New Federal Legalization Bill Gives Industry Possible Rallying Point

The national U.S. marijuana industry might have a viable path to a federally approved coast-to-coast market, complete with interstate commerce, if a bipartisan bill introduced late last week in the House of Representatives gains traction in Congress.

The measure is an updated, expanded version of the longstanding Strengthening the Tenth Amendment Through Entrusting States (STATES) Act, spearheaded by Ohio Republican Rep. Dave Joyce and cosponsored by fellow GOP Reps. Lori Chavez-DeRemer and Brian Mast, along with Democratic Reps. Earl Blumenauer and Troy Carter.

The bill is the latest attempt to thread a legal and political needle, on an almost parallel path with the federal rescheduling process that’s already underway. And it takes practical steps that rescheduling would leave unfinished from a business perspective.

For instance, the new STATES Act doesn’t fully federally legalize marijuana by removing the plant and its derivatives from the Controlled Substances Act, but rather it creates a carveout for states that have formally opted into a regulated industry and specifically authorizes interstate commerce between those states, according to Joyce’s office.

The measure is an ideological extension of an annual budget rider that Joyce and Blumenauer have been running for years now to prevent the federal Department of Justice from spending any resources to interfere with state medical marijuana programs. And it’s one that has enjoyed slowly growing political support in Congress, as more states have implemented legal marijuana markets.

The move drew immediate applause from nearly every corner of cannabis advocacy, with statements of support from the National Cannabis Industry Association, Better Organizing to Win Legalization (BOWL) PAC, the National Cannabis Roundtable, the American Trade Association for Cannabis and Hemp, the Coalition for Cannabis Policy, Education and Regulation, and Americans for Prosperity.

One of the immediate hurdles, however, is House Speaker Mike Johnson, who has voted repeatedly in opposition to various cannabis reform bills, Marijuana Moment reported after Johnson took power in October. That means the STATES Act will probably remain on a shelf until Democrats retake both chambers of Congress, which isn’t out of the question for November 2024.

If Johnson did allow the bill to move forward prior to next year’s election, however, it could ostensibly provide a valuable legal bridge between rescheduling and a functional national marketplace.

The administrative rescheduling process – which is currently at the Department of Justice, but with an unknown timetable for completion – would primarily be a financial benefit to the current industry via new federal tax breaks, without any other major business perks. That means it still wouldn’t be legal for brands to ship products from California to New York, for example, barring some other new action.

That’s where the new STATES Act comes in – or at least that’s the idea.

From a practical standpoint, if marijuana was to be moved from to Schedule III from Schedule I – as the Biden administration is proposing – that would still leave a major legal disconnect between federal law and the existing state-level cannabis industry, with the U.S. Food and Drug Administration a nearly insurmountable hurdle.

Only major pharmaceutical companies, with billions of dollars to invest and years to spend on clinical trials, are ever able to meet the Schedule III threshold for FDA approval to make and sell drugs categorized as such.

That means the industry needs the STATES Act, or at least, something quite similar, in concert with rescheduling in order to become truly normalized in the U.S.