Welcome back to Higher Law, our weekly briefing about all things cannabis. I’m Cheryl Miller, reporting for Law.com from Sacramento, where temperatures have topped 100 degrees and a final vote on a $139 billion state budget is in sight. The spending plan banks on $630 million in marijuana tax revenues in the 2018-19 fiscal year. But $14 million originally allocated for a law enforcement crackdown on black market operations was cut in the final deal between state lawmakers and the governor.
This week we take a look at the big marijuana legislation introduced in that other capital, Washington, D.C.. And in who got the work—keep sending me your new stuff!—PharmaCann picks up a federal lobbyist, and a New Jersey law firm joins forces for a greater share of that state’s growing marijuana business.
Leave It to the STATES (Act)
A game changer. That’s what Brian Vicente, partner and founding member of Vicente Sederberg, called newly introduced federal legislation that would carve an exemption into the Controlled Substances Act for states where marijuana is legal.
The Strengthening the Tenth Amendment Through Entrusting States Act, aka—you guessed it—the STATES Act, is the bipartisan effort of Republican Sen. Cory Gardner of Colorado and Democratic Sen. Elizabeth Warren of Massachusetts.
>> Essentially, the bill would allow state-sanctioned cannabis businesses to operate without federal interference so long as authorizing states comply with several requirements, such as keeping kids from buying marijuana and from working in the industry and blocking sales to non-legalized states.
President Trump says he’ll “probably” support the bill.”
“It’s a sign of the end of marijuana prohibition in the country,” Vicente says. “And I’ve been a full-time professional advocate in this space for 15 years. I’ve seen a lot of things come and go, and this is enormous.”
>> Supporters of the bill say it would finally open bank doors to the marijuana industry.
“Despite guidance we’ve had in the past about banking from the federal government … this bill would essentially be removing that threat of possible criminal prosecution because [licensed marijuana businesses] would no longer be illegal,” Vicente (at left) says. “And as such it would clear the way for banks to say, alright, it’s no longer illegal, that hurdle is out of the way. Now let’s consider working with this industry.”
The bill should also ease the tax burden on state-legal businesses. Right now, federal tax code bars businesses that traffic in controlled substances from taking business deductions.
Under the STATES Act, “any state-legal activity would no longer be considered trafficking,” said Steve Fox, director of VS Strategies in Colorado.
>> Insurance access should open up, too. More from my chat with Vicente:
“Both banking and insurance are kind of these conservative, slow-moving beasts. They sort of have their piece of the pie and they’ve been hesitant to jump into this new space while it’s federally illegal. Once it’s clearly federally legal, when that hurdle is gone, I think you’ll see something.”
The bill does not check every box on legalization advocates’ wish list. It does not deschedule marijuana. And, Vicente notes, it does not specifically address interstate sales among cannabis-legal states, which supporters say will ultimately be needed for a stable national market.
>> There’s also the matter of getting the bill to Trump’s desk.
Public and political support for marijuana legalization may be growing, but certain Republican leaders in Congress remain adamantly opposed.
“The reality is, it’s kind of tough to pass anything in Congress this year,” Vicente says. “This is gaining popularity but we probably don’t have the votes this year. I think ’19 is going to be a different landscape and the momentum will be that much more and it will be teed up for passage.”
No hearings have been scheduled yet on the bill.
Who Got the Work
>> Illinois-based PharmaCann‘s hired the communications and lobby shop Great Point Strategies LLC, according to U.S. Senate lobbying records. The contract focuses on the Secure and Fair Enforcement Banking Act of 2017, which would prohibit regulators from cracking down on financial institutions that serve state-legal marijuana businesses.
PharmaCann operates eight medical marijuana dispensaries and three grow sites in Illinois and New York. The company’s leadership includes two former Polsinelli attorneys, CEO Teddy Scott and general counsel Jeremy Unruh. Eric Schmutz, recently registered as a lobbyist for Alexandria, Va.-based Great Point Strategies, will advocate for PharmaCann.
>> Roseland, N.J.-based Brach Eichler has launched a partnership with lobbying firm Public Strategies Impact LLC “to help businesses participate in New Jersey’s emerging cannabis marketplace,” the law firm announced.
The alliance will help clients “address both the legal complexities of cannabis opportunities and in close collaboration with Public Strategies Impact, enable clients to position their license application for success,” John Fanburg, co-chair of Brach Eichler’s nine-member cannabis law practice said in a prepared statement.
In the Weeds…
- I know you’re all devoted to Higher Law. (Thank you.) But it seems a lot of attorneys have turned to publishing blogs on the intersection of cannabis law and the lawyers who practice it. Massachusetts attorney Bob Ambrogi found 26 such blogs—and a lot more bad marijuana puns. [Above the Law]
- Meet Orrick counsel Brian Moran, the Trump administration’s pick for Seattle U.S. attorney. Moran’s newly released financial disclosure reveals a client list that is who’s who of major U.S. companies. We’ll watch for announcements on the marijuana-enforcement front. Assuming Moran gets confirmed. [The Recorder]
- Federal Reserve Chairman Jerome Powell says the state-federal conflict on marijuana puts federally chartered banks in a very difficult situation.” In brief remarks to reporters Wednesday, Powell said “of course, our mandate has nothing to do with marijuana. So we would just love to see it clarified, I think.” [cnbc.com]
- To drug test or not to drug test. That’s the question Massachusetts employers are grappling with as the recreational marijuana market readies to open July 1. As we’ve seen before, in marijuana-legal states, there are a whole lot of unanswered questions about workplace liability, safety and competitiveness in a tight labor market. [The Boston Globe]
- Remember when Attorney General Jeff Sessions rescinded the Cole memo? It was just six months ago, but it feels like the marijuana political pendulum has swung the opposite way in that short time. Federal prosecutors have not cracked down on state-law-abiding operations, and Sessions’ boss said he’ll probably support congressional efforts to protect them. [The Wall Street Journal]
- New Jersey could allow as many as 218 marijuana dispensaries to open around the state under state legislation recently introduced. Northjersey.com points out that that’s 14 more sites than the current number of Burger King locations in the Garden State. Recreational-use proponents, including Gov. Phil Murphy, are working toward a self-imposed June 30 deadline for passing an adult-use regulation bill. [Northjersey.com]
- How much would you pay for an “iconic” marijuana website name? If the price is right, you can own blunt.com. National Entertainment Collectibles Association is auctioning the rights to what it calls “the most iconic domain name ever offered for your cannabis business.” Bids will be accepted until noon on June 22. [PRNewswire.com]
Mark Your Calendars
June 24-25: The International Cannabis Business Conference will take place in Vancouver, B.C., Canada. Scheduled speakers include McMillan partner James Munro and Kirk Tousaw of the Tousaw Law Corp.
June 26-27: The University of Chicago hosts the DRI Marijuana Law Seminar. Discussion topics include “Cannabis Regulation in the Trump Administration” and “Mitigating Liability at the Point of Sale.”