Member Article

Marijuana’s legal status has flummoxed industry observers for more than a decade. Several current proposals could provide clarity at the federal level. And Alabama appeared to be on the brink of implementing a medical marijuana regime just before the COVID-19 pandemic ground the legislative process to a halt. Is there time to rescue that legislation this session?

Federal Marijuana Legislation

Marijuana remains illegal under federal law, but 33 states and the District of Columbia have enacted laws permitting the use of marijuana for certain purposes. This presents confusion and challenges to growth, and it has yielded results bordering on the absurd. For example, marijuana companies must pay federal taxes and comply with federal employment laws, but they are ineligible for government benefits such as Payroll Protection Program loans under the CARES Act.

Several pieces of legislation currently pending in Congress would offer clarity in this murky legal area and allow maturation of the marijuana market.

1. SAFE Banking Act

Nowhere is the federal prohibition on marijuana more impactful than in the banking laws prohibiting financial institutions from banking the proceeds of unlawful activity, including marijuana proceeds. For better or worse, these laws prohibit the full development and maturation of the industry. The Secure and Fair Enforcement (SAFE) Banking Act would allow financial institutions to transact with marijuana-related businesses in states that have legalized marijuana. It has passed the House of Representatives, but it has stalled in the Senate.

2. STATES Act

The Strengthening the Tenth Amendment Through Entrusting States (STATES) Act “would amend the Controlled Substances Act so that it no longer applies to persons acting in compliance with state or tribal laws on cannabis, and the proceeds of any compliant transaction would not be deemed unlawful under anti-money laundering statutes or other federal laws.” It does not currently appear to have sufficient support to pass Congress.

3. MORE Act

The Marijuana Opportunity, Reinvestment, and Expungement (MORE) Act would remove marijuana from the Controlled Substances Act and take steps to address the past implications of marijuana prohibition through social justice and equity programs. The act would also impose a tax on sales from marijuana growers to processors. The act has yet to garner the kind of strong bipartisan support it needs, and it may be the least likely of the three pieces of proposed legislation to become law.

There is still time for Congress to act before January 2021, and all bets are off during the window between the presidential election in November and the end of the session. At this point, however, it appears more likely than not that federal marijuana legislation of any sort will wait until next year at the earliest.

Marijuana Legislation in Alabama

After nearly shocking the cannabis world by legalizing medical marijuana during the 2019 session, the Alabama Legislature appeared poised to take the final step in 2020 – until Covid-19.

Under proposed legislation, the state would establish a “seed-to-sale” tracking and licensing system which would permit the medical use of smokeless marijuana products for a select number of patients with qualifying conditions. Such conditions include nausea from cancer or HIV, seizures, autism, PTSD, anxiety disorder, sleep disorders, or conditions causing chronic pain.

In short order, the bill passed the Senate by a vote of 22-11, and appeared more likely than not to receive sufficient support in the House to become law. The following week, however, legislative activity was suspended due to the Covid-19 pandemic. Since then, things appear to have changed. The Legislature seems unlikely to resume consideration of the bill in the limited amount of time available, particularly in light of other legislative priorities.

While it remains possible that the Legislature will consider the bill as part of a special session later in the year, it appears increasingly likely that medical marijuana in Alabama will be on the table when the 2021 legislative session begins.

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Yogi Berra once noted that it’s tough to make predictions, especially about the future. That is most definitely the case in the world of marijuana policy, but most signs point to a wait-and-see approach until 2021 at the state and federal level.

The original article, "Going Green? Marijuana Policy at the State and Federal Level," appeared in the Birmingham Business Journal on May 8, 2020.