Turning Advocacy Wins into Operator Wins

The word “advocacy” is a loaded term. It evokes different emotions in different people. However, in the cannabis industry, it’s a case of goose and gander, as a win for advocacy is a win for operators as well — with policy wins ultimately translating into financial benefits for operators. Thus, it would stand to reason that whenever possible, operators should lend their support to the side of advocacy. In this article, we’ll explore how the two can work together to their mutual benefit.

From Bill Passage to Bank Balance

Due to its quasi-legal status, every positive legislative change can be a massive boon for the cannabis industry. As many are aware, the industry can often operate on a cash-only basis due to federal restrictions. Thus, something like the SAFER Banking Act, which advocates have been pushing for, can be highly beneficial to the industry.

To recap: this act would help provide federal protection to financial institutions, including preventing the depository institution from being penalized for providing banking services to a state-sanctioned cannabis business. Further, the Act prohibits a federal banking service from requesting or requiring a depository institution to cancel a deposit account.

While this act is still waiting to be passed by the Senate, it could represent a significant step forward for the industry by offering essential banking services such as loans, credit lines, and cash management services, such as armored deposit services.

Another big issue for cannabis advocacy is rescheduling. Going from a Schedule I narcotic to a Schedule III narcotic would also open many doors for the industry. One of the most significant advantages of this shift would be the elimination of IRC 280E, which restricts what operators can deduct under the tax code. Unshackled from this prohibitive tax code, operators would have a wealth of items they could deduct, such as wages, rent, utilities, insurance, marketing, and administrative costs.

The benefits of rescheduling wouldn’t stop there. This shift could also herald more research and development opportunities for cannabis, as there would be a greater legal recognition of the plant’s medicinal value.

TL;DR: Advocacy could help operators in many ways; here are but a few examples:

• The SAFER Banking Act would provide federal protections, allowing banks to safely offer essential services, such as checking accounts, loans, and cash management, to state-legal cannabis businesses. This would reduce cash-only risks and improve industry stability.

• Rescheduling cannabis to Schedule III would eliminate the restrictive tax code 280E, enabling cannabis businesses to deduct regular business expenses and promoting more research, development, and legal recognition of cannabis’s medical value.

Now, let’s discuss how the industry is already working together to be most effective for everyone.

Coalition Building

Fortunately for the cannabis industry, supporters are passionate and proactive. We can examine several examples of how the industry has leveraged partnerships across different segments to the benefit of everyone.

California NORML – (CA NORML)

The oldest chapter of NORML, established in 1972, the National Organization for the Reform of Marijuana Laws — California chapter continues its legacy from the Compassionate Use Act of 1996 to the recent passage of AB 564, a tax-reducing policy.

California NORML unites the cannabis industry by coordinating lobbying, publishing resources, and building a business directory — acting as a bridge between consumers, legislators, and cannabis businesses to promote equitable laws and industry cohesion.

The Minority Cannabis Business Association (MCBA)

Favoring a grassroots approach, the MCBA seeks, in their words:

“To create equal access for cannabis businesses and economically empower communities of color through policy, programming, and outreach initiatives to achieve equity for the communities most impacted by the War on Drugs.”

Through advocacy and events, the MCBA creates partnerships through many industry segments (retail, cultivation, etc.) for maximum impact.

Besides working together, let’s explore how we can utilize one state’s win as a model for others.

National Cannabis Industry Association (NCIA)

NCIA brings together various players in the cannabis industry by providing national advocacy, policy coordination, education, networking, and a member directory across all verticals — ensuring businesses and stakeholders speak with one informed, powerful voice.

Scaling Local Success 

We can look to states such as California, Oregon, and Washington as (limited) success stories. These states have passed legislation enabling their governors to enter into interstate agreements, allowing border-transversing sales of cannabis between states where it is legal. This enables operators to reach far-flung markets beyond their home state. We see how these states follow each other’s lead while also working collaboratively to secure the best return on investment, although full-scale interstate commerce remains limited pending federal changes.

We can also turn back the clock nearly thirty years from today to when California passed the Compassionate Use Act of 1996. Other states would follow California’s model, and by 2023, 37 states had medical marijuana laws.

Or we can turn to Colorado and Washington, rewinding the clock not quite as far to 2012, when the states legalized recreational cannabis use. This would also serve as a model for other states, and by 2023, 19 states had followed Colorado’s example.

It goes without saying that when one state makes progress for cannabis reform and has quantifiable results, other states are likely to follow suit.

Conclusion

There is no cannabis industry without advocacy. Every step advocacy makes, operators are in lockstep with it. Fortunately, as competitive as the industry is, groups like the National Cannabis Industry Association are arduously working for legislative changes that benefit many in the industry. At the same time, we have other organizations like the Minority Cannabis Business Association toiling to help specific groups that have been historically disadvantaged. However, when these minority groups benefit, everyone benefits — as these social equity initiatives support whole communities by providing jobs and using tax revenue for mental health support, legal services, and other community reinvestment programs.

And speaking of tax revenue, when one state’s cannabis laws are effective — whether medical or recreational — it’s easier to get the ball rolling on similar laws in other states.