Tag Archives: STATES Act

David Feldman

Senior Trump Officials Support Congressional Action on Cannabis

In the last week both the US Attorney General and the Treasury Secretary have encouraged Congress to take action towards easing US cannabis prohibition. Yesterday, in testimony before Congress, AG William Barr seemed to support the currently pending Strengthening the Tenth Amendment Through Entrusting States (STATES) Act, while still opposing legalization. He was concerned about the continuing conflict between federal and state laws in the area, saying: “The situation that I think is intolerable and which I’m opposed to is the current situation we’re in, and I would prefer one of two approaches rather than where we are. Personally, I would still favor one uniform federal rule against marijuana but, if there is not sufficient consensus to obtain that, then I think the way to go is to permit a more federal approach so states can make their own decisions within the framework of the federal law and so we’re not just ignoring the enforcement of federal law…I would much rather that approach—the approach taken by the STATES Act—than where we currently are.”

Separately, many have been disappointed by the lack of action by Secretary Steven Mnuchin’s Treasury Department. In February 2018 he said that addressing the challenge of cannabis businesses’ access to commercial banking was at the “top of the list” of his priorities. Since then the Department has taken no action on the issue. On Tuesday of this week, Mnuchin announced in Congressional testimony, essentially, that his hands are tied and he believes he cannot solve the cannabis banking problem administratively. He urged Congress to address the issue with new laws “on a bipartisan basis.” Mnuchin spoke of the need to build “cash rooms” at Treasury to hold taxes that cannabis companies pay in cash. The SAFE Banking Act of 2019, which would effectively eliminate most restrictions on banks taking cannabis companies as customers, has passed the House Financial Services Committee and is expected to pass the full House as well. It’s fate in the US Senate is less clear. The STATES Act also would address the banking issue.

Politically, it appears we are closer than ever to Congressional action in this area. Every Presidential candidate, including all the Democrats, Trump and his current Republican contender Bill Weld, favors some form of legalization or allowing states to decide on the matter. Between the growing public support for legalization, the taxes and jobs pouring into cannabis-legal states and the desire to right the wrongs of the War on Drugs, it is becoming both more politically acceptable and politically expedient to support easing of federal criminal restrictions. The current holdup? The US Senate, where Lindsey Graham and Mitch McConnell continue to appear to desire to stonewall further legalization efforts. Stay tuned.

 

David Feldman

Trump Will “Probably” Support Gardner Cannabis Bill

On the White House lawn this morning, getting ready to leave for the G-7 summit in Canada, Pres. Trump made positive comments about the cannabis bill introduced yesterday by Sen. Cory Gardner (R-CO) and Elizabeth Warren (D-MA). The STATES Act would allow states the freedom to legalize cannabis within their borders with no federal enforcement action permitted. The text of the Senate bill, just released, removes state legal cannabis from enforcement under the Controlled Substances Act.

On the lawn, the President said of the bill, “I probably will end up supporting that, yes.” He said, “We’re looking at it,” but also noted that he “really” supports Sen. Gardner. Of course the bill has to be passed by Congress before being sent to the President. The question is whether the process can be completed before the “silly season” of midterm elections brings most legislative activity to a stop. Trump promised to support a bill like this in exchange for Sen. Gardner resuming approval of judicial nominations, which he had stopped after Attorney General Jeff Sessions rescinded an Obama-era memo de-emphasizing federal enforcement against actors in cannabis legal states.

The House version of the bill was introduced this morning but text is not yet available. The initial sponsors will be Rep. Jared Polis (D-CO), David Joyce (R-OH) and Earl Blumenauer (D-OR). The bill also appears to effectively repeal IRS Code Section 280E which prevents cannabis companies from deducting ordinary business expenses. It also removes activity by cannabis companies being assumed to be money laundering, which will hopefully help more banks to take cannabis companies as customers. Certainly a dramatic potential development.