The STATES Act and What it Could Mean for Cannabis Businesses

By Tucker Arensberg, P.C.

DISTRICT OF COLUMBIA: Senators Elizabeth Warren and Cory Gardner introduced the “Strengthening the Tenth Amendment Through Entrusting States Act” (“STATES”) Act – on June 7, 2018.  A companion bill was introduced by Representatives Earl Blumenauer and David Joyce in the House of Representatives.

The STATES Act seeks to amend the Controlled Substances Act (“CSA”), an effort to put the control of legal state marijuana programs in the hands of the states.  The proposed amendments to the CSA provide that as long as a person/persons is/are acting in compliance with their State or tribal laws relating to the manufacture, production, possession, distribution, dispensation, administration or delivery of marijuana, the provisions of the CSA will not be applicable to them.

Perhaps most importantly for cannabis business owners, the STATES Act provides that transactions that are compliant with state and tribal law are not to be considered trafficking and are not to be considered proceeds of an unlawful transaction.  This provision seeks to alleviate the financial issues on cannabis business caused by the federal prohibitions in place.

Limitations imposed by the STATES Act include a prohibition on the distribution of recreational marijuana to anyone under age 21, unless for medical purposes, as well as a ban on the distribution of marijuana at transportation safety facilities (rest areas/truck stops).  Prohibitions of the CSA, including the prohibition of endangering a life while manufacturing marijuana and the prohibition of employing a person under the age of 18 in drug operations would continue to remain in place.

President Trump has made statements suggesting that he would likely support the bill.

The text of the legislation that was introduced in the Senate on June 7, 2018, can be found here:

Gardner, Warren, Joyce and Blumenauer Unveil Bicameral, Bipartisan Legislation to Protect State Marijuana Policies

Forty-Six States, Washington D.C., Two Territories, and a Number of Tribes Have Legalized Marijuana in Some Form

DISTRICT OF COLUMBIA: U.S. Senators Cory Gardner (R-Colo.) and Elizabeth Warren (D-Mass.) and U.S. Representatives David Joyce (R-Ohio) and Earl Blumenauer (D-Ore.) today introduced the bicameral, bipartisan Strengthening the Tenth Amendment Through Entrusting States Act (STATES Act) to ensure that each state has the right to determine for itself the best approach to marijuana within its borders. The bill also extends these protections to Washington D.C, U.S. territories, and federally recognized tribes, and contains common-sense guardrails to ensure that states, territories, and tribes regulating marijuana do so safely.

Forty-six states currently have laws permitting or decriminalizing marijuana or marijuana-based products – and Washington D.C., Puerto Rico, Guam, and a number of tribes have similar laws. As states developed their own approaches to marijuana enforcement, the Department of Justice issued guidance to safeguard these state actions and ensure practical use of limited law enforcement resources. However, this guidance was withdrawn earlier this year, creating legal uncertainty, threatening public health and safety, and undermining state regulatory regimes.

“In 2012, Coloradans legalized marijuana at the ballot box and the state created an apparatus to regulate the legal marijuana industry.  But because of the one-size-fits-all federal prohibition, state decisions like this put Colorado and other states at odds with the federal government,” said Senator Gardner. “The federal government is closing its eyes and plugging its ears while 46 states have acted.  The bipartisan STATES Act fixes this problem once and for all by taking a states’ rights approach to the legal marijuana question. The bipartisan, commonsense bill ensures the federal government will respect the will of the voters – whether that is legalization or prohibition – and not interfere in any states’ legal marijuana industry.”

“Outdated federal marijuana laws have perpetuated our broken criminal justice system, created barriers to research, and hindered economic development,” said Senator Warren. “States like Massachusetts have put a lot of work into implementing common sense marijuana regulations – and they have the right to enforce their own marijuana policies. The federal government needs to get out of the business of outlawing marijuana.”

“We should trust the people of the states, like Ohio, who have voted to implement responsible common-sense regulations and requirements for the use, production, and sale of cannabis,”said Representative Joyce. “If the people of these states have decided to provide help for those veterans and others suffering from pain and other health issues, we should allow them access without government interference.”

“For too long the senseless prohibition of marijuana has devastated communities, disproportionately impacting poor Americans and communities of color. Not to mention, it’s also wasted resources and stifled critical medical research,” said Representative Blumenauer. “It’s past time to put the power back in the hands of the people. Congress must right this wrong.”

Ignoring the ability of states, territories, and tribes to determine for themselves what type of marijuana regulation works best comes with real costs. Legitimate businesses that comply with state laws are blocked from access to basic banking services. Illicit markets often spring up and local law enforcement must divert resources needed elsewhere. Thousands of people are prosecuted and locked up in our criminal justice system. Qualified scientists and state public health departments struggle to conduct basic and epidemiological research or spur medical advances, and the fundamental nature of state and tribal sovereignty is violated. As more states, territories, and tribes thoughtfully consider updates to marijuana regulations, often through voter-initiated referendums, it is critical that Congress take immediate steps to safeguard their right to do so by passing the STATES Act.

The legislation has been endorsed by organizations including the American Civil Liberties Union (ACLU), Americans for Prosperity, Americans for Safe Access, Americans for Tax Reform, the Brennan Center for Justice, Campaign for Liberty, the Competitive Enterprise Institute, the Cooperative Credit Union Association, the Drug Policy Alliance, the Institute for Liberty, LatinoJustice PRLDEF, the Law Enforcement Action Partnership, the Marijuana Policy Project, the Massachusetts Bankers Association, the Maine Credit Union League, the Mountain West Credit Union Association, the National Cannabis Bar Association, the National Cannabis Industry Association, the National Conference of State Legislatures, the New Federalism Fund,NORML, the Northwest Credit Union Association, R Street, and the Taxpayers Protection Alliance.

The STATES Act:

  • Amends the Controlled Substances Act (CSA) so that – as long as states and tribes comply with a few basic protections – its provisions no longer apply to any person acting in compliance with State or tribal laws relating to marijuana activities.
  • Clearly states that compliant transactions are not trafficking and do not result in proceeds of an unlawful transaction.
  • Removes industrial hemp from the list of controlled substances under the CSA.
  • The following federal criminal provisions under the CSA continue to apply:
    • Prohibits endangering human life while manufacturing marijuana.
    • Prohibits employment of persons under age 18 in drug operations.
  • Prohibits the distribution of marijuana at transportation safety facilities such as rest areas and truck stops.
  • Prohibits the distribution or sale of marijuana to persons under the age of 21 other than for medical purposes.

A fact sheet about the legislation is available here, and the full bill text is available here.

Elizabeth Warren Urges Feds To Support Research On Medical Marijuana’s Benefits

DISTRICT OF COLUMBIA: The federal government has a “responsibility” to facilitate sensible research into marijuana’s medical benefits, Sen. Elizabeth Warren (D-Mass.) and seven other senators urged in a letter issued last week to multiple federal drug and health officials.

“While the federal government has emphasized research on the potential harms associated with the use of marijuana, there is still very limited research on the potential health benefits of marijuana — despite the fact that millions of Americans are now eligible by state law to use the drug for medical purposes,” the letter reads.

The senators praised the White House’s recent lift of what was a mandatory bureaucratic review process, long criticized by researchers and lawmakers alike, that had stifled scientific research into the plant. But, they also encouraged the federal drug and health agencies to do more.