Finding common ground between Democrats and Republicans is likely the key to moving cannabis legislation across the finish line. In introducing the States Reform Act, Rep. Nancy Mace (R-SC) is seeking to bring more Republicans into the fold. Her proposed legislation would decriminalize cannabis at the federal level while allowing states to establish their own regulations.

How the States Reform Act Would Regulate Cannabis

Like other cannabis reform bills, the States Reform Act (SRA) would decriminalize cannabis and create a national regulatory framework for legal cannabis products. The SRA is unique in allowing states to keep their own regulatory schemes in place. “Today, only 3 states lack some form of legal cannabis. My home state of South Carolina permits CBD, Florida allows medical marijuana, California and others have full recreational use, for example. Every state is different. Cannabis reform at the federal level must take all of this into account. And it’s past time federal law codifies this reality,” Rep. Mace said in a press statement.

Below are several key aspects of the proposed cannabis reform legislation:

• Decriminalization: The bill removes cannabis from Schedule I of the Controlled Substances Act (CSA).
• State rights: The bill defers to states over prohibition or regulation. No state or local government would be forced to alter its current cannabis policies.
• Regulatory framework: The bill regulates cannabis federally like alcohol. The U.S. Department of Agriculture would oversee growers, the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives would regulate cannabis products, and the U.S. Food and Drug Administration would supervise medical use.
• Safe harbor: The bill creates a transitory safe harbor so that patients and businesses currently using and producing state-licensed products are not deemed in violation of this law until the agencies responsible for issuing federal regulations promulgate them within the specified time periods.
• Taxation: The bill institutes a 3% federal excise tax on cannabis products, which would be used to fund law enforcement, small business, and veterans mental health initiatives. The tax would be levied at wholesale and based on the removal price of the cannabis. 
• Medical cannabis: The bill ensures the safe harbor of state medical cannabis programs and patient access while allowing for new medical research and products to be developed.
• Expungement: The bill provides for federal release and expungement for those convicted of nonviolent, cannabis-only related offenses. This will not include cartel members, agents of cartel gangs or those convicted of driving under the influence (DUI). Approximately 2,600 releases will be expected at the federal level. State level releases and expungements will be left to each state to determine.
• Military veterans: The bill protects military veterans by prohibiting discrimination in federal hiring for cannabis use or VA healthcare benefits.
• SBA: The bill requires the Small Business Administration (SBA) to treat cannabis businesses like alcohol or similar businesses and no longer as illegal businesses. It specifies that in general and for disaster loan, microloan, small business investment company debenture, and state or local development loan programs, cannabis businesses are now eligible entities.
• Child protections: The bill imposes a nationwide 21-year age limit for cannabis consumption (with an exception for medical use consistent with state programs and medical recommendations). Targeting cannabis product advertising at children would be prohibited by law, along with fraudulent advertising.

Status of Other Cannabis Reform Measures

As discussed in prior articles, Democrats have introduced their own comprehensive cannabis reform bills. This summer, Senate Majority Leader Chuck Schumer (D-NY) and Senators Cory Booker (D-NJ) and Ron Wyden (D-OR) released a discussion draft of the Cannabis Administration and Opportunity Act (CAOA). The Senators continue to solicit feedback from stakeholders and have yet to formally introduce the bill.

On September 30, 2021, the House Judiciary Committee advanced the Marijuana Opportunity Reinvestment and Expungement (MORE Act). The bill, which is sponsored by Rep. Jerrold Nadler (D-NY), passed in the full House in 2019 before failing to advance in the Senate, which was under Republican control at the time. The MORE Act will likely be on the House agenda sometime in 2022.

The full House also approved the Secure and Fair Enforcement (SAFE) Banking Act this fall as part of the National Defense Authorization Act (NDAA). As discussed in greater detail in prior articles, the SAFE Banking Act seeks to improve access to financial services for legal cannabis businesses. While the more incremental reform would seem more likely to pass the Senate, Sen. Cory Booker has said that providing businesses with easier access to financial services before federal criminal penalties are eliminated is a nonstarter.

Key Takeaway

With Democrats now in control of both chambers, as well as the White House, there is optimism that cannabis reform can become a reality. However, the margins for passage are narrow, requiring the support of all Democrats and/or at least some Republicans. Should Rep. Mace be able to rally Republican support around her bill, it increases the likelihood that the two parties can find common ground and advance a bi-partisan cannabis reform bill that both parties will support. We encourage members of the cannabis industry to closely monitor legal updates and contact the Scarinci Hollenbeck Cannabis Law Group with any questions about how your business may be impacted by ongoing state and federal legalization efforts.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact Dan McKillop, Teddy Eynon, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.

This article is a part of a series pertaining to cannabis legalization in New Jersey and the United States at large. Prior articles in this series are below:

• New Jersey Adult-Use Cannabis License Applications Coming in December
• Are Cannabis Licensee Residency Requirements Legal?
• House Committee Greenlights Cannabis Legalization Bill

Disclaimer: Possession, use, distribution, and/or sale of cannabis is a Federal crime and is subject to related Federal policy. Legal advice provided by Scarinci Hollenbeck, LLC is designed to counsel clients regarding the validity, scope, meaning, and application of existing and/or proposed cannabis law. Scarinci Hollenbeck, LLC will not provide assistance in circumventing Federal or state cannabis law or policy, and advice provided by our office should not be construed as such.