, CRS also pointed out that several studies have found that “the enactment of medical marijuana laws were generally associated with a reduction in traffic fatalities,” with a running theory that patients may be using cannabis as a substitute for alcohol.

Hemp legalization

Marijuana remains federally illegal under the CSA, but Congress did legalize industrial hemp containing no more than 0.3 percent THC as part of the 2018 Farm Bill.

CRS said that the cannabis policy change has created complications for law enforcement because it’s “difficult” to “distinguish between hemp and marijuana plants.”

“These plants look, smell, and feel the same,” it said. “Drug-sniffing dogs are unable to distinguish between them.”

Marijuana arrests amid the legalization movement

CRS pointed out that, perhaps obviously, the “number of marijuana-related arrests is expected to go down in jurisdictions that have legalized marijuana for medical and recreational use, but especially in recreational marijuana states where adult use is not restricted to those with a medical card.”

A recent study found that decriminalizing marijuana not only significantly decreases arrests for possession overall but that it also reduces racial disparities in any remaining arrests.

Legalization affects trafficking trends

Advocates have argued that providing adults with regulated access to marijuana would offset illicit markets—and there’s a body of research indicating that that is the case, though it varies from state to state.

However, officials from states that maintain prohibition have reported increases in “trafficking of other-states’-authorized marijuana into their states.”

What does seem clear is that legalization at the state level is leading to a decline in cannabis trafficking from Mexico, as DEA recently acknowledged in a separate report.

“Marijuana cultivation in Mexico has declined, along with trafficking into the United States, and some have linked this to changes to state-level marijuana policies in the United States and decreased U.S. demand for lower-quality Mexican marijuana,” CRS said. “Reportedly, the trafficking organizations have shifted production to more profitable drugs such as heroin and methamphetamine.”

“Demand for higher-quality marijuana has generally increased in the United States. Notably, marijuana produced in Mexico is generally considered to be a low-grade or commercial-grade product and of lower quality compared to the marijuana produced in the United States and Canada. Further, it is not just U.S. consumers who demand higher-quality marijuana; for example, there have been anecdotal reports of traffickers moving high-quality marijuana produced in the United States across the Southwest border for sale and distribution in Mexico.”

Legal states are generating revenue from marijuana taxes

CRS noted that while “some states utilize marijuana-related revenue streams for general spending purposes, others have approved measures to dedicate a portion of this revenue for spending on a wide range of programs, such as education, economic development, public safety and criminal justice, and public health and substance abuse.”

All told, states that have legalized marijuana for adult use collectively generated more than $3.7 billion in tax revenue from recreational cannabis sales in 2021, a report from the Marijuana Policy Project (MPP) that was released earlier this month found.

International implications of legalization

“With respect to marijuana, state parties to the U.N. drug control treaties have committed to strict controls on the non-medical, non-scientific cultivation, production, and use of cannabis, cannabis resin, extracts and tinctures of cannabis, as well as organic and synthetic cannabinoids, including THC and dronabinol,” CRS said. “Despite international commitments to limit the global marijuana market, the drug remains among the most widely used in the world—leading multiple countries to call for changes in the international community’s approach to its control.”

Countries like Canada that are party of the UN treaty have moved to legalize cannabis nationally without facing sanctions.

CRS has been actively looking at various marijuana policy considerations under the status quo of prohibition.

In February, for example, CRS gave lawmakers an update on how different federal courts across the country have been interpreting a spending bill rider that has generally shielded state medical marijuana programs from interference by the Justice Department.

The federal researchers also put out an analysis in March that overviews the House-passed Marijuana Opportunity, Reinvestment and Expungement (MORE) Act to end prohibition and promote social equity in the industry.

A few months before the MORE Act came up for a floor vote last session in 2020, CRS also released a report that similarly identified multiple problems caused by conflicting federal and state marijuana laws.

Late last year, a CRS report concluded that President Joe Biden can grant mass amnesty to people who have violated federal marijuana laws—and his administration can also move to federally legalize cannabis without waiting for lawmakers to act.

Arizona Collected More Tax Revenue From Marijuana Than Alcohol And Tobacco Combined, March Data Shows

Photo courtesy of Chris Wallis // Side Pocket Images.

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