The COVID-19 pandemic and subsequent recession powerfully demonstrated that the cannabis industry is providing essential medicine and products to countless Americans, as well as creating jobs and tax revenue. Retail sales of medical and adult-use cannabis in the United States were on pace to eclipse $15 billion by the end of 2020, and if you include ancillary products and services, the industry is estimated to reach $68.4 billion in 2021. The U.S. cannabis industry is experiencing rapid job growth, boasting an estimated 300,000 full-time jobs in 2020. Those numbers are expected to almost double by 2024. Over the next four years, the industry is expected to add nearly 250,000 full-time equivalent positions. By comparison, roughly 271,000 people currently hold beverage manufacturing jobs. These numbers demonstrate with sureness that the U.S. cannabis industry is on a high-growth trajectory, which makes it imperative that the market operate under a practical regulatory framework that benefits both regulators and operators.
Most states that have approved some form of legal cannabis sales (medical and/or adult-use) have also selected a single, mandated technology platform that all operators must use to track and trace their cannabis seeds, plants, and end products. Some iterations of the current track and trace model — which is primarily centralized approach — sets businesses, employees, and regulators up to fail. Of course, it also further limits the competitiveness of the regulated market with the unregulated market, and the ability for policymakers to be confident that cannabis consumers in their states are obtaining taxed, tested, and regulated products.
Local governments are missing out on tax revenue, and businesses (both large and small) are forced to spend unnecessary resources on a system that is fundamentally flawed. The centralized model, contracting with one specific software provider, and mandating operators to use that software provider in order to stay compliant, is wreaking havoc on the entire U.S. cannabis industry and is not sustainable for a federally-legal and global supply chain.
As a team, the National Cannabis Industry Association’s State Regulations Committee’s Technology and Compliance Subcommittee has spoken to regulators, operators, and international technology providers in the interest of presenting a practical track and trace solution to benefit the industry as a whole. This is the first blog in a series that will highlight the issues that cannabis operators and regulators are facing because of the current centralized state-mandated track and trace model. We propose that the U.S. cannabis industry operate under a more practical framework that has a higher probability of success for regulators and cannabis businesses through slight changes and improvements based on proven best practices.
The History of Track and Trace in the U.S. Cannabis Industry
Track and trace systems serialize assets to identify where assets are (track) and to identify where assets have been (trace). Track and trace is not something new. It is the globally acknowledged standard for product movement and reconciliation in both the Pharmaceuticals and Consumer Packaged Goods (CPG) industries. A secure track and trace system combines material security and information security elements to confirm assets are legitimately produced and sourced, following a pre-defined and auditable path.
As the regulated cannabis markets started to take shape and mature in 2012, one of the driving factors that shaped the need for a track and trace system was the 2013 U.S. Department of Justice Cole Memorandum (Cole Memo). The Cole Memo indicated for the first time that the federal government would only intervene in states that failed to prevent criminal involvement in the market, sales to youths, and illegal diversion to other states.
The first four states to legalize adult-use cannabis were Colorado, Oregon, Washington, and Alaska. All four of these states instituted a market-based licensing system to regulate the commercial activity of cannabis sales. The intentions of the newly instituted policies were two-fold: protect consumer health and minimize diversion, both of which align with the core principles of the Cole Memo. To meet these intentions, the states instituted procedures for inventory control and tracking documentation using a state-mandated centralized model, in an effort to create a transparent and controlled system of oversight within the cannabis industry.
As the industry has developed over the years, most states that have approved some form of legal cannabis sales have selected a single mandated technology platform that all operators must use to track and trace their cannabis seeds, plants, and cannabis products. As shown in Figure 1, the majority of legalized states have chosen METRC as their exclusive contractor of track and trace services.
A Scalable and Sustainable Track and Trace Solution
The legal cannabis market has changed significantly since 1996 and it is important for the industry to re-evaluate the intention and implementation of track and trace. Regulatory bodies contracting with one track and trace technology provider and mandating operators to use that specific provider in order to stay compliant is problematic for many reasons. Time has shown that the current centralized model is fiscally irresponsible and ultimately counterproductive, with significant negative externalities, including ethical concerns such as anti-trust issues. Most recently, an Oklahoma cannabis operator (seeking class-action status) initiated litigation against the state’s Medical Marijuana Authority (OMMA), alleging that the state exceeded its authority by requiring licensees to pay for a state-mandated track and trace program, and that the state’s contract with METRC creates an unlawful monopoly, among other claims.
To provide an analogy, let’s think about how businesses are required to report taxes. The IRS sets out certain rules and every business must report their income and assets according to that framework. Technology providers (such as TurboTax, Tax Slayer, H&R Block, etc.) have built scalable products to support businesses in reporting their taxes. The IRS does not mandate that businesses use one single specified software in order to report their taxes. Doing so would kill competition, introduce a monopoly, and eliminate any incentive for the technology providers to improve their product. By the IRS allowing free competition over the realm of tax preparation and processing software, the public benefits from the technology companies being incentivized to update and improve their software features and benefits.
The centralized model is crippling the entire industry as system failures are occurring on a more frequent basis, and its after-effects are causing a more detrimental and wide-ranging impact as the industry grows at an exponential rate. Most recently, METRC’s integration functionality (how third-party business operations software communicates to the state’s system) was down for more than fourteen days in California, causing significant problems in the nation’s largest cannabis market. One software provider and its tag-producing partners are benefitting, while setting industry regulators and operators up to fail. One software provider cannot meet the current or future needs of regulators and operators, especially not on a national level. Meanwhile, there are many excellent software providers that specialize in track and trace. The free market should determine the most efficient and user-friendly approach to allow businesses to stay compliant and accurately report to the appropriate regulatory authorities.
By leveraging the knowledge and experience the industry has gained over the last 20 years, we can incorporate best practices from other industries’ and other markets’ track and trace systems, and set regulators and operators up for success.
Join us as we dive deeper into the issues surrounding compliance and track and trace in the cannabis industry. Our multi-part blog series provides an in-depth look into the technical shortcomings of the current centralized approach and provides a roadmap for implementing a distributed model approach. Some of the disadvantages we will cover in the subsequent posts include:
Impact of System Failure: The current centralized model provides a single point of failure: if the system goes down, all licensee operations must stop operating entirely. In some cases, operators may manually record activity during a system failure, and then manually enter the activity when the system resumes. This introduces a high risk of human error. No backup system or alternative means of recording through the use of technology exists since the state relies on only one system.
Challenges with Scalability: The history of performance with centralized track and trace systems demonstrates that there are significant challenges in scalability because of multiple system failures and shutdowns. The system would benefit from a more advanced track and trace capability, specifically with its API (Application Programming Interface). Many times it is not the technology of the licensee system, but the technology design of the state-mandated systems.
Fiscal and Environmental Impacts: Licensees are required to purchase plant and product tags from the single state-mandated vendor, which creates a fixed price system that is typically not in favor of a licensee. It is also creating a sustainability issue in the industry, as the plant and product tags are single-use. More operators are speaking up about the waste it is generating in our cannabis industry.
Interested in joining us in establishing an effective and scalable track and trace framework for regulators and operators in the legal cannabis space? Click here to stay updated on the State Regulations Committee, and the efforts that it’s Technology and Compliance Subcommittee are taking to improve and advance track and trace nationally. Let’s close the informational gap between operators and regulators, and help the entire industry move forward together.
Stay tuned for the next two blog posts in our multi-part series!
by Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
You may have seen this week that there were a number of Senate confirmation hearings, and cannabis was a topic of discussion in some! But what are confirmation hearings, and what happened in them this week?
In Article II, Section 2, Clause 2 of the Constitution is the Appointments Clause, which empowers the President to nominate and, with the advice and consent of the Senate, appoint public officials. In layman’s terms, advice and consent essentially means confirmation.
As of publication, cannabis was brought up before two nominees this week: Attorney General nominee Merrick Garland, and Deputy Secretary of Treasury nominee, Adewale Adeyamo.
On Monday, President Biden’s nominee for Attorney General, Merrick Garland, appeared before the Senate Judiciary Committee. Before this, Garland’s position on cannabis was relatively unknown — he had ruled in a 2012 federal lawsuit case over DEA’s denial of a marijuana rescheduling petition and was one of three judges in the U.S. Court of Appeals for the District of Columbia Circuit panel that upheld the denial.
However, Garland’s position on cannabis became more clear this week — at least in how he views the Department of Justice’s role in enforcement and arrest disparities. While before the Senate Judiciary Committee on Monday, Garland was asked about marijuana arrest disparities by notorious cannabis champion Sen. Cory Booker (D-NJ). Sen. Booker asked:
“One big thing driving arrests in our country is marijuana arrests. We had in 2019 more marijuana arrests for possession then all violent crime arrests combined. When you break out that data and segregate along racial lines it’s shocking that an African-American has no difference in usage or selling than someone who is white in America, but their likelihood of being arrested for doing things that two of the last four presidents admitted to doing is three to four times higher than somebody white. Is that evidence that within the system there is implicit racial bias, yes or no?”
Garland responded: “It is definitely evidence of disparate treatment within the system, which I think does arise out of implicit bias. Unconscious bias may be, sometimes conscious bias.”
As Sen. Booker continued to question Garland about bias in the criminal justice system, Garland proactively brought marijuana back up, saying:
“The marijuana example is a perfect example. Here is a nonviolent crime that does not require us to incarcerate people and we are incarcerating at significantly different rates in different communities. That is wrong and it’s the kind of problem that will then follow a person for the rest of their lives. It will make it impossible to get for — to get a job and will lead to a downward economic spiral.”
Garland later continued:
“We can focus our attention on violent crimes and other crimes that put great danger in our society and not allocate our resources to something like marijuana possession. We can look at our charging policies and stop charging the highest possible offense with the highest possible sentence.”
But that wasn’t the only time the likely-soon-to-be Attorney General talked about cannabis. Freshman Senator Jon Ossoff (D-GA) asked Garland about equal justice, and highlighted the fact that “Black Americans continue to endure profiling, harassment, brutality, discrimination in policing and prosecution, sentencing, and incarceration.” While responding as to how his Justice Department would combat this, Garland said:
“One important way I think is to focus on the crimes that really matter, to bring our charging and arresting on violent crime and others that deeply affect our society. And not have such an overemphasis on marijuana possession, for example, which has disproportionately affected communities of color and damaged them far after the original arrest because of the inability to get jobs.”
During the “lightning round” of questions, Sen. Booker brought cannabis up again — this time, about enforcement and the now-rescinded Cole Memo. The Senator asked Garland, “Do you think the guidance in the Cole Memorandum should be reinstated, that the Justice Department respects states’ decisions?” Garland responded:
“I do remember it and I have read it. This is the question or prioritization about resources and prosecutorial discretion. It does not seem to me a useful use of limited resources that we have to be pursuing prosecutions in states that have legalized and are regulating the use of marijuana either medically or otherwise. I don’t think that is a useful use.”
This was, without a doubt, the most “cannabis positive” response from an Attorney General nominee in history! But the Judiciary Committee wasn’t the only one curious about cannabis this week!
Next, we move to the Senate Finance Committee, where Deputy Secretary of the Treasury nominee Adewale Adeyamo was being questioned Tuesday. During this hearing, Sen. Catherine Cortez Masto (D-NV) asked, “Do you believe Treasury should seek to update FinCEN’s 2014 guidance on the Bank Secrecy Act’s expectations for financial institutions that provide services to cannabis related industries, and if so, what changes do you recommend?” Adeyamo responded:
“Senator, I look forward, if confirmed, to talking to my colleagues at Treasury about this important issue and thinking through what changes may be needed and doing this in a way that’s consistent with the agency and the President’s guidance. In doing that I look forward to consulting with you and members of this Committee on our path forward.”
To be blunt, this is a really big deal! These questions show that the upper chamber of Congress is taking cannabis policy seriously, and expects the topic to be taken up by various agencies over the next four years. You can continue to count on the NCIA team to keep you updated, advocate on your behalf, and work with Congress and the Biden Administration to create a flourishing, responsible, diverse, and equitable cannabis industry.
What To Watch: The Executive Branch Edition
by Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
Last week, I wrote about what to expect during the 117th Congress. This week, I want to highlight the incoming Biden Administration, and the various agencies and Cabinet officials that could affect cannabis policy going forward over the next four years.
The tradition of the Cabinet dates back to the beginnings of the Presidency itself. Established in Article II, Section 2, of the Constitution, the Cabinet’s role is to advise the President on any subject he may require relating to the duties of each member’s respective office. The Cabinet includes the Vice President and the heads of 15 executive departments — the Secretaries of Agriculture, Commerce, Defense, Education, Energy, Health and Human Services, Homeland Security, Housing and Urban Development, Interior, Labor, State, Transportation, Treasury, and Veterans Affairs, as well as the Attorney General.
Here’s my breakdown of the top three agencies I’ll be watching:
In February 2014, the Treasury Department issued guidance to clarify Bank Secrecy Act (BSA) expectations for financial institutions seeking to provide services to marijuana-related businesses. However, over the last seven years, the policy landscape surrounding cannabis has changed dramatically — at the time this guidance was issued, only Colorado and Washington had legalized adult-use cannabis. Now, there are 15 states plus the District of Columbia that allow for the adult-use of cannabis and 36 states with medical cannabis laws.
Incoming President Biden has nominated former Federal Reserve Chairwoman Janet Yellen for the post of Treasury Secretary. Though her position on cannabis is relatively unknown, it’s definitely possible that this guidance could be updated or expanded. Additionally, if the SAFE Banking Act is passed by Congress, the Treasury Department would then be in charge of ensuring that the implementation of that legislation goes smoothly.
Department of Justice (DoJ)
Here’s the big one everyone in cannabis will be watching: the Department of Justice. President Biden has selected Merrick Garland as his nominee for Attorney General, and everyone seems to be wondering the same thing: could there be a new “Garland Memo” ala the Cole Memo?
If you’ll remember, during the Obama Administration in 2013, the Department of Justice issued the Cole Memo, which outlined enforcement priorities for the Department as states were beginning to set their own cannabis policies. Under the Trump Administration, that memo was rescinded in January 2018 by then-Attorney General, Jeff Sessions.
It’s certainly possible that a Garland DoJ could unveil a new cannabis-related memo. Outside of enforcement priorities, the Department could also direct other agencies to reevaluate their policies around cannabis and housing, immigration, and the armed forces.
Small Business Administration (SBA)
In 2018, the Small Business Administration (SBA) came out with a notice to all employees and lenders that updated their policies surrounding marijuana businesses. They stated, “Because federal law prohibits the distribution and sale of marijuana, financial transactions involving a marijuana-related business would generally involve funds derived from illegal activity. Therefore, businesses that derive revenue from marijuana-related activities or that support the end-use of marijuana may be ineligible for SBA financial assistance.” They then went on to outline the ineligibility of direct and indirect marijuana businesses, as well as hemp-related businesses (this was pre-2018 Farm Bill) to participate in SBA programs.
This could all change under a Biden Administration, however. The President-elect has tapped Isabel Guzman as Small Business Administrator — she currently serves as the director of California’s Office of the Small Business Advocate. While her position on marijuana is unknown, I’m incredibly hopeful for reform under Guzman — her familiarity with small businesses in California means she is surely well informed on the struggles the cannabis industry faces.
These are just a few of the agencies that I’m watching, but there are many others to keep an eye on: the Veterans Administration, Health and Human Services, and FDA, just to name a few. And, as always, NCIA will be working to advance positive reforms within the executive branch at every opportunity.
Video: NCIA Today – Special Episode with NCIA’s Michael Correia On The Historic MORE Act House Vote
Join NCIA Deputy Director of Communications Bethany Moore and our Government Relations Director Mike Correia for a quick discussion about last week’s historic passage of the MORE Act.
On Friday, December 4, the House of Representatives made history by voting to approve H.R. 3884, the Marijuana Opportunity, Reinvestment, and Expungement (MORE) Act.
The MORE Act would remove marijuana from the federal Controlled Substances Act and work to repair the social and personal harms caused by federal marijuana enforcement. This is the first time since marijuana was made federally illegal that either chamber of Congress has held a floor vote on- or approved- a bill to make the substance legal again.
The final vote count of 228-164 fell mostly along party lines, with five Republicans crossing the aisle to support, and six Democrats voting to oppose.
This monumental victory shows just how far Congress has come over the years. Although this vote more closely aligns the House of Representatives with the majority of voters who overwhelmingly support cannabis legalization, the Senate is a different story.
Looking Back On #10YearsOfNCIA: 2018-2019
by Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
Over the last several weeks, I’ve been taking a retrospective look at the progress NCIA has made in the ten years since its inception. This is our last installment, detailing 2018-2019, and brings us up to 2020 (the year that shall not be spoken of). While this timeline is by no means a comprehensive look at everything that’s happened in cannabis policy during those years, here are some highlights:
On January 4, 2018, then-Attorney General Jeff Sessions declared in a one-page memo that he had rescinded the Cole Memo, a similar memo related to cannabis activity on tribal land, and two other older memos. Sessions directed U.S. Attorneys to instead “follow the well-established principles that govern all federal prosecutions,” which require federal prosecutors to “weigh all relevant considerations, including federal law enforcement priorities set by the Attorney General, the seriousness of the crime, the deterrent effect of criminal prosecution, and the cumulative impact of particular crimes on the community.”
This month was filled with the political fallout of the rescission of the Cole Memo. First, a letter was written by the U.S. Treasury Department’s assistant secretary for legislative affairs to Congress that said, “We are reviewing the [cannabis banking] guidance in light of the Attorney General’s announcement [to rescind the Cole Memo] and are consulting with law enforcement”. Then, following Sen. Gardner’s (R-CO) decision to block the Department of Justice’s nominees over the rescission of the Cole Memo in January, he released his holds on nominees for U.S. attorneys in a dozen federal districts and U.S. marshals in every district. Holds continue on the nominations of seven top Department of Justice nominees.
In March, Attorney General Sessions spoke at an event where he acknowledged that the Department of Justice cannot use its limited resources to enforce cannabis prohibition against everyone who violates federal marijuana laws. He said, “We’re not going to be able, even if we desired, to take over state enforcement of routine cases that might occur.”
The Trump administration officially began accepting online comments about whether marijuana should be rescheduled under international agreements. That same month, U.S. Senate Majority Leader Mitch McConnell (R-KY) filed a hemp legalization bill.
The U.S. Small Business Administration (SBA) quietly issued a document saying that businesses that work with the marijuana industry aren’t eligible for federally backed loans. Fast forward to 2020, this document is largely what prohibited both direct and indirect marijuana businesses from receiving PPP money or federal assistance due to the COVID-19 pandemic.
Senators Elizabeth Warren (D-MA) and Cory Gardner (R-CO), introduced the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act. Shortly thereafter, President Trump was asked if he supports new Senate legislation to let states set their own marijuana laws without federal interference, to which he replied, “I really do. I support Senator Gardner. I know exactly what he’s doing. We’re looking at it. But I probably will end up supporting that, yes.” The STATES Act has never had a congressional hearing or moved in any way through the legislative process.
In a slight change of tone, U.S. Attorney General Jeff Sessions said that “states have a right to set their own laws and will do so” but that “the American republic will not be better if there are marijuana sales on every street corner” and “we’ll [Department of Justice] enforce the federal law.”
A group of the top financial regulatory officials from 13 states sent a letter urging congressional leaders to solve the marijuana industry’s banking access issues. The regulators wrote, “It is incumbent on Congress to resolve the conflict between state cannabis programs and federal statutes that effectively create unnecessary risk for banks seeking to operate in this space without the looming threat of civil actions, forfeiture of assets, reputational risk, and criminal penalties.”
NCIA worked with Congressman Lou Correa (D-CA) to send a letter to the Department of Homeland Security Secretary Kirstjen Nielsen that urges the department to develop clear guidance concerning the entry into the United States of foreign nationals with authorized work visas who are associated with the cannabis industry.
Well-known pollster Gallup found that sixty-six percent of Americans now support legalizing marijuana. Support has remained near that number to the present.
This month, midterm elections were held, and a number of states voted on setting their own cannabis policies. Residents of Michigan and North Dakota both voted on adult-use measures, one passing and one failing, respectively. Additionally, Utah and Missouri both passed medical cannabis ballot initiatives. While the Senate remained in control of the GOP, the House of Representatives switched from a Republican majority to a Democratic majority.
Congress passed the 2018 Farm Bill which included hemp legalization. The bill did not create a completely free system in which individuals or businesses can grow hemp whenever and wherever they want — there are numerous restrictions — and the programs are still being adjusted today.
The 116th Congress was sworn in and quickly filed a number of cannabis-related bills, including:
H.R. 420: Regulate Marijuana Like Alcohol Act, H.R. 493: Sensible Enforcement of Cannabis Act, and H.R. 127: Compassionate Access, Research Expansion, and Respect States (CARERS) Act of 2019
In February, the Subcommittee on Consumer Protection and Financial Institutions held its first-ever hearing on marijuana and financial services, entitled: Challenges and Solutions: Access to Banking Services for Cannabis-Related Businesses. Up for discussion was the Secure and Fair Enforcement (SAFE) Banking Act.
Quickly following the subcommittee hearing, the House Financial Services Committee scheduled a full markup for the SAFE Banking Act. The bill passed out of committee with a bipartisan vote of 45-15.
During a House appropriations subcommittee hearing, several lawmakers asked Treasury Secretary Steven Mnuchin about what could be done to provide state-legal cannabis businesses with access to financial institutions. Mnuchin replied, “Let me just say, I hope this is something that this committee can on a bipartisan basis work with since there are people on both sides of the aisle that share these concerns. I will just say I don’t believe this is a failure of the regulators. I want to defend the regulators on this issue.”
NCIA hosted our 9th Annual Cannabis Industry Lobby Days, bringing hundreds of professionals to Washington, D.C. Over the course of 48 hours, attendees met with nearly 300 congressional offices to share their stories and experiences and dropped off informational materials to 200 offices that we did not schedule meetings with. In addition to these meetings, we had two briefings, held a PAC fundraiser, and hosted our first-ever VIP Day for members of our Leadership Circle.
In June, the Senate Banking Committee held a hearing entitled “Challenged for Cannabis and Banking: Outside Perspectives.” NCIA was proud to have Sen. Jeff Merkley introduce for the record the testimonials of nearly 100 NCIA members during the hearing.
The Subcommittee of the House Judiciary Committee held a hearing on ending cannabis prohibition in America. The hearing, entitled “Marijuana Laws in America: Racial Justice and the Need for Reform” will focus on the need to deschedule cannabis, the importance of equity, diversity, inclusivity in this burgeoning industry, and will also cover issues pertaining to cannabis and public health, law enforcement, and the failings of prohibition.
When President Trump was asked at the end of August whether or not marijuana will be federally legalized during his administration, he said, “We’re going to see what’s going on. It’s a very big subject and right now we are allowing states to make that decision. A lot of states are making that decision, but we’re allowing states to make that decision.”
For the first time in history, a standalone cannabis policy reform bill was brought before the House of Representatives for a vote and passed with an overwhelming bipartisan majority. The Secure and Fair Enforcement (SAFE) Banking Act of 2019, or H.R. 1595, was approved 321-103, including nearly half of voting Republicans, in a suspension vote.
The U.S. Tax Court ruled this week that the tax code ban on business deductions by medical marijuana companies is constitutional. The case is Northern California Small Business Assistants Inc. v. Commissioner of Internal Revenue, docket number 26889-16.
In a vote of 24-10, the House Judiciary Committee approved a bill that would effectively end marijuana prohibition. The Marijuana Opportunity Reinvestment and Expungement (MORE) Act of 2019, or H.R. 3884, was introduced by House Judiciary Committee Chairman Jerrold Nadler (D-NY) and has been moving through the legislative process steadily. The MORE Act is anticipated to be voted on by the full House of Representatives this month.
The Federal Reserve released guidance allowing banks to work with the hemp industry. Financial institutions are no longer required to file suspicious activity reports on customers operating a hemp business.
It’s been a wild ride to look back at the last 10 years of NCIA, and we are looking forward to serving you and your business for another 10 more!
Meet The Team: Morgan Fox – NCIA’s Director of Media Relations
This week marks my second anniversary working with the National Cannabis Industry Association, and with everything going on in the world, it very nearly slipped by me unnoticed. However, the occasion has given me an opportunity to reflect on the past and look to the future, both of which are truly motivating to me when it comes to the work we are doing in the present.
When I first came to NCIA, it was a very turbulent time for cannabis policy reform, the industry, and for me personally.
After working in the movement for ten years, I was very familiar with what the organization stood for and what it had accomplished. I was eager to join those efforts and pivot more into federal policy work after a wave of state-level victories and to help protect businesses that were responsible for so much innovation despite unprecedented challenges over the years.
It was also a very scary time: earlier in the year, then-Attorney General Jeff Sessions had rescinded the Cole Memo that had guided federal prosecutors in their hands-off approach to regulated (but federally illegal) cannabis businesses, and then-Rep. Pete Sessions’ prohibitionist tenure as head of the House Rules Committee had a firm stranglehold on any cannabis-related legislation in Congress.
This move just happened to coincide with the impending birth of my first child, which made me look at everything through a different lens and ask myself some hard questions. Was I making the right decision to continue working in a field that could get shut down at any moment? Was there any hope for positive change in the foreseeable future? Should I keep working in cannabis when there are other ways I can try to make a positive difference for future generations?
The answer to those questions was a resounding “yes” as I was soon to see repeatedly in the coming months. The feared federal crackdown on state-legal cannabis businesses never came. Congress once again approved a spending ban on targeting medical cannabis patients and providers. By the end of the year, both Jeff and Pete were out of their jobs, a Democratic takeover of the House of Representatives had created opportunities for real progress on cannabis bills, and voters in three more states had approved ballot initiatives to create regulated adult or medical cannabis markets. It was an interesting year, to say the least.
But I think one of the most important developments for me was getting more direct exposure to the people that work so hard to advance this vibrant and inspiring industry. From the people who risked their freedom and often their life savings to open businesses when the threat of arrest and forfeiture were commonplace, to those working every day to undo the damage of our disastrous drug laws and create fair opportunities in the industry for people and communities that have been most harmed by prohibition, I can safely say I’ve never met more passionate and dedicated individuals.
Practically every day I see developments and ideas that could have wide-reaching effects outside of cannabis. Social and criminal justice issues that are starting to become more central to cannabis policy are forcing us to reexamine many problems related to fairness and historical inequality in our society. The increasing focus on corporate responsibility and sustainability is creating a model for other businesses to follow at a time when we desperately need one. New innovations are improving health and wellness while paving the way for technologies, methods, and applications that have the potential to revolutionize agricultural and industrial fields.
I want my child to grow up in a world with laws that prioritize justice, freedom, and fairness; with businesses that care about their communities and try to make the world a better, cleaner, and healthier place. There is still a lot of work to do, but I know I am in the right place to help make that world a reality in my own small way. I can’t wait to see what the next ten years hold for NCIA.
Committee Blog: Ending The Ban On Interstate Commerce (Part 1)
Oversupply and shortages, high prices and lack of choice for patients and consumers, illicit markets, tainted products, and the inability to access banking and capital all plague the burgeoning cannabis industry. While cannabis advocates and industry leaders are working on each of these problems, there is one solution that would ease the burden on all of them. Allowing for interstate trade between states with legal cannabis markets would improve each of these issues while supporting the individual solutions to each that the industry has been working on. This is the first post in a series that explores the benefits and barriers to setting up a legal framework for interstate trade, even before wholesale legalization at the federal level.
Since the beginning of legal, adult-use cannabis, when Colorado and Washington passed the first ballot measure allowing for adult-use, the industry was guided by the Cole Memo, which laid out the parameters for the federal government staying out of the states’ cannabis experiments. Among other things, the Cole memo stated that the DEA could crackdown on cannabis moving from states with well-regulated systems to states that do not allow cannabis. This statement has been interpreted conservatively to mean that no cannabis should cross state lines for any reason, ever, based on the fact that at the federal level, cannabis is still a Schedule I drug under the Controlled Substances Act.
Today, there are 10 states which have legalized adult-use, another 19 which allow for medical use, and six more which allow the use of CBD products only. Many of these states share borders, and producer states could serve several nearby markets without ever entering a state that does not allow cannabis in any form. Furthermore, the Cole Memo, which was rescinded by Jeff Sessions in 2018, has not been replaced by any guidance whatsoever. This means that each U.S. Attorney’s office is free to set their own enforcement priorities around state-legal cannabis activities, and there is no official overriding policy at the DOJ on interstate trade between states with medical or adult use. Corresponding guidance from FinCEN, however, remains in effect and similarly discourages the transfer of cannabis between states.
Cannabis markets vary widely from state to state with regard to the underlying market dynamics and challenges that they face. Some states produce too much while other states experience shortages. Meanwhile, new states pass legislation or have voter initiatives that allow medical or adult-use every year without any infrastructure in place to supply that state’s demand. In each new legal market, the vast majority of demand had long been met through illicit market supply, and generally from outside of the state’s boundaries.
The artificial boundaries around cannabis markets have far-reaching impacts for local economies, patient access, illicit market activity, and social equity. Later posts in this series will take a deep dive into each of these issues, and in this post, we will look at how this has impacted states, the industry, and consumers so far.
Washington State chose to take the strictest possible reading of the Cole Memo, and insist that not only must cannabis not cross state lines but also sources of funding must come from within the state. Combined with their high capitalization requirement for licenses, the result was a disaster from an equity standpoint: only wealthy and well-connected individuals in the state (which are overwhelmingly white males) were able to even attempt a license. This decision was based substantially on the fact that interstate trade was not allowed.
In Oregon, which has an ideal growing climate and a long tradition of exporting cannabis (albeit in the illicit market), the artificial boundaries created by the ban on interstate trade lead to a massive oversupply for its small population, which crippled the industry and tanked many small businesses. Despite the fact that Oregonians consume more cannabis per capita than any state, their climate and culture have led to growing massive quantities of world-class cannabis that cannot reach patients and consumers, even in neighboring states that might have under-supply issues. The result is that hundreds of small, mom-and-pop shops and family farms have gone out of business, eradicating millions of dollars of local capital, and accelerating mass consolidation of the industry into the hands of a few foreign corporations. Meanwhile, in medical markets like Illinois and Michigan, patients have had sporadic access to quality cannabis-based medicines.
When Nevada originally launched, due to the influence of local liquor distributors, it was almost impossible to get products to market, and the state’s dispensaries sold out on the first day of sales. After ironing out some of the kinks, sales are going strong, but the practice of growing thirsty plants indoors in the desert is of dubious value when the same plant can be grown with a fraction of the inputs in northern California and southern Oregon.
California’s legal system is a perfect example of how over-regulation fuels illicit market activity. Because of the structure of their regulatory framework and high taxes, the state is served by only 800 licensed dispensaries, whose prices are double and triple those found on the illicit market for similar products. This has led to the emergence of thousands of “pop-up” or unlicensed dispensaries, selling untested products tax-free in a thriving illicit market. The booming illicit market in California has also led to massive wholesale markets of hardware, branded packaging, and flavoring and cutting agents (all technically legal) to supply the illegal operators with everything they need to look legitimate. This is a major contributing factor to the wide-spread vaping related illness cases popping up all over the country, as many illicit market operators purchase their supplies in downtown Los Angeles.
The ban on interstate trade promises to continue to create new and novel problems as well. If New York, the 4th most populous state in the union, legalized adult-use (which seems likely in the near future), and interstate trade were still banned, it would require a massive investment, on the order of billions of dollars, to create enough indoor and greenhouse grow facilities to supply the demand created by its 19 million inhabitants. The recent legalization of hemp under the last Farm Bill has created a number of legal dilemmas as well, as some individual states that do not recognize any difference between hemp and cannabis flower have seized products and arrested individuals taking hemp legally grown in one state to a market where it is legal to sell.
Some suggest that these issues will be sorted in local markets, and in each state individually this approach might seem to make sense. When you add these problems together, though, a much more elegant, efficient, and obvious solution emerges: let states that have always exported cannabis send it to states that have always imported it. A set of different and seemingly unconnected problems become each other’s solutions.
Historically, people across the country have consumed cannabis, and the vast majority of it was grown in a few locations that are particularly well-suited to the plant. It is highly likely that a fully-matured nationwide legal market (one which must account for not only interstate, but also international competition) will ultimately be best served by the same general market dynamics. The only question is: how long will we allow the artificial market boundaries around each state to decimate local capital, curb access for patients and consumers, encourage investments that are attractive short-term but disastrous long-term, and prop up the illegal markets that pose a public health risk?
Interstate trade between states that allow some form of legal cannabis would provide much-needed relief on a number of fronts for cannabis businesses, and could be structured in such a way to support social equity efforts. With a little guidance on enforcement and thoughtful programs and agreements between states, there is a path to legal interstate commerce even before cannabis is removed from the Controlled Substances Act. The state of Oregon has already passed legislation allowing for the export and import of cannabis products provided that the Federal Government allows it. This could be either through legislation such as the proposed Blumenauer/Widen State Cannabis Commerce Act, or though DOJ enforcement guidance (whether from the Attorney General or the relevant local U.S. Attorney’s). There are multiple paths that can lead to the end of banned interstate trade, and it seems increasingly inevitable that we will see legal cannabis trade across state borders in the near future. For most operators in the cannabis industry, and for all patients and consumers, this will be a good thing, and can’t come soon enough.
Gabriel Cross is a Founder and CEO at Odyssey Distribution, LLC, a distributor for locally-owned craft cannabis producers and processors in Oregon. Gabe worked in the sustainable building industry for a decade before starting Odyssey and brings his experience with sustainability and systems thinking to his work in the cannabis industry. Odyssey manages logistics, sales and marketing for boutique producers so they can focus on creating great craft cannabis products for the Oregon market.
Picking Up Speed In The 116th Congress – An Overview Of Our Progress
by Madeline Grant, NCIA’s Government Relations Manager
We’ve seen an extraordinary amount of momentum sweep through Capitol Hill so far this Congress. The U.S. House of Representatives passed the Secure and Fair Enforcement (SAFE) Banking Act of 2019 and the Judiciary Committee marked up the Marijuana Opportunity Reinvestment and Expungement (MORE) Act of 2019. On top of these significant policy gains and historic achievements, we’ve seen an increase in cannabis-related bills, committee hearings, amendments, and markups.
With strong Democratic leadership on the House side, the question of legalizing cannabis has even been put on the table. Conversations are happening in hearings and markups that will help educate lawmakers. For example, as cannabis remains a Schedule I substance, significant federal research is still unattainable. These are the important conversations we are having with lawmakers. The SAFE Banking Act passed with overwhelmingly bipartisan support, with a vote of 321-103. This bill has been supported by the American Bankers Association, the Governors Association, the National Association of Attorneys General, and the credit unions across the country. The McClintock-Blumenauer-Norton amendment, which would prohibit the Department of Justice from interfering with state cannabis programs, passed the House with a vote of 267-165. This historic vote shows just how far we have come and with continued momentum where we can go.
Now, we need your help. It is more important than ever that Congress hears from their constituents. Your stories and experiences are what resonates the most with Hill offices. Now that the SAFE Banking Act passed the house, we need to turn our attention to the Senate.
Please call your U.S. Senators and urge them to support S.1200, the SAFE Banking Act, which prevents federal banking regulators from punishing banks for working with cannabis-related businesses that are obeying state laws or halting their services, taking action on loans made to those businesses, or limiting depository institution’s access to the Deposit Insurance Fund. As you call your Senators, be sure to explain the frustration you have had with a lack of access to banking. Personal stories resonate with our Congressional offices, so take a few minutes to make these important calls.
To find your Senators, click this link and simply enter your address. The office phone number will pop up next to their photos.
Looking Back On Ten Years Of Cannabis Reform – The Road Behind, The Struggle Ahead
By Morgan Fox, NCIA Media Relations Director
August in Washington D.C. means heat, which is probably a big reason why lawmakers take the month off and return to their home states before coming back to confront the issues of the day. With this Congress – which has been more supportive of cannabis policy reform than any in history – out on recess, it seems like a good time to reflect on how far we’ve come as a movement and as an industry, we well as to recognize how much farther we still need to go.
I’ve been working exclusively on cannabis issues for more than a decade, and when I started my first job in the field at the Marijuana Policy Project all those years ago, the landscape looked much different. At the time, there were only a handful of states with effective medical cannabis laws, and no states where it was legal for adults. Opponents would consistently claim that cannabis has no medical value with a straight face, and people would believe them. The nonsensical argument that providing medicine to sick people would somehow lead all teenagers to become addicted to hard drugs often ruled the day and frequently delayed reform efforts. Access to cannabis, even in states with good laws, was limited and hard fought. Cannabis consumption by anyone except the most seriously, visibly ill people was largely portrayed as criminal and immoral.
Now, cannabis is legal for adults in 11 states, D.C., and two territories; 33 states and several territories have comprehensive medical cannabis laws; and nearly every state allows cannabis in some form. Tens of millions of people can now safely access cannabis without fear of arrest. Dozens of states are looking at cannabis policy reform legislation every year, and we can expect to see several ballot initiative campaigns taking place next year.
As more and more states have regulated cannabis in some way, new legal markets have emerged, allowing the industry to grow and thrive in many ways. At the start of my involvement, there were a shockingly small number of cannabis businesses, and the problems they faced were quite different than what we tend to deal with today. Non-existent access to banking was of trivial concern when the threat of raids by armed federal agents was a daily concern. Videos of jack-booted thugs pointing rifles at disabled patients and dragging dozens of plants out of smashed windows were commonplace. Long prison sentences for cultivators and providers were the norm.
New state laws and increasing public acceptance helped to ease the crackdown on the cannabis industry, but the real game changer came in the form of an unexpected federal policy directive. In 2013, Deputy Attorney General James Cole issued a directive to federal prosecutors, telling them not to target businesses or individuals who were in compliance with state cannabis laws. Known as the Cole Memo, this directive did not carry the force of law and did not prevent the enforcement of federal prohibition. Some Department of Justice employees took it more seriously than others. However, it did drastically reduce the number of prosecutions of state-legal cannabis businesses, and gave people enough confidence to really pull out all the stops. Since then, the industry has grown and professionalized by leaps and bounds. Huge trade shows, once unheard-of, are now commonplace and attracting people from a wide range of professions. Businesses no longer hide in the shadows, but are actively competing for exposure. There are now more than ten thousand licensed plant-touching businesses in the U.S., and many thousands more ancillary businesses working in the cannabis space. According to a recent report by Leafly, more than 200,000 jobs have been created by the legal cannabis industry.
One of the most important changes to happen over the years is the increased and deeper focus on justice in the cannabis reform movement, including equity in the cannabis industry. Legalization has always been about freedom and justice, but it has largely been talked about in the general sense of the injustice of criminalizing people for consuming a substance that is objectively safer than alcohol. The disproportionate harms inflicted on people of color and the destructive impact that prohibition has had on entire communities for generations were well known to many, but it wasn’t until the ACLU released its groundbreaking report that these facts started gaining more attention in the public sphere. It has still taken far too long for this issue to come to the forefront of the cannabis policy debate, but things are moving in the right direction. Most modern legalization legislation now contains provisions related to expungement, community reinvestment, and equity in the emerging cannabis industry, and indeed these are now required in order to be taken seriously by voters, activists, and policymakers. But it wasn’t always so.
During the ballot initiative campaign for Amendment 64, which would go on to pass in November 2012 and make Colorado the first state in the nation to regulate cannabis for adults, polling showed that including even a limited provision to expunge minor cannabis convictions would have killed the chances of victory. Fast forward to this year, where legislation to make cannabis legal in New Jersey stalled because it did not go far enough to address the disparate harms caused by the war on cannabis. Illinois, the first state to regulate cannabis through its legislature, included language in its legalization bill which passed earlier this year that will expunge the vast majority of marijuana convictions and will help to ensure that people of color can take advantage of the opportunities being created by the legal cannabis market. And even Congress is starting to come around, with multiple active bills containing restorative justice provisions being considered and a House subcommittee holding a groundbreaking hearing on the issue this summer.
Speaking of Congress, the differences between now and then could not be more stark. Until somewhat recently, there was little appetite for addressing cannabis policy reform, and tremendous opposition from both sides of the aisle. While states continued to pass cannabis legislation, most federal lawmakers wouldn’t go near the subject except to shut it down. Even those whose own states had passed good laws were actively undermining their constituents. In 2014, an amendment was added to the annual spending bill that codified the protections outlined in the Cole Memo, but only for medical cannabis programs. Despite this provision being included in all subsequent budgets, it was never extended to adult use programs. Progress on stand-alone bills related to cannabis was generally slow and did not receive serious consideration in either chamber.
This Congress has been extremely different. Dozens of cannabis bills addressing all sorts of issues have been introduced, often with bipartisan support. Hearings have actually been held and taken seriously in the House and Senate, often with mostly supportive testimony. The SAFE Banking Act, which would provide safe harbor for financial institutions to work with cannabis businesses and increase access to capital for small businesses and disenfranchised communities, has seen unprecedented movement and support this year. In the House, it has 206 cosponsors and was approved with a bipartisan vote in the Financial Services Committee. It now waits to be called for a vote, which it will likely win. In the Senate, despite some lingering opposition, key committee heads and Republican leaders are softening their stances and held an informational hearing on the bill last month. More comprehensive bills such as the Marijuana Justice Act, the FAIR Act and the MORE Act are being given more attention than we’ve ever seen for legislation that would deschedule cannabis. It seems that politicians are finally catching up to public opinion and are more comfortable with supporting reform in the open.
Some of the credit for this can be given to the media. When discussing this topic, I always like to relate a story told to me by my first boss in cannabis policy reform. In the late 2000’s, he called CNN’s newsroom to pitch a story about a new positive cannabis study. He identified himself and his organization at the beginning of the call, which prompted the person on the other end to start laughing so hard they had to put my boss on hold. When they finally returned, they greeted him by saying “OK, Mr. Marijuana. How can we help you?” Needless to say, the story did not get picked up.
For years, we’ve had to deal with a media environment where cannabis policy reform was treated as a joke at best, and as a horrible scourge at worst. Stories were riddled with bad puns (I can’t count the number of times I’ve seen the phrases “blunt truth” or “clearing the smoke” or “hazy proposition” in headlines), or only referred to cannabis as “pot” or something equally stigmatizing. Many of them took prohibitionists at their word as they spewed falsehoods and fear, while giving limited or no space to reformers. Most major media outlets were not even interested in looking at the issue to begin with.
All that has changed. Cannabis is finally being taken seriously, and news organizations are devoting massive resources to covering it and even creating cannabis beats for dedicated journalists. Dozens, if not hundreds, of cannabis-specific publications are now available, with advertisers clambering for space in them. The coverage is much more fair, and the puns are (mostly) gone. Changes in the way the media talks about cannabis have certainly had a positive impact on how the public, and by extension lawmakers, thinks about this issue.
It can be tempting to look at all this progress and pat ourselves on the back for a job well done, and in some senses it is deserved. Tens of thousands of otherwise law-abiding individuals around the country will no longer be saddled with the disastrous consequences of having a criminal record every year. Hundreds of thousands are gainfully employed in an industry that is steadily displacing the illicit market while making cannabis safer and less stigmatized. The federal government is getting closer and closer to making real progress on cannabis issues. Support for legalization is a ubiquitous topic in the 2020 presidential field and has become almost a prerequisite for being considered as a serious candidate. Two-thirds of Americans think cannabis should be legal for adults. All of this is a world away from where we were a decade ago, and the benefits being reaped because of the hard work of advocates are significant.
But we have a long way yet to go.
There are still roughly half a million cannabis arrests in the U.S. annually, mostly at the state level. The majority of states have yet to regulate cannabis for adults, and support for doing so in many of them is still very weak. Advocates and industry leaders need to redouble their efforts to reach out to lawmakers, voters, stakeholders and communities, and work with them to pass sensible cannabis legislation. Even states with relatively good laws still need help: home cultivation is still illegal in Washington state, for example, and Vermont and D.C. do not yet have regulated cannabis markets or legal sales.
State and local restorative justice efforts have had limited success, to put it generously. Funds intended for community reinvestment have been diverted or delayed, and equity programs are sometimes being exploited by predatory operators. High application fees, arbitrary license caps, criminal record bans and other unnecessary barriers of entry are preventing marginalized people from becoming a part of this industry. Decreasing arrests, while vitally important, cannot be the only gain made by disproportionately impacted communities as we continue to reform our cannabis laws.
Despite growing support for change in Congress, cannabis is still a relatively low priority for most federal lawmakers. Without constant pressure on them, reform will come slowly or not at all. NCIA’s in-house federal lobbying team, as well as outreach efforts like our annual Cannabis Industry Lobby Days, help keep this conversation going at the Capitol and sway legislators to our side. Federal legalization is far from inevitable, and we are committed to maintaining and increasing our efforts to make sure it happens.
But we need your help. Now is the time to get involved, get active, and help end prohibition once and for all while we build a responsible, competitive, and inclusive cannabis industry. We still have much work to do, but if the accomplishments of the last decade tell us anything, it’s that we can do this together.
Top 5 Reasons You Should Attend Lobby Days This Year
Will you join us as a united front in Washington, D.C. this year?
Hundreds of cannabis industry professionals from all over the country will descend on Capitol Hill this month for the 9th year in a row for NCIA’s Annual Lobby Days. It’s more important than ever before to make your voice heard and advocate for the federal reforms our industry needs to truly thrive.
Whether it’s access to banking for your business, much-needed federal tax reforms, or some of the many other struggles faced by our industry that could be remedied by congressional action, we need you to tell your stories on Capitol Hill with us on May 21-23.
Here’s our top five reasons for you to register today to join us for this exciting and impactful event this year:
Progress made on SAFE Banking Act
Earlier this spring, we saw historic movement on one of our key pieces of legislation: banking. The SAFE Banking Act of 2019 was introduced in the House of Representatives by some of our champions in Congress – Reps. Ed Perlmutter (D-CO), Denny Heck (D-WA). Following an historic hearing, the bill received a markup by the House Financial Services Committee and passed out of the House Financial Services Committee in a vote of 45-15. This is important because it is the first time in history that a cannabis banking bill has made its way this far through the legislative process. NCIA vigilantly jumped in to collect and submit the testimonies of dozens of cannabis industry leaders for the hearing.
The momentum continues to grow as the bill now has more than 160 co-sponsors and will likely be debated again in the House soon. Now is the time to strike while the iron is hot. Join us at Lobby Days to educate and inform even more members of Congress about the struggles our industry faces to get and keep access to financial institutions!
New Attorney General is receptive to state’s rights issues
As the saying goes: out with the old and in with the new! Attorney General Jeff Sessions, who is known for his anti-cannabis stance, resigned from the Department of Justice earlier this year, and was replaced by William Bar. During his Senate confirmation hearing in January, Barr expressed his respect for the policies laid out in the Cole Memorandum, issued in 2014, which cannabis companies have relied on to continue doing business in a state-legal, regulated environment. Additionally, he wrote to the committee, “I still believe that the legislative process, rather than administrative guidance, is ultimately the right way to resolve whether and how to legalize marijuana.”
These statements hint at a more reasonable approach to cannabis reform, and the need for NCIA members to make their voices heard in the halls of Congress, particularly those in Congress with influence on the Senate Judiciary Committee and at the Department of Justice.
New members of Congress
Last November, we saw midterm elections bring in a new class of freshman members of Congress. Many of these new faces replaced the old guard of those with long-standing prohibitionist views toward cannabis. Many of them lean more progressive, which means they are more likely to be friendly toward our issues. This infusion of new blood, new minds, and new perspectives in the halls of Congress can work in our favor.
NCIA’s Lobby Days is the best way to get direct access to some of these offices so we can get off on the right foot with them on our issues. Joining us in D.C. means you will inform and educate these new members of Congress on the struggles we face like tax reform, veteran’s medical access, social equity, and of course, the SAFE Banking Act specifically. How many new co-signers can we get on this bill? Let’s find out together.
Meeting 200+ other politically active industry professionals
It’s not a conference — It’s different. There’s no expo floor or panel discussions, just people. And it happens to be some of the most politically engaged leaders of our industry who attend Lobby Days. You’ll rub shoulders and team up with cannabis industry pioneers who have been in the game for years. You’ll learn the “ins and outs” of the Beltway from lobby day veterans who join us every year to advocate for our industry. Hear about it for yourself by watching this re-cap video from last year’s 8th Annual Lobby Days:
Learn how to lobby and take those lessons home
This isn’t our first rodeo, but it might be yours, and that’s okay. Even if you’ve never done citizen lobbying before, NCIA’s government relations team makes it easy by offering trainings before the event, as well as on-site. We’ll give you materials to help you tell your stories including descriptions of our priority legislation, and background information on the offices you’ll be speaking with. And you won’t have to go it alone! We will team you up with a small group of your fellow cannabis industry peers to navigate the halls of Congress together.
Lobby Days with NCIA will empower you to go back to your home state to advocate on the industry’s behalf. You’ll know what to say, how to say it, and what to expect.
Together, we can make a real difference and push our industry past the tipping point. Hundreds of NCIA members have already registered for this event, so what are you waiting for? Register today, schedule your flight, and book your hotel. We can’t wait to see you there.
by Michelle Rutter, NCIA’s Government Relations Manager
Last month, the Senate Judiciary Committee began the confirmation hearing for William Barr, President Trump’s nominee for Attorney General. Barr served as Attorney General under President George H.W. Bush from 1991-1993 — a time when the War on Drugs was arguably at its peak. There was much concern that Barr’s position on cannabis would be reminiscent of the last Attorney General, Jeff Sessions, however, January’s hearings proved otherwise.
During the Senate confirmation hearing, Barr stated that he would respect state cannabis laws and legal businesses when it comes to enforcing federal marijuana statutes. In response to questioning from Sen. Cory Booker (D-NJ) and Sen. Kamala Harris (D-CA), Barr stated that if confirmed, his “approach to this would be not to upset settled expectations and the reliant interests that have arisen as a result of the Cole Memorandum.” Upon further questioning, he stated that he “is not going to go after companies that have relied on the Cole Memorandum.” (It’s also important to note that the two Senators who asked Barr about cannabis policy are both running for president).
Barr even put it in writing. In response to written questions, Barr wrote, “As discussed at my hearing, I do not intend to go after parties who have complied with state law in reliance on the Cole Memorandum… I have not closely considered or determined whether further administrative guidance would be appropriate following the Cole Memorandum and the January 2018 memorandum from Attorney General Sessions, or what such guidance might look like. If confirmed, I will give the matter careful consideration.” He also wrote to the committee, “I still believe that the legislative process, rather than administrative guidance, is ultimately the right way to resolve whether and how to legalize marijuana.”
The Cole Memo, issued in 2014, directed federal prosecutors not to use resources to target businesses or individuals that were in compliance with state cannabis laws and met a set of public safety criteria. That guidance, which gave many businesses and state governments the confidence to move forward with implementing regulated cannabis markets, was rescinded in January 2018 by then-Attorney General Jeff Sessions.
Several comprehensive cannabis policy reform bills that would allow states to determine their own laws without federal interference are expected to be considered this year. NCIA will continue to work with the Senate Judiciary Committee, Barr (should he be confirmed), and the Department of Justice on these critical issues.