How the Government Shutdown Affected Cannabis Legislation

The effects (and financial costs) of the most recent government shutdown are continuing to reveal themselves, sometimes in surprising ways. One relatively under-the-radar development relates to the progression of cannabis-friendly legislation being introduced in the U.S. House and Senate.

As more and more states legalize cannabis in both its medical and recreational forms, the federal government is feeling pressured to act. Given the stark conflict between cannabis’ federal classification as a Schedule I controlled substance and states’ willingness to legalize, tax, and regulate cannabis, the federal government faces a fairly binary choice—step up and begin enforcing anti-cannabis laws against the states (potentially winding up in court), or working to find a compromise that will allow states and the federal government to more freely regulate cannabis financing, cultivation, and sales.

But the government shutdown brought the wheels of justice to a grinding halt, and many cannabis activists fear that any pending (or planned) cannabis-related legislation may wind up shelved until next year. As an election year, 2020 is certain to bring many hot-button topics to the public’s attention, and with support so overwhelmingly in favor of legalizing cannabis, this issue may simply not be divisive enough to garner much notice or activism.

Read on to learn more about some of the cannabis measures currently being contemplated or introduced in the House and Senate, as well as some of the options states may have to protect their burgeoning cannabis industries from federal oversight (and overreach) if legalization remains years away.

What Cannabis-Related Legislation May Be Coming Down the Pike?

Just prior to the November 2018 election, Oregon Representative Earl Blumenauer (D) provided members of his party leadership with a veritable blueprint for nationwide cannabis legalization. And when the Democratic Party took the House, many expressed optimism that these measures might gain traction in an increasingly cannabis-friendly society. Blumenauer expressed his concern that if Democratic lawmakers were not quick to get behind cannabis legalization measures (and to make their support public), Republicans could take credit for these efforts, bolstering their election odds in 2020.

Some of Blumenauer’s suggestions included:

  • During the first quarter, schedule congressional committee hearings on each of the policy areas that are most likely to be impacted.

Legalizing marijuana on a national basis may have a significant impact on public safety and policing finance and taxation, and the judicial system. Hashing out any potential “side effects” before the Judiciary Committee, the Energy and Commerce Committee, the Financial Services Committee, and others can ensure that all angles are considered before legislation is drafted. This deliberative process can largely prevent unintended consequences of otherwise well-meaning legislation.

  • During the second quarter, begin marking up legislation to eliminate the inconsistencies between federal and state marijuana laws.

For example, military veterans—even those who live in states where medical and recreational cannabis is legal—are unable to use their military medical benefits to seek out cannabis treatment because of the drug’s classification under federal law. And because most lenders (even small local banks) are subject to federal banking requirements, they are unable to extend loans to marijuana-based businesses except under a very restrictive set of circumstances.

  • Before the annual August recess, put together (and pass) a comprehensive “marijuana package” that would make some sweeping changes to federal cannabis laws—much like the changes the 2017 Tax Cuts and Jobs Act made to individual and corporate income taxes.

By following this blueprint, Blumenauer urges, Congress can have a bill in front of President Trump for signature by the end of the calendar year, paving the way for a historic victory for the cannabis community in what is shaping up to be a historic election year. American Cannabis Company provides the consulting services cannabis companies need more than ever to navigate this changing market.

The Impact of the Six-Week Shutdown

President Donald Trump, who in 2017 signed the Farm Bill to legalize industrial hemp (and the CBD oil derived from this hemp), has not expressed much opposition to loosening federal restrictions and regulations on cannabis. And while many anti-cannabis groups still tout the prospective dangers of outright legalization, public support for legalizing marijuana currently stands at around two in every three Americans, or 66 percent.

But despite this public support, each of these measures requires decisive action to take effect. And with so many House representatives focused on immigration reform and border security, to the exclusion of drug-related laws, Blumenauer and others are concerned that they have already missed their opportunity.

In a recent interview, Blumenauer expressed consternation at the six-week government shutdown, which he claimed was “especially frustrating for me because we had this grand plan of things we wanted to do.” With the relatively tight quarter-by-quarter schedule he outlined, losing six weeks on the front end could make it tough to achieve these measures by his August 2019 goal.

Do States Have Any Options Short of Continuing to Wait?

As of early 2019, there are 33 states (and, ironically, the District of Columbia) that have legalized medical marijuana, recreational marijuana, or both. Some of the “pioneer” states, like Colorado and California, have been able to demonstrate an overall positive impact of legalization—particularly when it comes to increased tax revenue and decreased incarceration and jail overcrowding rates.

But these states all face a few major problems. One is the physicians’ inability to “prescribe” marijuana to patients. Many state medical marijuana laws are written in a way that requires medical marijuana to be “prescribed” by a licensed physician—but any physician who writes such a prescription risks a suspension (or even revocation) of their ability to prescribe medications.

States are also finding it challenging to support marijuana-based businesses when these businesses are often unable to qualify for the financing options other small businesses enjoy. While there are venture capitalists and organizations that specialize in cannabis funding—free of federal lending constraints—these funding options can be tougher for small companies to obtain. Fortunately, American Cannabis Company’s consulting services can help connect cannabis operations to these lending options, providing a far better picture of what might be available.

One thing states could do, in the absence of action by the federal government, is to revise their own laws to allow medical marijuana upon a physician’s “recommendation,” rather than requiring a prescription. Tweaking this language on a state-by-state basis is undoubtedly less efficient than simply granting physicians the ability to prescribe cannabis at the federal level, but can still provide each state’s residents with a path toward legal medical marijuana if federal action seems unlikely.

States may also be able to pursue alternative lending options for local cannabis businesses, perhaps even setting up cannabis-specific Chambers of Commerce to assist fledgling businesses in getting their capital requirements and determining the best corporate structure to adopt.

American Cannabis Company provides this service as well. Our consultants work with businesses at each stage in the process—from initial dispensary permitting and financing to commercial branding, advertising, and staffing and human resources. Boasting over one million square feet (and counting) of cultivator space built to date, American Cannabis Company can help build your business, whether you are just starting out or are hoping to expand. Visit our website to learn more about the services we offer or to quickly get in touch with one of our experienced consultants.



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