Moving Forward with the MORE Act: A Look into Current Cannabis Legislation

By Charles Alovisetti, Partner

Nov 18, 2019

News broke this weekend that the House Judiciary Committee will mark up and vote on legislation legalizing cannabis, the Marijuana Opportunity Reinvestment and Expungement (MORE) Act of 2019 on Wednesday, November 20th.

This will be the first-ever U.S. congressional vote to end federal cannabis prohibition. With this historic vote approaching, let’s take a look at the current status of federal law regarding cannabis, other pieces of legislation that have been introduced, and what the MORE Act contains.

Current Federal Cannabis Laws and Potential Legislative Changes   

While there has been no material change to the law criminalizing marijuana since the passage of the Controlled Substances Act (CSA), there are several pieces of legislation at the federal level that will have a major impact on the legal status of cannabis, if passed. The two major bills with the broadest legislative support are the “Strengthening the Tenth Amendment Through Entrusting States Act” (the STATES Act) and the “Secure and Fair Enforcement Banking Act of 2019” (the SAFE Banking Act), both of which have bipartisan sponsors in the House and Senate. This is key as the Republican-held Senate is unlikely to take up cannabis reform measures without broad support from their side of the aisle.

The STATES Act

The STATES Act would resolve the tension between federal and state cannabis laws, by deferring to state cannabis decisions. This would be accomplished by making the CSA inapplicable to operators who are in compliance with state cannabis laws.

Because the STATES Act would remove federal criminal liability from state-compliance operators, this would remove issues around federal money laundering statutes, any issues related to aiding and abetting, conspiracy, RICO, and 280E. The STATES Act has been introduced into both the House and the Senate, with nine cosponsors in the Senate and 62 in the House, but the legislation has not passed out of committees in either chamber. Notably, President Trump has stated he will “probably” support the STATES Act.

The SAFE Banking Act

The SAFE Banking Act would create a safe harbor from federal prosecution for financial institutions that offer direct or indirect services to cannabis-related businesses or service providers, pursuant to state law. It removes state-legal cannabis-related business or service provider transaction profits from being considered as proceeds of an unlawful activity under the Money Laundering Control Act solely because the transaction was conducted by such businesses. These two provisions, in addition to other protections and guidance mandated under the bill, would significantly improve the ability of cannabis businesses to obtain secure banking services and raise capital.

As of today, there have been no votes in the Senate on the SAFE Banking Act or a newly written alternative bill. On September 25, 2019, the full House approved the SAFE Banking Act 321-103. This vote made the bill the most successful cannabis policy reform measure to date. In the Senate, a companion version of the SAFE Banking Act has been introduced and currently has 33 total cosponsors. On September 12, Senate Banking Committee Chairman Mike Crapo (R-ID) indicated that he might work to amend the SAFE Banking Act or might write his own bill, but that he wants to hold a vote on some legislation that would allow banks to service the cannabis industry. There have not been any public updates regarding the SAFE Banking Act since its passage by the House.

In addition to the STATES Act, the SAFE Banking Act, and the MORE Act, other bills have been introduced, including the Marijuana Justice Act of 2019, which has a similar social justice component as the MORE Act. This bill is regarded as not likely to advance.  

The MORE Act

The MORE Act was introduced into the Senate by Sen. Kamala Harris on July 23, 2019 as S. 2227, where it has currently been referred to the Committee on Finance. The bill has five cosponsors – Sens. Booker, Merkley, Wyden, Warren, and Markey. On the same day, Rep. Jerrold Nadler introduced the same bill into the House as HR. 3884. This bill has 55 cosponsors, including one Republican, Rep. Gaetz from Florida.

Unlike the STATES Act, which has broader bipartisan support and is regarded as the more likely to advance in the Republican-led Senate, the MORE Act has a strong social justice component. In addition to completely removing marijuana from the schedule of controlled substances under the CSA, which would fix a large measure of the cannabis industry’s 280E and banking issues, the MORE ACT contains additional far-ranging provisions worth noting:

  • Requires the Bureau of Labor Statistics to maintain demographic data on the cannabis industry, including owners and employees
  • Creates a 5% national excise tax on cannabis that is used, in part, to fund an opportunity trust fund
  • Creates Community Reinvestment Grant Program to fund services for individuals most adversely impacted by the war on drugs (e.g., job training, reentry services, etc.)
  • Creates a Cannabis Justice Office to administer the Community Reinvestment Grant Program
  • Directs the Small Business Administration (SBA) to create an Equitable Licensing Grant Program to fund states to implement equitable cannabis licensing programs
  • Explicitly makes state-legal cannabis businesses eligible for SBA assistance
  • States that no person may be denied any Federal public benefit on the basis of cannabis use or conviction for a cannabis offense
  • States that security clearances cannot be denied for cannabis use
  • Amends immigration laws so that immigration status will not be impacted by cannabis conviction or use
  • Creates a Federal expungement program and a process for sentencing review for individuals incarcerated for cannabis offenses

Note that the above summary only pertains to the current text of the MORE Act. The upcoming meeting Wednesday is a markup meeting (a meeting by a committee or subcommittee during which committee members offer, debate, and vote on amendments to a measure) so we shouldn’t be surprised if the substance of the legislation changes.

 

This article is for informational purposes only and not for the purpose of providing legal or tax advice. You should contact your attorney to obtain advice with respect to any issue or problem.