Ohio, a hotbed bed of cannabis drama and debate?
Who knew?
While the state of Ohio is grappling with recent voter approval of a full recreational cannabis program, and Republicans in the state government trying to strip out key parts of the measure or stop in completely, a new Ohio cannabis story has emerged on the national level.
Dave Joyce, a Republican in the House, has stepped with a federal marijuana legalization bill that makes sense!
A revised edition of a bill aimed at terminating the federal prohibition of marijuana in legalized states has been introduced by a Republican congressman. Representative Dave Joyce (R-OH) reintroduced the Strengthening the Tenth Amendment Through Entrusting States (STATES) 2.0 Act, which seeks to legalize interstate cannabis commerce, establish IRS policies for the industry, and consider a federal tax-and-regulate framework.
The bipartisan effort includes co-sponsorship from Representatives Lori Chavez-DeRemer (R-OR), Brian Mast (R-FL), Earl Blumenauer (D-OR), and Troy Carter (D-LA). Similar to the previous version, the proposed legislation would amend the Controlled Substances Act (CSA) to eliminate federal criminalization for those adhering to state cannabis programs, including those operated by Indian tribes. However, STATES 2.0 goes further by endorsing interstate marijuana commerce and proposing an unspecified federal tax on cannabis sales to fund regulations and enforcement.
Rep. Joyce, the co-chair of the Congressional Cannabis Caucus, emphasised the bill's intent to respect states' rights to enact their cannabis laws. He argued that the current federal approach impedes state autonomy, hindering medical research, affecting legitimate businesses, and diverting law enforcement resources. In a press release, Joyce stated, "The STATES Act does what every federal bill should do—help all 50 states succeed."
The bill articulates that states and tribes should have the authority to establish "time, place, and manner restrictions" to assist small businesses, regulate health and safety, and align with community values. Acknowledging the limitations of states in regulating interstate commerce unilaterally, the legislation highlights the persistence of illicit interstate cannabis trade despite significant state policy changes. It contends that the federal government should regulate and monitor this trade to prevent cannabis from reaching unauthorized destinations.
To achieve this, the bill proposes the establishment of a framework supporting administration, oversight, consumer safety, and enforcement. It suggests a modest federal excise tax on cannabis to fund these measures and advocates oversight by the Alcohol and Tobacco Tax and Trade Bureau (TTB).
Taxation and Interstate Commerce Guidelines
The proposed legislation does not mandate a specific tax rate, but its findings section suggests that any tax imposed should be "low enough to not exacerbate the level of taxation set by States, thereby avoiding the pyramid effect of adding Federal taxes on top of high State taxes." The purpose of the tax is to cover the costs associated with implementing the administrative functions of a Federal regulatory framework for marijuana, including testing, enforcement, policing, youth prevention, and substance abuse prevention and education, as outlined in the bill.
Crucially, the updated bill would prohibit states and tribes from restricting the transportation of cannabis across their borders from one legal jurisdiction to another. However, it allows origin and destination jurisdictions to "impose reasonable restrictions" within their borders on various aspects of marijuana, such as manufacture, production, possession, distribution, dispensation, administration, or delivery.
Furthermore, the STATES Act addresses a significant concern for the industry by ensuring that revenue generated from marijuana sales in regulated state markets "shall not be subject to section 280E" of the IRS code. Currently, section 280E prevents the cannabis industry from claiming federal tax deductions available to other traditional markets.
This particular issue has been a focal point for the industry, which has long advocated for the advancement of the Secure and Fair Enforcement (SAFE) Banking Act—a separate bipartisan bill led by Representative Joyce in the current legislative session.
Legal Framework and Regulatory Oversight
The newly proposed STATES Act outlines that the attorney general must, within 180 days of enactment, finalize a rule amending the Controlled Substances Act (CSA) to grant states and tribes an exemption from federal marijuana prohibition.
The legislation also emphasizes the continued role of the Food and Drug Administration (FDA) in regulating cannabis marketed as a drug, food item, dietary supplement, or cosmetic. It explicitly prohibits the combination of marijuana with "adulterated" products, including alcohol and tobacco. Within 180 days, the Health and Human Services secretary is tasked with issuing a rule on regulating cannabis products, encompassing contaminant testing, manufacturing, and marketing requirements.
Notably, the bill maintains that individuals engaging in activities such as manufacturing, producing, possessing, distributing, dispensing, administering, or delivering marijuana in violation of state or tribal laws, or employing a minor in such activities, remain subject to federal prosecution.
Additionally, the legislation mandates the Government Accountability Office (GAO) to conduct a study examining the impact of cannabis legalization on traffic safety. The GAO is required to submit a report to Congress within one year of the enactment of the bill, presenting its findings on this matter.
Congressional Recognition of Tribal Autonomy
The bill's findings section also conveys Congress's acknowledgement that the FDA should support "tribal self-determination and self-government concerning marijuana regulation."
Expressing his pride in collaborating with Representative Dave Joyce on multiple versions of the STATES Act, Earl Blumenauer, founding co-chair of the Cannabis Caucus, stated that true bipartisan engagement benefits cannabis reform. Despite his decision not to seek re-election next year, Blumenauer looks forward to working towards improving federal-state partnerships across political lines.
Brian Mast, another co-chair of the caucus, emphasized the constitutional principle that, although the U.S. Constitution doesn't explicitly mention cannabis, it unequivocally states that powers not granted to the federal government are reserved for the states. Mast argued that cannabis policy should reflect this principle, allowing each of the 50 states to establish policies that best serve their constituents—a goal he believes the STATES Act will achieve.
Lori Chavez-DeRemer highlighted the increasing number of states legalizing cannabis and stressed the importance of creating a secure and professional environment for one of the fastest-growing industries.
Despite doubts about advancing marijuana policy reform in the current Congress, the Senate Banking Committee passed a marijuana banking bill in September. However, it awaits floor action, and there's uncertainty about House GOP leaders' willingness to address it. Senate Majority Leader Chuck Schumer noted the challenge of garnering more GOP votes for the bill, as some lawmakers fear backlash from constituents, particularly older ones, despite majority voter support for reform.
Simultaneously, a coalition of 20 congressional Democrats is urging Treasury Department officials to update federal guidance, preventing financial institutions from discriminating against marijuana business owners based on past cannabis-related activity that is now legal at the state level, as lawmakers continue to advocate for the SAFER Banking Act.
Bottom Line
Congressman Dave Joyce's STATES 2.0 Act represents a comprehensive effort to reshape federal cannabis policies, encompassing interstate commerce, taxation, and regulatory oversight. The bipartisan support underscores the significance of respecting states' autonomy, recognizing tribal self-determination, and addressing key industry challenges. While doubts persist about the immediate progress of marijuana policy reform in the current Congress, the proposed legislation sets the stage for a nuanced and collaborative approach, emphasizing the importance of federal-state partnerships and industry growth in the evolving landscape of cannabis legalization.
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