The state of marijuana laws is in a constant struggle. For decades, the federal government has been turning down states’ requests to decriminalize cannabis use for medical and recreational purposes. This leaves states with many questions about how they are supposed to regulate it without incurring fines from federal officials..

The “17 qualifying medical conditions” are the only ones that have been approved by the federal government as a way to show marijuana has medicinal purposes. The list of conditions is not all-inclusive, however.

Federal law still treats marijuana as an illegal drug, creating headaches for states

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Adult usage has now been legalized in 44 states, accounting for 44 percent of the population of the United States.

The majority of states in the United States are in breach of a key federal drug law.

Because of its alleged propensity for misuse and absence of medicinal uses, the 1971 Controlled Substances Act places marijuana in the most hazardous category established by the law, on par with cocaine and heroin.

However, 36 states plus the District of Columbia allow either full adult legalization or widespread medicinal usage, contradicting federal prohibition. Despite backing from senior Democrats for a smoother connection between the states and the federal government, Congress has so far been unable to come up with a solution.

The first states to allow adult usage were Colorado and Washington, which did so less than ten years ago. Marijuana possession will be legal for all adults in 18 states at the beginning of the year, including Arizona, Colorado, Maine, Michigan, Montana, Nevada, New Jersey, New Mexico, Oregon, and Virginia, which account for 44 percent of the country’s population.

This number has lately risen: only this year, the governors of New Mexico and Virginia approved legalizing bills. Montana’s, which was adopted by a ballot proposal in 2020, will take effect on January 1, 2021.

The disparity between a federal prohibition and expanding state legalization hasn’t prevented the marijuana sector from thriving in states where it is allowed. The federal government has mostly avoided pursuing federal law in states where marijuana is legal since Colorado and Washington made their moves in December 2012.

However, as additional states participate in legalization, the policy divide deepens, affecting everything from banking to tribal authority.

“While the federal prohibition of cannabis clearly does not prevent states and territories from enacting cannabis legalization laws, federal prohibition continues to create a number of barriers for states, businesses, and consumers,” said JM Pedini, the development director of the advocacy group National Organization for the Reform of Marijuana Laws, or NORML, and the executive director of the group’s Virginia chapter.

Banking

One of the most apparent issues — and the easiest to solve for proponents of legalization — is banking.

Because cannabis is illegal at the federal level, a lot of financial institutions will look at the legislation and decide it’s not worth the risk.

Marijuana firms, as well as others that offer related items, are turned down for credit, small business loans, and even bank accounts.

According to Mason Tvert, a communications adviser with the Denver-based cannabis specialty law firm Vicente Sederberg and partner with the firm’s separate public policy office, VS Strategies, banks are afraid of being prosecuted for working with businesses that technically fit the federal definition of drug traffickers.

“Because cannabis is illegal at the federal level, a lot of financial institutions will look at the legislation and decide it’s not worth the risk,” he added. “They are concerned about the possibility of being charged with federal money laundering and narcotics trafficking.”

Tvert stated that banks and insurers who cooperate with marijuana enterprises often add a significant markup to their services.

Even firms like Greenlane Holdings, which offers marijuana-related items but does not produce or sell the plant itself, are affected, said to Nick Kovacevich, CEO.

Banking sector guarantees would be provided by a plan in Congress that would enable banks to conduct business with state-legal marijuana merchants, according to backers.

The SAFE Banking Act was approved by the House as part of the yearly defense authorization bill this year, but it was withdrawn by the Senate. It would go a long way toward improving marijuana’s acceptability in the corporate world, according to Kovacevich.

He said, “It’s a risk-reward situation.” “I believe the risk-reward profile for them changes drastically as more banks say, ‘OK, now I’m comfortable.’”

The defense bill has been removed.

The banking law, which was initially submitted in the Senate by a bipartisan group in 2017, has made progress in prior Congresses, but supporters hoped the new Democratic Senate would approve it this year.

Tvert said, “There were strong expectations it would be included in the national defense bill.” “However, it was finally excluded.”

Democratic friends, according to Kovacevich, Tvert, and others, are obstructing the bill in the Senate.

Sens. Cory Booker of New Jersey and Chuck Schumer of New York, along with Oregon’s Ron Wyden, released their own draft legislation this year to end the federal prohibition on marijuana, expunge criminal records for those convicted of marijuana offenses, and create an investment fund for communities harmed by the decades-long war on drugs.

Schumer remarked at a press conference in July that the banking law was too limited and that a more comprehensive solution was required, particularly for minority communities that have been hurt by federal prohibition.

According to a transcript given by his office, he stated, “Communities of color have paid such a terrible price for the past over-criminalization of marijuana that we want to make sure that money gets back to them, and not simply to the largest, strongest banker to grab it all.”

A spokeswoman for Booker issued a comment when asked about his opinion on the banking measure.

“While the SAFE Banking Act is a common-sense legislation that I support, it must be paired with robust restorative justice elements that attempt to right the numerous injustices endured by Black and Brown communities as a result of our country’s failing War on Drugs,” Booker said in a statement.

“To that end, I’ve collaborated with Senator Wyden and Majority Leader Schumer to present… comprehensive legislation that will undo decades of unfair, unjust, and discriminatory drug policy.”

Schumer’s spokesman did not immediately reply to a request for comment.

In 2022, it’s unknown where the law will stand.

Although The Hill reported last month that Schumer may put his plan up for a floor vote this spring, the Schumer-Booker-Wyden bill is still simply a discussion draft and hasn’t been publicly presented.

According to Justin Strekal, the political director for NORML, a big majority of Republicans are unlikely to embrace complete legalization, at least in part because their Senate leader, Kentucky’s Mitch McConnell, is a staunch opponent.  

At the July availability, Schumer committed to “get something done” by lobbying senators to approve the bigger package.

He stated, “This is a pretty thorough measure.” “We’re going to go to our coworkers and ask them explicitly: what don’t you support here?” What are you able to contribute in this situation? We’re going to accomplish something.”

Interstate sales and tribal rights

Though Congress is primarily focused on financial reform, the federal prohibition hinders state legalization in other ways, particularly in states with large Native American populations and reservations, such as Montana and New Mexico.

On tribal territory, federal officials with the Bureau of Indian Affairs have authority, which means they might theoretically enforce federal drug prohibitions there, even if it would otherwise be lawful.

This was the case in a raid on tribal grounds in New Mexico in September, just after the state’s legalizing statute took effect.

Montana state Sen. Shane Morigeau, a Democrat and member of the Confederated Salish and Kootenai Tribes of the Flathead Nation, said in an interview that tribes don’t have the same degree of assurance as states that federal authorities would allow them to regulate marijuana on their own.

Morigeau pushed for a clause in Montana’s marijuana legislation that would offer the state’s eight tribes a one-of-a-kind chance to get licenses to produce and sell marijuana to consumers.

Morigeau, who emphasized the potential cash from legalizing marijuana, said the clause was an effort to include tribes in the new revenue stream, which he described as “at the bottom of every social index.”

“This letter stating we’re going to be hands off with you people,” he remarked, referring to US Justice Department instructions to leave state-legal conduct alone. “For the tribes, that just does not exist… For us, it was a simple matter of identifying regions of the state that might benefit from income.”

The federal restriction also implies that products cultivated in one state cannot be exported to another, even if both states have legalized the practice, such as Oregon and Washington.

Growers in states with a tiny marijuana production industry may benefit from this.

Growers are overproducing and pushing down costs in Oregon, a reasonably fruitful region for marijuana production with a comparatively small population.

Montana, on the other hand, may have the opposite issue, according to Morigeau. There might be a scarcity once legal sales begin on Jan. 1 due to a lack of cultivators and a limitation on going beyond the state’s boundaries for supplies, he added.

The ‘quagmire’ in Virginia

Not every issue with a state’s marijuana program stems from federal regulation.

Many states have shown how to run effective programs, according to Virginia Delegate Glenn Davis, a Republican who is dissatisfied with Democratic leaders’ implementation of the state’s marijuana laws.

He believes Virginia should have looked at programs in Colorado and other states. Instead, when the Commonwealth of Massachusetts legalized marijuana use this year, the law did not establish a legal market until 2024. That means it’s legal to own and consume marijuana, but not to purchase or sell it for three years.

The issue, according to Davis, is a “quagmire.”

“Obviously, because of the feds, there are some issues,” he added. “However, the Democrats’ predicament was not caused by the federal government.”

Those who wish to see marijuana handled like any other business authorized by a state have been disappointed by the multiple obstacles with state marijuana programs generated by the federal prohibition.

“Given the trajectory of public support and the increasing number of states that have approved these legislation, as well as the degree to which this discussion has evolved,” Tvert added. “However, it must be safeguarded and handled as a legitimate business.”

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The “schedule 1 and 2 drugs” are classified as highly addictive substances with no medicinal value. This is due to the Federal law that still treats marijuana as an illegal drug, even though there are 28 states that have legalized it for medical or recreational use. This creates headaches for states where marijuana is legal.

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