As Washington State’s legislative session drew to a close this weekend, lawmakers approved a bill that for the next two years would make drug possession a misdemeanor. After that, the criminal penalties would disappear—a move designed to force lawmakers back to the negotiating table.
The measure is a temporary response to a state Supreme Court decision in February that struck down Washington’s felony drug possession law as unconstitutional, ending the prohibition of simple possession. Some progressive lawmakers have called the ruling an opportunity to leave the drug war behind, while moderates and conservatives have insisted that reinstating criminal penalties is necessary to incentivize people to enter treatment.
In an attempt at compromise, the bill’s criminal penalty provisions will expire on July 1, 2023, again leaving Washington without a law against drug possession. The sunset clause is meant to give lawmakers time to craft a more permanent replacement or surrender the issue to local jurisdictions. In the meantime, the state will assemble an advisory committee to develop recommendations on how to best ensure that people with substance use disorder receive care.
It rejects the felony model that does not work & focuses on diverting those with substance use disorder into treatment. Makes possession a simple misdemeanor for the next 2 yrs while #WA builds out our behavioral health system & works to find the best path forward. #waleg 2/2
— WA House Democrats (@WAHouseDems) April 24, 2021
An amended version of the bill, SB 5476, passed the House of Representatives on a 80–18 vote on Saturday. Later that evening, the Senate accepted the House-amended version and voted 26–23 to send the final bill to Gov. Jay Inslee (D) for his signature.
“This bill is not an ideal solution, but it is a thoughtful step forward,” sponsor Sen. Manka Dhingra (D) said in a statement following the measure’s passage. “It achieves three important goals. First, it establishes a statewide approach to addressing drug possession. Second, it prioritizes and funds treatment for substance use disorder. And third, it provides us the time to come up with a public health approach to substance use disorder that relies on best practices and access to treatment that takes into account equity.”
Watch the Senate floor debate and final passage of the bill:
Dhingra initially introduced the bill with language that would have removed all penalties for possession of small, “personal use” amounts of controlled substances, with people instead diverted to an evaluation and possible treatment for substance use disorder. But the Senate stripped out that provision last week and replaced it with a gross misdemeanor charge, which carries up to a year in jail—a move that caused Dhingra to vote against her own bill as amended.
A House committee later reduced the penalty to a simple misdemeanor, which carries up to 90 days in jail and a maximum $1,000 fine.
While the simple misdemeanor remains in the final legislation, most people aren’t expected to see criminal charges for their first few offenses. As passed, SB 5476 requires law enforcement to recommend people to a behavioral health assessment for their first two violations, with the possibility for further diversion after that.
To fund the expanded outreach, treatment and recovery services, an amendment passed on the House floor sets aside nearly $100 million in funding, including earmarking $45 million to establish a “recovery navigator” program, which would provide community-based treatment and long-term case management for people with substance abuse disorder. Among other appropriations, it would also use $12.5 million to establish an outreach program for unhoused people, $5 million to expand efforts to provide opioid use disorder medication in jails and $4.5 million to expand the state’s therapeutic court model to local courts, which have jurisdiction over most misdemeanor cases.
"Our work is not done, but this bill invests in what we know we need, an approach to substance use disorder that treats all our neighbors with the dignity and compassion they deserve." – Rep. Kirsten Harris-Talley on the House striker to SB 5476 #waleg pic.twitter.com/YI2d2YTqv9
— WA House Democrats (@WAHouseDems) April 24, 2021
Another amendment adopted on the House floor came from Rep. Lauren Davis (D), who earlier this year introduced a separate bill, HB 1499, to decriminalize drug possession and expand treatment. Her change specifies the composition of the state’s substance use recovery advisory committee—which would include a elected officials, substance use disorder experts, treatment and recovery providers, law enforcement, an antiracism expert, a tribal representative and people living with substance use disorders—and requires that the group submit a preliminary report by the end of the year.
A House amendment from Rep. Roger Goodman (D) made a number of changes. One moved the new system’s point of diversion farther upstream, requiring that law enforcement—not prosecutors—refer people to treatment. That, he said, will prevent most people caught with drugs from being booked into jails or charged.
A more notable change in Goodman’s amendment modified the bill’s expiration provisions. An earlier version of the bill would have automatically replaced the misdemeanor penalty in 2023 with a Class 2 civil infraction, which carries a $125 fine and no possibility of jail time. Goodman’s amendment specified that instead the misdemeanor penalty would simply dissolve.
Some drug reform advocates initially read the proposal as a step to further criminalize drug possession. Treatment First WA, a coalition of groups that support decriminalization, sent an action alert to its followers urging opposition to the amendment, which it said “would return Washington to exactly the same failed and racist War on Drugs policies in place today.”
The ACLU of Washington posted a similar action alert against the amendment.
We can’t go back to the War on Drugs.
Tell your legislator to pass a version of ESB 5476 that stops treating people like criminals for drug use and substance use disorder.https://t.co/o7fxwPp263
— ACLU of Washington (@ACLU_WA) April 24, 2021
Goodman told Marijuana Moment in an interview Saturday night that he felt those criticisms were mistaken. The law would not revert to criminal penalties, he stressed, but to what it is today—with no law against drug possession in place.
“It does not sunset to criminalization,” Goodman said. “That’s absolutely incorrect.”
Watch the House floor debate on and passage of SB 5476, around 6:00 into the video below:
Goodman, a longtime drug reformer, believes that expiring the prohibition on drug possession entirely will encourage his colleagues to revisit the issue and craft a more durable policy. He’s betting that after reforms in SB 5476 take place, and as the legislature begins to hear back from the new advisory committee, skeptics of reform will be more willing to accept a more treatment-focused approach.
“The conversation on the failure of the drug war only keeps going the same direction. We’re almost at the tipping point now where we are at a completely new paradigm,” he said, noting that he’s heard support for reform from both Republicans and police, groups who often oppose easing criminal penalties. “Two years from now, that conversation will mature further and be even more progressive. The voters and the legislators and the public will be moving that direction. We have to go slow and steady, unfortunately.”
Goodman acknowledged that there’s some risk to his proposal. “The legitimate concern is that in 2023, the legislature won’t act, or the legislature’s makeup will be different and the will to act won’t be there,” he said. “I think it’s not likely that the legislature will fail to act.”
But if the House had sent the bill back to the Senate with the misdemeanor set to expire into a civil infraction, he added, senators would’ve rejected it.
He described the final version of SB 5476 as “the best we could do in the raw politics and vote counting, and I think it’s a step in the right direction.”
Goodman told Marijuana Moment last week that with the state legislative session set to end Sunday, there would be no time for the Senate to do anything but either concur with or reject the House version of the bill, “so we are having to confer closely with the Senate to see what they are willing to pass.”
If SB 5476 were to fail, the state would continue on without a drug possession law on the books following the court ruling—but also without the nearly $100 million in additional funding for treatment or any tools to compel people to seek help. While votes fell largely along party lines on Saturday, both Democrats and Republicans in recent weeks have said it was essential the legislature pass a law to fill the hole left by the Supreme Court decision.
On the Senate floor, however, GOP members balked at the House’s amendment to downgrade the possession penalty from a gross misdemeanor to a simple misdemeanor, saying that sometimes it’s necessary to use the threat of incarceration to force people to get treatment they might not otherwise seek.
“You have to give them the stick and not the carrot here, because they’re not going to take that option, they don’t have the capability of making that decision,” said Sen. Lynda Wilson (R).
On the House side, GOP representatives introduced a number of amendments that would have increased penalties, including a pair of amendments brought during floor debate that would have increased returned the simple misdemeanor to a gross misdemeanor, as the Senate had passed it earlier in the week, but House Democrats rejected those changes.
While some Democrats lamented the return to criminal penalties under the bill, they generally supported its passage. They pointed out that decades of criminalizing drug use has failed to meaningfully reduce either use or the negative consequences of substance abuse disorder. It’s also led to disproportionate arrests, prosecutions and incarceration of Black, brown and Indigenous people
“Decades of putting people in jail for drug offenses has been a failure,” Rep. Jamila Taylor (D) said in a statement. “The system today hurts those it should be helping, and it is time for change. Change that puts people in treatment instead of prison.”
Rep. Davis, who repeatedly stressed the need for more investment in outreach and recovery services during hearings on her decriminalization bill, said the new bill represents “the first time in state history that we have ever made substantial improvements in the outreach services that connect people to care on the front end and recovery support services on the back end that help them achieve long-term recovery.”
Because it contains an emergency clause, the bill would take effect immediately upon being signed by Gov. Inslee. He’s politically aligned with many of the bill’s supporters but has not yet indicated publicly whether he intends to sign it. A spokesperson for Inslee told Marijuana Moment on Sunday that the governor’s office had “not received it and staff have not had time to review it for final recommendation.”
State Attorney General Bob Ferguson (D), meanwhile, recently jumped into the fray, urging lawmakers on Thursday “to reject criminal penalties for non-commercial drug possession.”
— Washington State Attorney General (@AGOWA) April 20, 2021
Washington voters, for their part, are generally supportive of decriminalization, according to a statewide poll commissioned by reform advocates and released earlier this month. Fifty-nine percent of those surveyed said lawmakers should use the state Supreme Court decision to “reconsider and replace past drug possession laws with more effective addiction and treatment alternatives,” while only 35 percent favored making a technical change to return to the past system.
Nearly three in four voters (73 percent) said the state’s approach to problematic drug use has been a failure. Just nine percent called it a success.
Some reform advocates have floated the possibility of decriminalizing drugs in Washington through a ballot initiative similar to the one passed in Oregon. HB 1499, the decriminalization measure introduced earlier this session, was itself an offshoot of an effort by Treatment First Washington to put an initiative on last year’s ballot. That campaign, however, was scuttled after the COVID-19 pandemic interrupted signature-gathering.
Outside the Pacific Northwest, lawmakers in both Maine and Vermont have recently unveiled legislation to decriminalize small amounts of controlled substances. Last month, a Rhode Island Senate committee held a hearing on legislation that would end criminal penalties for possessing small amounts of drugs and replace them with a $100 fine. And in New Jersey, Gov. Phil Murphy (D) recently said he’s “open-minded” on decriminalizing all drugs.
In California, a bill that would legalize possession of a wide range of psychedelics passed its second Senate committee earlier this month.
IRS Official Offers Tax Advice To Marijuana Businesses And Says Feds Expect Industry To Keep Growing
The Internal Revenue Service (IRS) says it expects the marijuana industry to continue to grow, and it’s offering some tips to cannabis businesses on staying compliant with taxes while the plant remains federally prohibited.
In a blog post on Monday, IRS’s De Lon Harris said that the “evolving and complex issue my organization has been focused on is the tax implications for the rapidly growing cannabis/marijuana industry.”
“The specific rules and regulations regarding how [marijuana] is taxed at the federal level provides the IRS an opportunity to promote voluntary compliance, not only through audits, but also through outreach and education,” he said, noting the rapid expansion of state-legal cannabis markets. “And while there are 14 states that still ban cannabis use, we expect both unlicensed and licensed marijuana businesses to grow.”
“It’s tricky from a business perspective, because even though states are legalizing marijuana and treating its sale as a legal business enterprise, it’s still considered a Schedule 1 controlled substance under federal law,” Harris wrote. “That means a cannabis/marijuana business has additional considerations under the law, creating unique challenges for members of the industry.”
The official, who serves as commissioner of IRS’s Small Business/Self Employed (SB/SE) Examination division, recognized that the status quo means that marijuana businesses are forced to operate on a largely cash-only basis, and federal prohibition also means that companies in the sector are precluded to taking key tax deductions.
However, while the tax statute known as 280E means the industry is ineligible for most federal tax deductions and credits, he noted that marijuana firms “can deduct their cost of goods sold, which is basically the cost of their inventory.”
“What isn’t deductible are the normal overhead expenses, such as advertising expenses, wages and salaries, and travel expenses, to name a few,” Harris said. “I understand this nuance can be a challenge for some business owners, and I also realize small businesses don’t always have a lot of resources available to them.
The official previewed a new “Cannabis/Marijuana Initiative” the agency is launching that will provide specific job training to tax officials to effectively carry out audits within the industry, ensure that there’s consistency in the IRS’s policy for cannabis, work with stakeholders to ensure tax compliance and help to identify non-compliant businesses.
“I’m very focused on the success of this strategy because it’s very important for business owners to understand that under our nation’s tax laws, and specifically Internal Revenue Code 61, all income is taxable, even if someone is running a business that’s considered illegal under federal law,” he said. “This is a truly groundbreaking effort for our agency.”
“Our strategy is not limited to pushing information out via our website in the hope that business owners will find it. I’ve made it a priority for my SB/SE organization to engage with the cannabis/marijuana industry through speaking events and other outreach. I have done three of these types of events over the last year, and what I have heard is a genuine desire to comply with the tax laws regarding the industry. Through this extended outreach, we hope to help small business owners and others fully understand the unique tax rules before there are any compliance issues.”
“Since the unique circumstances of the cannabis industry can make tax preparation challenging, I hope that new and experienced business owners take my advice in this post and use our resources to ensure they understand their tax obligations and avoid penalties associated with non-compliance,” the blog post concludes. “We’re always here to help with tools, information and guidance.”
This is yet another signal that while marijuana remains federally illegal, agencies are increasingly recognizing that a policy shift is happening in states and may well be on the horizon at the congressional level.
As leadership in the House and Senate work to advance legislation to deschedule cannabis, lawmakers have also pushed to enact clear, statutory protections for financial institutions that work with state-legal marijuana businesses. And that would be accomplished through House-passed standalone legislation, or an amendment that was attached to a defense spending bill this week.
In the interim, 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. FinCEN released a report last week showing that there were 706 financial institutions that said they were actively serving cannabis clients as of the last quarter.
IRS separately hosted a forum last month dedicated to tax policy for marijuana businesses and cryptocurrency.
The seminar, which was presented by a representative of the National Association of Tax Professionals (NATP), examined issues such as allowable tax deductions while cannabis remains federally illegal and how different states approach taxing marijuana. It also covered issues related to paying taxes on earnings in Bitcoin and other forms of digital currency.
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.”
Harris’s predecessor at IRS SB/SE also participated in an informational webinar in December, offering candid insights on a variety of cannabis industry issues from the federal perspective.
Massachusetts Lawmakers Discuss Drug Decriminalization And Safe Injection Sites At Hearing
Massachusetts lawmakers on Monday heard testimony on separate proposals to decriminalize drug possession and establish a pilot program for safe injection facilities where people could use illicit substances in a medically supervised environment to prevent overdose deaths and facilitate treatment.
The state legislature’s Joint Committee on Mental Health, Substance Use and Recovery held a hearing on the harm reduction proposals, with experts and people personally impacted by substance misuse advocating for new approaches to drugs that destigmatize addiction and offer people resources outside of a criminal justice context.
The decriminalization bill would replace criminal penalties for the possession of any controlled substance with a civil fine of up to $50. To avoid the fine, individuals could enroll in a “needs screening to identify health and other service needs, including but not limited to services that may address any problematic substance use and mental health conditions, lack of employment, housing, or food, and any need for civil legal services.”
For the safe injection site legislation, the state would establish a 10-year pilot program where at least two facilities would “utilize harm reduction tools, including clinical monitoring of the consumption of pre-obtained controlled substances in the presence of trained staff, for the purpose of reducing the risks of disease transmission and preventing overdose deaths.”
A separate, less far-reaching bill that was added to the agenda in a late addition would direct the Department of Public Health to simply “evaluate the feasibility” of safe consumption sites and then report back to lawmakers by July 31, 2022..
The joint committee listened to academics, health professionals, lawmakers discuss the reform proposals but did not take immediate action on any of the legislation. It’s unclear when the bills will be taken up again for further consideration.
“By every metric, the war on drugs has been a catastrophic failure,” Rep. Mike Connolly (D) said. “In the United States and here in Massachusetts, the criminalization of drug possession is a major driver of mass incarceration. We know that black people have been incarcerated at a rate eight times higher than white people, and there’s no question that the criminalization of substance use issues has contributed to these terrible disparities.”
Connolly is also the sponsor of legislation that received a Joint Judiciary Committee hearing in July on studying the implications of legalizing psychedelics like psilocybin and ayahuasca.
Officials with at least one Massachusetts city, Somerville, said that there are plans in the work to launch a safe injection facility in the jurisdiction. And they want to see the statewide bill pass to provide additional protections against being federally penalized.
“State legislation, wielding its constitutionally granted powers to enact laws for public health and safety, has the ability to greatly minimize these risks through legislation authorizing a pilot of safe consumption sites,” Hannah Pappenheim, assistant city solicitor at the City of Somerville, said. “In addition, state legislation would also minimize the risk of costly—but more importantly, lengthy—litigation.”
The official noted that a separate, Pennsylvania-based case on the legality of safe injection sites has been ongoing in federal courts for years at this point.
A coalition of 80 current and former prosecutors and law enforcement officials—including one who is President Joe Biden’s pick for U.S. attorney of Massachusetts—recently filed a brief urging the Supreme Court to take up the case.
Xavier Bacerra, the Biden administration’s secretary of health and human services, was among eight top state law enforcement officials who filed an earlier amicus brief in support of the Philadelphia-based Safehouse’s safe injection site plan when he served as California’s attorney general.
“State legislation paves the way for a more expedient process in Somerville, and of course elsewhere in the Commonwealth,” Pappenheim said.
Somerville Mayor Joseph Curtatone (D) said at Monday’s hearing that “it’s important for Massachusetts to finally lead—not just compiling, but implementing a strategy that reduces harm and save lives.” He conceded that he previously opposed the concept of allowing safe consumption sites; but his personal experience knowing people in his immediate family who suffered from addiction—as well as his own review of the scientific literature on harm reduction alternatives to criminalization—led him to embrace the reforms.
Massachusetts lawmakers advanced similar legislation last year, but it was not ultimately enacted.
The governor of neighboring Rhode Island signed a bill in July to establish a safe consumption site pilot program where people could test and use currently illicit drugs in a medically supervised environment. It became the first state in the country to legalize the harm reduction centers. It’s not clear whether the Department of Justice will seek to intervene to prevent the opening of such facilities in that state.
Oamshri Amarasingham, deputy legislative director of the ACLU of Massachusetts, voiced support for both reform proposals at Monday’s hearing and told WGBH that establishing a safe injection site pilot program “is one piece of that puzzle” that is “critically important and that’s had great success in other countries.”
The ACLU has long supported shifting to a #PublicHealth approach to drug policy rather than a criminal one…
— ACLU Massachusetts (@ACLU_Mass) September 27, 2021
Shaleen Title, a former Massachusetts cannabis commissioner who now heads the Parabola Center, juxtaposed how laws handle substances like caffeine, alcohol and nicotine differently from currently illegal drugs.
“What separates that from when we have these illicit drugs, where handcuffs and cages are involved, and what led that to be? The reason has nothing to do with science, or evidence or the relative dangers of those drugs,” she said. “The reason is because—and this is well-documented—those drugs could be scapegoated and blamed on their association with indigenous and Indian and Mexican and Chinese and other cultures, and then used to target communities of color, particularly black and Latino people nationally and here in Massachusetts.”
At the same time that Massachusetts legislators are looking into harm reduction and broad drug decriminalization, local activists in the state have also been pursuing psychedelics reform.
Three Massachusetts cities—Northampton, Somerville and Cambridge—have each passed resolutions to deprioritize enforcement of laws against the possession, use and distribution of a wide range of psychedelics and other drugs. The Easthampton City Council is also exploring a resolution to decriminalize a wide range of entheogenic substances, with a meeting set for Friday.
Marijuana Arrests Dropped Sharply In 2020 As Both COVID And Legalization Spread, FBI Data Shows
Marijuana arrests declined significantly in 2020 amid the coronavirus pandemic, newly released FBI data shows.
There were 1,155,610 drug-related arrests overall last year, with cannabis sales and possession busts accounting for just over 30 percent (or 350,150) of those cases. The vast majority were for marijuana possession alone.
The agency’s data shows that there was a cannabis arrest every 90 seconds in the country in 2020, and there was a drug-related arrest every 27 seconds.
While these figures still highlight the rampant, ongoing criminalization of cannabis in states across the U.S., it’s a substantial deescalation compared to 2019, when FBI reported a total of 545,601 marijuana arrests. That amounted to a cannabis bust every 58 seconds.
Put another way, there was a 36 percent decrease in cannabis cases from 2019 to 2020. And while the federal agency doesn’t attempt to explain the statistical shift, there are a number of factors that could help explain it.
One of the more obvious societal changes during that timeframe is the COVID-19 health crisis, which involved social distancing requirements and generally discouraged people from being out in public where they might be at higher risk of being arrested for simple possession.
But advocates have also pointed out that the marijuana reform movement could be playing a role. Illinois’s adult-use cannabis law took effect at the beginning of 2020, for example. Hawaii, New Mexico and North Dakota also enacted decriminalization of marijuana possession in 2019, and Virginia followed suit the next year.
In Arizona, limited cannabis possession was legalized for adults starting on November 30, 2020 following voter approval of a reform initiative earlier that month.
“As more states move toward the sensible policy of legalizing and regulating cannabis, we are seeing a decline in the arrest of non-violent marijuana consumers nationwide,” NORML Executive Director Erik Altieri told Marijuana Moment. “The fight for legalization is a fight for justice. While these numbers represent a historic decline in arrests, even one person being put into handcuffs for the simple possession of marijuana is too many.”
Despite the decline in cannabis busts, the new data shows that American law enforcement still carried out more arrests for marijuana alone last year than for murder, rape, robbery, burglary, fraud and embezzlement combined.
It should be noted that not all local police participate in FBI’s reporting program, so these figures are not holistic and are estimates the agency makes based on those that do submit data.
The country had seen a consistent decline in cannabis arrests for roughly a decade prior to 2016, when those cases started to rise up until 2019.
Observers expect to see the downward trend in cannabis busts continue as more states move to end prohibition and law enforcement deprioritizes marijuana-relate cases. In New York, for example, police received new guidance this year stipulating that adults 21 and older can possess certain amounts of marijuana and consume it in places where tobacco use is permitted.
That directive alone seems to have led to a dramatic decrease in cannabis arrests in New York City.
Federal marijuana trafficking cases also continued to decline in 2020 as more states have moved to legalize, an analysis from the U.S. Sentencing Commission (USSC) that was released in June found.
Federal prosecutions of drug-related crimes overall increased in 2019, but cases involving marijuana dropped by more than a quarter, according to an end-of-year report released by Supreme Court Chief Justice John Roberts in December.
A study released by the Cato Institute in 2018 found that “state-level marijuana legalization has significantly undercut marijuana smuggling.”