A key House committee has scheduled a Wednesday hearing to advance a bill to federally legalize marijuana toward a full floor vote, which could then happen as soon as Thursday. Meanwhile, leaders in the chamber are proposing an amendment that would make several changes to the cannabis legislation.
Among the most significant revisions would be to the tax-related provisions of the bill.
The Rules Committee’s move to take up the Marijuana Opportunity, Reinvestment and Expungement (MORE) Act follows Majority Leader Steny Hoyer (D-MD) announcement that the chamber would be holding a floor vote on the bill before the end of the year.
The Committee on Rules will meet Wednesday, December 2 at 1:00 PM via Cisco Webex on the following measure:
H.R. 3884 — Marijuana Opportunity Reinvestment and Expungement Act of 2019 (MORE Act of 2020) pic.twitter.com/jlNrCLj0K9
— House Committee on Rules (@RulesDemocrats) November 30, 2020
Judiciary Committee Chairman Jerrold Nadler (D-NY), the lead sponsor of the bill, transmitted it to Rules with the series of modifications—many of them technical in nature. But beyond the tax changes, the newly proposed language also reaffirms the regulatory authority of certain federal agencies such as the Food and Drug Administration (FDA) and clarifies that cannabis can still be included in drug testing programs for federal workers.
Other members of the House are likely to file proposed amendments as well, though the Democratic majority of the Rules panel will determine which ones can be made in order for floor votes later this week.
As originally drafted, the legislation would have imposed a five percent tax on marijuana products, revenue from which would be used in part to fund a grant program to support communities disproportionately impacted by the war on drugs. In Nadler’s amendment, that language is being removed and replaced with text that more closely reflects a separate descheduling bill, the Marijuana Revenue and Regulation Act.
The modified tax provisions of the MORE Act would make it so cannabis would be federally taxed at five percent for the first two years after implementation and then increased by one percent each year until reaching eight percent. After five years, taxes would be applied to marijuana products based on weight rather than price.
At its core, the MORE Act would federally deschedule cannabis from the Controlled Substances Act and expunge the records of those with prior marijuana convictions. The descheduling provisions would be retroactive.
The bill would also create a pathway for resentencing for those incarcerated for marijuana offenses, as well as protect immigrants from being denied citizenship over cannabis and prevent federal agencies from denying public benefits or security clearances due to its use.
A new Cannabis Justice Office under the Justice Department would be responsible for distributing funds providing loans for small cannabis businesses owned and controlled by socially and economically disadvantaged individuals. The bill also seeks to minimize barriers to licensing and employment in the legal industry.
While the bill still calls for the establishment of a Community Reinvestment Grant Program, the new leadership amendment would remove a line calling for it to specifically fund “services to address any collateral consequences that individuals or communities face as a result of the War on Drugs.”
Tax dollars appropriated to that program would instead more generally go to job training, legal aid for criminal and civil cases such as those concerning marijuana-related expungements, literacy programs and youth recreation and mentoring services, among other programs.
The definition of people impacted by the drug war who could be eligible for aid is also being changed to narrow the scope. At first it included those who have “been arrested for or convicted of the sale, possession, use, manufacture, or cultivation of cannabis or a controlled substance,” but now it only extends to marijuana and not other illicit drugs.
Other changes included in Nadler’s latest revision include one requiring FDA and the U.S. Department of Health and Human Services (HHS) to hold public meetings on “regulation, safety, manufacturing, product quality, marketing, labeling, and sale of products containing cannabis or cannabis-derived compounds” within one year of the bill’s enactment.
The language is also being updated to reflect the current number of states where marijuana is legal for medical or recreational purposes, clarify that FDA and HHS maintain their authorities to regulate cannabis products and stipulate that federal agencies can continue to include cannabis in employee drug testing. A conforming amendment would clarify that the U.S. Department of Transportation could continue to require drug testing for workers in safety sensitive positions.
The revised version also stipulates that funding can be made available to “connect patients with substance use disorder services” and apply to “individuals who have been arrested for or convicted of the sale, possession, use, manufacture, or cultivation of a controlled substance other than cannabis (except for a conviction involving distribution to a minor).”
The proposal also deletes from the definition of substance misuse treatment language stating that it would be an “evidence-based, professionally directed, deliberate, and planned regimen including evaluation, observation, medical monitoring, harm reduction, and rehabilitative services and interventions such as pharmacotherapy, mental health services, and individual and group counseling, on an inpatient or outpatient basis, to help patients with substance use disorder reach remission and maintain recovery.”
There are also a number of technical and conforming changes in the proposal, as well as the removal of the word “most” from “individuals most adversely impacted by the War on Drugs” when it comes to determining eligibility for the new programs and services created by the legislation.
In a new report on the bill that was submitted by the Democratic majority in Judiciary, members said cannabis enforcement “has been a key driver of mass criminalization in the United States” and the “drug war has produced profoundly unequal outcomes across racial groups, manifested through significant racial disparities throughout the criminal justice system.”
“The higher arrest and incarceration rates for communities of color do not reflect a greater prevalence of drug use, but rather the focus on law enforcement on urban areas, lower income communities, and communities of color,” they wrote.
Further, the “collateral consequences of even an arrest for marijuana possession can be devastating, especially if a felony conviction results.”
“Those arrested can be saddled with a criminal conviction that can make it difficult or impossible to vote, obtain educational loans, get a job, maintain a professional license, secure housing, secure government assistance, or even adopt a child,” the report states. “These exclusions create an often-permanent second-class status for millions of Americans. Like drug war enforcement itself, these consequences fall disproportionately on people of color. For non-citizens, a conviction can trigger deportation, sometimes with almost no possibility of discretionary relief.”
Rep. Jim Jordan (R-OH), GOP ranking member on the panel, wrote the minority opinion in the report.
He argued that the MORE Act “disregards established science” and “would open the floodgates to marijuana cultivation, distribution, and sale within the United States—allowing bad actors and transnational criminal organizations to further exploit America’s addiction crisis.”
The congressman complained that the legislation—which he called “an extreme and unwise measure”—wouldn’t impose limits on THC concentration or ban flavored cannabis products, and he said it “fails to funnel any tax revenue towards a public awareness campaign to discourage teen use of marijuana, modeled on successful anti-tobacco campaigns.”
He also claimed it “does nothing to help the Federal government and scientific community to understand the effects of marijuana usage.”
Vice President-elect Kamala Harris (D-CA) is the lead sponsor of the Senate companion version of the MORE Act.
One provision of the bill requires that any uses of the words “marijuana” or “marihuana” in U.S. Code or regulations be replaced with the term “cannabis”—despite the fact that the legislation has “marijuana” in its own title.
The Congressional Research Service released an analysis of the MORE Act last week, finding that the bill’s passage could “reverse” the current cannabis policy gap that exists between states and the federal government.
That’s because the bill does not require states to stop criminalizing cannabis, and so jurisdictions with prohibition still on the books could continue to punish people over marijuana even as such activity is legalized at the federal level.
Even if the legislation does pass in the Democratic-controlled chamber, as it’s expected to with some bipartisan support, it remains unlikely that the Senate will follow suit. Majority Leader Mitch McConnell (R-KY) is a champion of the hemp industry but staunchly opposes further marijuana reform.
That said, a symbolic vote for legalization could send a strong signal to the incoming Biden administration.
Given Biden’s former approach to championing punitive anti-drug legislation as a senator and his ongoing obstinance on marijuana legalization at a time when polls show that a clear majority of Americans favor the policy change, there remains some skepticism about his willingness to make good on his campaign promises to achieve more modest reforms he has endorsed, such as decriminalizing possession and expunging records.
A transition document the incoming Biden-Harris administration released this month left out mention of those cannabis pledges.
That said, the president-elect has conceded that his work on punitive anti-drug legislation during his time in Congress was a “mistake.”
For his part, Rep. Earl Blumenauer (D-OR) told Marijuana Moment in August that “the Biden administration and a Biden Department of Justice would be a constructive player” in advancing legalization.
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: