On December 4, 2020,1 the United States House of Representatives made history and voted to federally legalize cannabis for the first time by voting to pass the Marijuana Opportunity Reinvestment and Expungement Act (the “MORE Act”). Although the MORE Act still has to pass the historically cannabis-unfriendly United States Senate, the House’s quick action to pass a sweeping legalization bill in a time of presidential transition could signal greater legislative efforts to resolve the federal-state tension over state-legal cannabis.
The key provision of the MORE Act would be to federally deschedule cannabis and thereby remove it from the purview of the Controlled Substances Act. The MORE Act also would enact a 5% federal tax—which would step up by a point each year after the first two years after enactment up to 8%—on cannabis products and earmark those tax revenues to fund various social justice measures via a trust fund (the “Opportunity Trust Fund”). The Opportunity Trust Fund’s money would help fund the Community Reinvestment Grant Program (the “CRGP”), also established by the statute. The CRGP, administered by the newly created Cannabis Justice Office, would be responsible for “provid[ing] eligible entities with funds to administer services for individuals adversely impacted by the War on Drugs, including (1) job training; (2) reentry services; (3) legal aid for civil and criminal cases, including expungement of cannabis convictions; (4) literacy programs; (5) youth recreation or mentoring programs; and (6) health education programs.”
The MORE Act also has several other social justice measures embedded within it. First, it prohibits the denial of any “Federal public benefit”—e.g., welfare benefits, etc.—on the basis of any cannabis-related conduct. Second, the MORE Act would also explicitly authorize SBA loans to legal cannabis businesses. Third, and perhaps most potently, the MORE Act would provide for an automatic expungement process for nonviolent cannabis convictions, where each Federal district would initiate the process without any affirmative steps by the convicted person.
Importantly, despite the proposed sweeping federal changes, the MORE Act would preserve the current federalist contours—that is, individual states can still decide on whether to legalize or prohibit cannabis.
Although the House’s passage of the MORE Act is a watershed moment for cannabis in the United States, it is difficult for the industry to maintain too much excitement given the current United State Senate’s propensity for killing bills, or at least allowing them to die in that chamber. Even putting aside the sweeping legalization measures, the social justice strands of the MORE Act may be the dealbreakers for Congressional republicans, some of whom have already said as much publicly. Of course, if both Georgia Senate seats flip to democrats in the January runoff elections, the 50/50 split in the Senate, then the bill is teed up to have Vice President (and MORE Act Senate sponsor) Harris pushing the bill over the hump.
If that Senate scenario does not come to pass, the likely outcome seems to be that the extremity of the MORE Act may make more incremental cannabis legalization—like the STATES Act, which would federally deschedule cannabis without any other attendant social justice measures—more appealing to a recalcitrant Senate. Even more likely may be the SAFE Banking Act, which would not federally deschedule cannabis, but would provide safe harbor to the financial industry (among other service providers) who service the cannabis industry. Of course, if the MORE Act were to be enacted, it would presumably eliminate the financial industry’s objections to banking for and lending to state-legal cannabis businesses.
In the meantime, cannabis industry participants and onlookers will eagerly watch how this bill fares as the canary in the Senatorial coal mine.
1 Appropriately enough, the date of the House’s vote was Jay Z’s birthday. However, Jay himself did not identify as a heavy cannabis user, preferring to consume “once in a blue when there’s nothing to do/And the tension gets too thick for [his] sober mind to cut through.” That being said, Jay is ostensibly pro-legalization, having recently introduced his own brand of cannabis and cannabis accessories. Chris Gardner, Jay-Z Debuts Product Line for Cannabis Brand Monogram, The Hollywood Reporter (Dec. 10, 2020), available at https://www.hollywoodreporter.com/rambling-reporter/jay-z-debuts-product-line-for-cannabis-brand-monogram