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As the White House remains undecided on its position with respect to the legalization of marijuana, federal law makers – Republicans and Democrats - took steps on March 30, 2017 to forge a pathway to protect state marijuana laws. The three pieces of legislation, as introduced by Oregon’s Ron Wyden, Senate Finance Committee Ranking Member, and Earl Blumenauer, senior member of the House Ways and Means Committee, are intended to go beyond merely removing marijuana from being categorized as a Schedule I drug. They are attempting to also eliminate the federal criminal penalties posing a threat to those abiding by state laws and aiming to permit marijuana businesses to claim tax credits and be taxed and regulated much in the same way that tobacco and alcohol are regulated.
Bill #1: Responsibly Addressing the Marijuana Policy Gap of 2017
This comprehensive bill aims to address a diverse range of policy issues from safeguarding banks who accept deposits made by marijuana businesses, to protecting the autonomy of marijuana related activity by Indian tribes, to the expungement of criminal records for certain marijuana related offenses. Specifically, the bill sets forth a mandate that includes, but is not limited to:
- The elimination of criminal penalties for certain persons complying with state law
- Tax deductions and credits relating to expenditures in connection with marijuana sales conducted in compliance with state law
- Allowing the advertising of marijuana in states where state law governs marijuana activity or the laws of an Indian tribe governs
- Providing bankruptcy protection for a marijuana related business
- Providing tribal marijuana sovereignty
- Allowing for the expungement of criminal records for certain marijuana related offenses
- Limiting drug testing for applicants for federal employment
- Providing a civil forfeiture exemption for marijuana facilities authorized by state law, (i.e., the feds cannot confiscate property including land, where an activity is authorized under state law or the law of the Indian tribe)
- Amending what is considered drug related criminal activity in federally assisted housing
- Providing for greater medical marijuana research and access to conducting it without any limitation on the number of researchers or production quotas on marijuana grown for legitimate medical research
- Granting a provision by health care providers of the Dept. of Veterans Affairs to give their opinion and recommendations on veteran participation in state marijuana programs
- Authorizing medical professionals of the Indian Health Service to give their opinion and recommendations to their patients to participate in state marijuana programs, and
- Providing access to banking and to prohibit the barring of insurance depository protections under the Federal Deposit Insurance Act or the Federal Credit Union Act solely because a bank has provided financial services to a marijuana related business.
Bill #2: Marijuana Revenue and Regulation Act
The purpose of this law is threefold. (1) To establish a tax scheme relating to marijuana products, (2) to decriminalize marijuana at the federal level and create a licensing structure, and (3) to provide funding for the addition of marijuana oversight and regulation through what is currently the Alcohol and Tobacco Tax Trade Bureau (TTB) to that of the “Alcohol, Tobacco, and Marijuana Tax and Trade Bureau.”
Through this new agency an excise tax similar to that on alcohol and tobacco would be imposed using an approach that scales in the tax liability of a seller as determined by calendar years in business. The purpose of such phasing in would be to reduce the financial barriers faced by those entering the industry, in addition to allowing flexibility in the price changes expected to be seen in the marijuana market as a result of regulation and the de-scheduling itself.
The tax would attach to any marijuana product as soon as the product was in existence, whether it be subsequently separated or transferred into any other substance, either in the process of an original production or by any subsequent process.
While Bill #1 (above) defines a “marijuana product” as an article that contains marijuana or any marijuana derivative, for taxation purposes, the definition in this second bill expands upon it further. It defines a “marijuana product” as any article which contains marijuana or any marijuana derivative with the following exceptions:
1. Any article approved by the US Food and Drug Administration (FDA) that is for sale for therapeutic purposes and is marketed and sold solely for such purposes, and
2. Such articles considered “industrial hemp,” which is defined in this Bill as the plant Cannabis sativa L. and any part of such plant, whether growing or not, with a delta-9 tetrahydrocannabinol (THC) concentration of not more than 0.3% on a dry weight basis.
A marijuana derivative is also defined in this bill as any article containing marijuana, or any derivative thereof, which is not a naturally grown and unadulterated marijuana flower.
Bill #3: Small Business Tax Equity Act of 2017
As co-sponsored by Republican senator Rand Paul of Kentucky, and Carlos Curbelo, a Republican congressman from Florida, this bill aims to amend the Internal Revenue Code of 1986 to allow deductions and tax credits relating to expenditures in connection with marijuana sales conducted in compliance with state law. This action would effectively treat a marijuana business like any other small business in that state by removing current tax penalties impacting marijuana businesses and preventing these benefits.
It’s tough for any business to operate lawfully where the lines between lawful and unlawful activity is blurred. This three-pronged approach is intended to provide some much needed clarity, create job growth, and boost the economy while ensuring the industry is held to a fair and equitable standard.
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