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This is the last article in our three-part series examining various proposals for the federal legalization of marijuana and the possible socioeconomic impact those proposals could have on the burgeoning marijuana industry. Part I of our series looked at the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act, which would formalize state-level control over the industry. Part II looked at the so-called “420 Bills,” which would result in far more substantial federal regulation of the industry. This article examines the Compassionate Access, Research Expansion and Respect States (CARERS) Act and the Marijuana Justice Act, which are narrowly tailored to address the issues of legalizing medical marijuana and promoting marijuana-related criminal justice reform among the states, respectively.
The CARERS Act
Representatives Steven Cohen (D-TN) and Don Young (R-AK) introduced the CARERS Act early in the current session of Congress. Lawmakers introduced similar bills in both the House and Senate last session with bipartisan support, but those laws had not significantly advanced.
What the CARERS Act would do
The CARERS Act has five components. First, it would amend section 708 of the Controlled Substances Act (CSA) to state that:
Notwithstanding any other provision of law, the provisions of this title relating to marihuana shall not apply to any person acting in compliance with State law, as determined by the State, relating to the production, possession, distribution, dispensation, administration, laboratory testing, recommending use, or delivery of medical marihuana.
Second, it would exclude cannabidiol (CBD) from the definition of marijuana in section 102 of the CSA. CBD is derived from marijuana and hemp but contains no greater than .3 percent delta-9-tetrahydrocannabinol (THC), the psychoactive component of cannabis. Third, it would respect state laws regarding CBD concentration. Fourth, it would increase the number of licenses available to manufacture and distribute marijuana and marijuana-derivatives for scientific research. Fifth, it would allow healthcare providers employed by the Department of Veterans Affairs to provide recommendations for medical marijuana use to patients in states with medical marijuana programs.
What the CARERS Act would not do
The CARERS Act is incremental legislation and leaves several issues for later resolution. Like the STATES Act, it eliminates the conflict between state and federal law with respect to medical marijuana. But unlike the STATES Act, it stops there. Even upon passage of the CARERS Act, recreational marijuana would remain illegal under federal law even if permitted by state law.
The CARERS Act also does not attempt to broadly regulate marijuana at the federal level like the 420 Bills. It would not impose a federal excise tax; it does not create a federal licensing or permitting scheme; it does not impose advertising and marketing guidelines; it would not expressly allow marijuana-related businesses (MRBs) to access the financial markets; it would not expunge criminal records relating to marijuana or otherwise reform the justice system; and it would not exempt MRBs from federal law that prevents MRBs from taking a critical business expense deduction on their taxes (IRC §280E).
Will the CARERS Act pass?
We do not expect the CARERS Act to pass in the current environment. The CARERS Act has bipartisan support, but it is focused on protecting only medical marijuana from federal interference. With 10 states and Washington D.C. legalizing recreational marijuana already, and a significant number of additional states considering it, we believe lawmakers inclined to support state’s rights will be inclined to address the issue with respect to both medical and recreational marijuana. That is likely why the STATES Act has received far more attention in recent months than the CARERS Act.
That said, the CARERS Act could be a potential fallback option if the STATES Act or other more aggressive legalization plans fail to gain traction. We could foresee a situation where the STATES Act fails to garner the requisite support, and pro-legalization lawmakers agree to accept a more limited measure like the CARERS Act.
If passed, how would the CARERS Act affect the marijuana industry?
The CARERS Act would be a positive if small step forward for the marijuana industry. Certainly, MRBs would appreciate the protections for medical marijuana and CBD, and would be more secure in their operations.
Many of the problems that plague the industry would remain, however. While financial institutions would probably feel more secure doing business with MRBs, new issues would arise from the legality of medical marijuana and the illegality of recreational marijuana at the federal level. And the continued illegality of recreational marijuana at the federal level could also be perceived as a mandate to prosecute by the federal government, creating additional tension with those states that have allowed recreational use. These issues would likely keep large financial institutions on the sidelines. There would also still be vexing questions regarding criminal justice reform. Those outstanding issues mean that even if the CARERS Act would pass, it would likely only be a bridge as legislators continued to work on more comprehensive, or at least complementary, legislation.
The Marijuana Justice Act
Senator Corey Booker recently reintroduced the Marijuana Justice Act in the Senate. The bill has six cosponsors (all Democrats). Similar bills were introduced last session in both the House and Senate.
What the Marijuana Justice Act would do
The Marijuana Justice Act has the broadest criminal justice reform provisions of the various proposed legalization vehicles. It would amend the CSA to deschedule marijuana entirely. It also mandates that states that have not legalized marijuana and have a racially “disproportionate arrest rate” or racially “disproportionate incarceration rate” for marijuana offenses will not be eligible to receive any federal funds for the construction or staffing of prisons or jails and shall be subject to up to a 10% reduction in funds allocated under the Omnibus Crime Control and Safe Streets Act of 1968. Additionally, federal courts will be required to expunge federal convictions for marijuana use or possession (something 73% of registered voters support according to national polling data compiled by the Center for American Progress), and individuals in prison for such crimes will be entitled to a resentencing hearing. Finally, the Marijuana Justice Act will create a “Community Reinvestment Fund” to “reinvest in communities most affected by the war on drugs.”
What the Marijuana Justice Act would not do
The Marijuana Justice Act is specifically focused on criminal justice reform. Accordingly, it would not result in a broad takeover of marijuana regulation by the federal government. Although not explicitly reserving the right to regulate marijuana to the states (like the STATES and CARERS Acts), the Marijuana Justice Act would also retain the state-centric licensing and regulatory status quo.
Will the Marijuana Justice Act pass?
We do not believe the Marijuana Justice Act will pass in full. Specifically, we do not believe there is the necessary bipartisan support for the provision of the Act that would punish states that have not legalized marijuana for racial disparities in arrests and incarceration. Such a provision appears to have too many political implications to gain traction in the current political environment.
We have long believed, however, that federal legislation will need to contain some form of criminal justice reform in order to pass. The Marijuana Justice Act would expunge prior federal marijuana records, and order resentencing for those imprisoned for federal marijuana crimes. We believe that such an approach may prove acceptable to those demanding criminal justice reform (like Senator Booker), while not being a deal-breaker for other pro-legalization legislators.
If passed, how would the Marijuana Justice Act affect the marijuana industry?
If the Marijuana Justice Act were to pass, marijuana would be descheduled under the CSA and legal at the federal level, but would still be subject to the state-centric licensing and regulatory scheme currently in place. In other words, the federal government would not be able to interfere with MRBs, but states would still have the power to regulate marijuana as they see fit, which is similar to what would happen in practice upon passage of the STATES Act.
The big impact of the Marijuana Justice Act would be in the criminal justice arena. If passed as written, the Marijuana Justice Act would not only reform the federal approach to marijuana, it would place immense pressure on the states to reform their own approaches to marijuana or face funding cuts. That pressure imposed on the states makes the Marijuana Justice Act different from the other legislation percolating in Washington that seek to address criminal justice reform.
Where will things go from here?
Public support for the legalization of marijuana is at an all-time high, and politicians on both sides of the aisle are taking notice. Federal legalization of marijuana seems to be a matter of when, not if. The bill with the most bipartisan support now, and the one we see as having the clearest path to becoming law, is the STATES Act, but we expect that there will need to be some criminal justice element added before passage, and such an addition has the potential to change the political dynamic.
In any event, these are exciting times for proponents of legalizing marijuana and the marijuana industry because whether it is the STATES Act or some other bill, federal legalization will have a profound and immediate impact on the marijuana industry. We will continue to track developments in Washington and provide appropriate updates. To ensure you stay up-to-date on all recent developments, you can subscribe to Locke Lord’s Cannabis Blog.