Federal prohibition of marijuana has inspired generations of activists to dedicate their lives to legalized medical and adult use. Efforts have been successful for some states to legalize cannabis, and more Americans support marijuana reform than ever before. Still, the plant remains illegal at the federal level. As policymakers push for legislation to increase access and ease operational woes for cannabis companies, many believe federal marijuana legalization could be looming.
Before the 1930s, hemp domestication was encouraged in the United States. But the plant took a long road to being a DEA Schedule 1 substance since that time.
The Mexican Revolution (1210-1917) brought more immigrants North, and many used cannabis recreationally. This practice spread among Americans until the Great Depression. There was a lack of work during this financially destitute period of American history. This trauma led to a widespread xenophobic belief that Mexican immigrants would take the available jobs. This irrational fear became associated with the plant.
By 1937, after calls for cannabis prohibition, the plant became criminalized in the country. Since then, laws have ebbed and flowed from strict to lenient as different administrations took control of the White House–but the plant has remained illegal in the eyes of federal law enforcement.
“As more members of Congress come to represent constituencies with legal cannabis markets, we will move ever closer to achieving the critical mass of nationwide support we need to finally end federal cannabis prohibition,” Toi Hutchinson, president, and CEO of Marijuana Policy Project, told GreenState.
Cannabis federal rescheduling could be imminent
In 2022, President Joe Biden called for a review of the current scheduling from the Attorney General and Secretary of Health and Human Services (HHS). The Department recently officially recommended for the Drug Enforcement Administration to move cannabis down on the controlled substances scheduling.
In a letter, HHS voiced that cannabis should move from Schedule I to Schedule III. At Schedule III, the plant would be in the company of compounds like Tylenol and anabolic steroids. Though positive, many in the industry hoped for more.
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“Federal cannabis legalization is unfortunately not certain,” said Debbie Churgai, executive director of Americans for Safe Access, via email. “We believe a more promising pathway forward would be for Congress to create a new schedule designation for cannabis, Schedule VI, and to create an Office of Medical Cannabis and Cannabinoid Control (OMCCC) housed in Health and Human Services to oversee the new schedule as well as licensing, research, federal agency implementation, and national coordination.”
The Schedule I designation has not only made it illegal to purchase, sell, and possess the plant. It creates barriers for research scientists. If moved to Schedule III, cannabis would be much easier to research based on a 2022 DEA Researchers Manual.
Past rescheduling efforts came up short
Policymakers have previously attempted to reschedule the plant with bills like H.R. 3617, also known as the Marijuana Opportunity Reinvestment and Expungement Act (MORE Act). MORE passed in the House but died in committee in the 2021-2022 session. That was the second attempt at rescheduling cannabis using the bill.
“For decades, the federal government has taken every step to make it impossible to access cannabis for any reason, and they have created a convoluted control system that makes it nearly impossible to legalize within the current framework,” said medical cannabis advocate Alice O’Leary Randall. “The government needs to slice through it all. I’d like to see them create a Schedule VI for cannabis and all of its many products.”
Elected officials in the District of Columbia didn’t get the MORE Act through the last session, but rescheduling is on the docket again. The Marijuana 1-to-3 Act (H.R.610) seeks to move cannabis from Schedule I to III, which reclassifies the plant as having less potential for abuse, low or moderate risk of dependence, and some medical use. U.S. Rep. Gregory Steube introduced H.R. 610 into Congress in January 2023. It has yet to reach the committee, but the end goal may be met.
The final word on rescheduling relies on the DEA, who have yet to comment on the HHS recommendation.
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Cannabis access to banking services
Banking is one barrier to a compliant cannabis business. The financial industry answers to the federal government, and they view cannabis as illegal. As a result, many banks won’t serve cannabis companies. Several cannabis-friendly banks have emerged in the last decade, but most financial institutions refuse to accept plant-related clients. Banks cite avoiding possible penalties or punishment from the federal government as the reasoning behind the choice.
The current laws corner many cannabis entrepreneurs into alternative loan options. Most businesses can seek loans from established lenders. These loans often carry higher terms, making cannabis businesses vulnerable to predatory lending practices.
Some cannabis companies have chosen to avoid disclosing that they are in the industry to their bank, operating like any other small business owner at the local credit union. This tactic has worked for many but has also caused sudden banking issues for others.
Once a bank flags that a business is even slightly close to the cannabis space, it will often freeze accounts and cease its relationship with the client. Any tangential connection to cannabis currently leaves a business at risk of sudden account closure.
SAFE Banking Act gets SAFER, advances from committee
The Secure and Fair Enforcement Banking Act (S. 1323), also known as the Safe Banking Act, was introduced to the legislature in updated formats since the 2021 session. The bill would protect financial institutions that choose to serve the state-regulated marijuana industry if passed as written.
The act would prohibit Federal banking regulators from ending or limiting bank insurance because it works with a cannabis company. Compliant cannabis business accounts would also be safe from account shutdowns. SAFE reframed how cannabis transactions are observed under federal law. State-sanctioned marijuana business” transactions would be legal.
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Senator Jeff Merkley introduced The Secure and Fair Enforcement Banking Act (S. 2860), a.k.a. SAFER, in September 2023. SAFER maintains the action of the SAFE Banking Act. It also explicitly stops federal regulators from shutting down accounts without a valid reason. It also spells out how and when a bank should inform customers flagged with issues that could lead to shutdowns.
SAFER was referred to the Committee on Banking, Housing, and Urban Affairs for markups. This is a process where lawmakers propose amendments and changes to the law before recommending it to the full Senate. Majority Leader Chuck Schumer (D-NY) released a statement in support of moving SAFER through to full Senate.
“For too long, the federal government has continued to punish marijuana users and business owners – even when doing so is actively harmful to our country. This ‘war on drugs’ has turned into a war on people and communities – specifically people and communities of color – and a war on business.”
Senate Chair Sherrod Brown is also confident the bill will make it through, stating, “We’ll pass it decisively.”
NEW EXCLUSIVE:
Senate Banking Chair Sherrod Brown on SAFER Banking Act: “we’ll pass it decisively”#SAFEBanking #cannabisindustry https://t.co/g9P3nD6KuX pic.twitter.com/bYZZvoBBc0
— @askapol (@ask_a_pol) September 22, 2023
Federal marijuana legalization community impact
The end of federal prosecution for cannabis would impact the United States at every level. Legalization has been shown to lower arrests and Major crime in certain localities. The misnomer that cannabis consumption leads to crime persists in older generations.
“Twenty-three states have now enacted legislation regulating the adult-use cannabis market—none of these states have repealed or even rolled back their laws and public support for these policies has never been higher. That is because these policies are largely working as politicians and voters intended and they are preferable to prohibition,” Paul Armentano, Deputy Director of NORML, told GreenState. “Our nation’s federalist principles demand that Congress respect voters’ decisions on cannabis — and repeal the failed policy of federal prohibition.”
When legalization looms in a new location, public health officials worry most about rising crime rates and car accidents. Data regarding crime and car accident rates in the legal marijuana locales have shown otherwise.
Legalizing adult use leads to fewer cannabis-related arrests, and a 2012 study showed no correlation between dispensaries and Major crimes in Sacramento, CA. One study of car accident data in Toronto indicated fewer accidents near cannabis dispensaries. Data supports the notion that cannabis reform may not have a negative impact.
Federal marijuana legalization likely on the horizon
Though it may be a few years off, federal marijuana legalization may happen in this lifetime. Efforts in the 2023 legislative session may set a precedent for future policy that could alleviate the bureaucratic chokehold on compliant operators.
“I think it’s entirely reasonable to expect the federal government to regulate cannabis in the next five to seven years,” predicted Aaron Smith, co-founder and CEO of the National Cannabis Industry Association (NCIA). “Incremental progress such as passage of the SAFE Banking Act are much closer on the horizon. More states are moving to regulate cannabis for adults every year which increases the number of congressional representatives with a stake in the issue.”
Sara Payan, member of the California Cannabis Advisory Committee and Chair of the Medicinal Use Subcommittee, also believes that reform could within in a few years.
“I don’t believe federal legalization will happen during this presidential term. If the Democrats win the next presidential election, we have a good chance of seeing cannabis legalized nationally,” Payan said via email.
While Payan believes the U.S. is relatively close to cannabis legalization, Kaliko Castille, president of the Minority Cannabis Business Association, argues it could take nearly a decade.
The final word
“Many treat (legalization) as an inevitability, but that point of view minimizes how complicated it is to get anything through Congress during these polarized times,” Castille told GreenState. “If I had to guess, we are still two presidential cycles away from federal prohibition ending and it is going to require our industry to work in coalition for the greater good rather than in siloed interest groups.”
Medical and recreational legalization have shown to have a positive impact on communities, businesses, and more. New data and research continue to deflect the assumption that legalization leads to crime and chaos. Recent pushes could build enough momentum for federal marijuana legalization within the next five years.