The STATES act is one of the rare bills with bipartisan support, but it it good for entrepreneurs?
Opinions expressed by Entrepreneur contributors are their own.
The marijuana industry got a major canna-boost with the introduction of a new bipartisan bill and it’s probable endorsement by President Trump.
Last Thursday, Massachusetts Senator Elizabeth Warren (D) and Colorado Senator Cory Gardner (R) teamed up to announce the Strengthening the Tenth Amendment Through Entrusting States Act (STATES). According to Gardner, the bill will “ensure that each state has the right to determine for itself the best approach to marijuana within its borders. The bill also extends these protections to Washington, D.C, U.S. territories, and federally recognized tribes, and contains common-sense guardrails to ensure that states, territories and tribes regulating marijuana do so safely.”
President Trump appears to be all in on the bill. Before jetting off to the G-7 summit in Canada, he told reporters,” I support Senator Gardner. I know exactly what he’s doing. We’re looking at it. But I probably will end up supporting that, yes.”
Related: Trump Basically Says Obama-Era Marijuana Policies Aren’t Going to Change
Just how big is all this? The Marijuana Policy Project, a legalization advocacy group, called the bill “the most significant piece of marijuana-related legislation ever introduced in Congress.”
Here’s what the bill does and doesn’t do.
It Allows Legal Cannabis Businesses to Access Banks
Earlier this year, the Justice Department ruled that they could bring trafficking charges against banks who work with marijuana businesses. Fear of running afoul with the law has caused many banks to stop working with the industry, and it’s forced cannabis entrepreneurs to figure out what to do with billions of dollars in cash. “That’s bad for business and bad for safety,” said Warren.
Gardner agreed. “Billions of dollars in cash are floating around Colorado and other states that have a legalized industry, and they can’t bank it,” he said. “It’s time that we take this industry out of the shadows, bring these dollars out of the shadows and make sure we hold these people accountable for an industry that states are moving forward with regardless of the pace of business in Washington, D.C.”
The STATES bill seeks to remedy this cash-only problem by saying that legal bank transactions under state law “shall not constitute trafficking” or “the basis for forfeiture of property.” In other words, banks don’t have to worry about getting in trouble for working with legal cannabis companies.
Related: What Every Cannabis Entrepreneur Needs to Understand About the Cole Memo
It Does Not Allow Marijuana to be Federally Legal
The STATES bill says nothing about legalizing marijuana. Under federal law, it’s still classified as a schedule 1 drug, meaning it’s illegal and thought to have no medical value and a high potential for abuse.
“This is not a legalization bill — I think that’s very important,” Gardner said. “If a state like Oklahoma or Kansas or Nebraska chooses not to do this, they do not have to. The federal law remains the same. Nothing changes for them.”
It Protects Legal Marijuana Businesses
If you operate your business in a state where marijuana is legal and complies with “a few basic protections,” the STATES act seeks to ensure that companies and individuals who abide by their state’s rules can’t be targeted by the federal government.
The bill does this by amending the Controlled Substances Act, which outlaws marijuana, by saying that its provisions no longer apply to anyone who is complying with state or tribal laws on the “manufacture, production, possession, distribution, dispensation, administration, or delivery of marijuana.”
Says Warren, “The science is clear: Medical marijuana treatments are effective. There is absolutely no reason patients should be prevented from seeking scientifically approved care.”
Related: What Is Schedule I and Why Is Marijuana on the List, Anyway?
But It Doesn’t Offer Full Protection
The bill still leaves in place parts of the Controlled Substances Act, including prohibiting the distribution of cannabis at rest areas and truck stops and setting the legal age to buy the drug at 21, except for medical purposes.
It Makes Hemp Legal
Good news potentially for those in the hemp business. The STATES bill changes the definition of “marijuana” under the Controlled Substances Act to exclude industrial hemp.
While hemp contains tiny traces of THC, the chemical compound in cannabis that produces psychoactive effects, it can also be used for things like paper, cotton, silk, rayon, linen, and wool. Hemp oil has been used as an ingredient in many cosmetics such as body lotions, soaps, and shampoos.
Related: Hemp Is the Multibillion-Dollar Cannabis Opportunity Few Have Heard About