Bill to recognize states’ rights on marijuana gets Trump support
Sens. Lisa Murkowski and Dan Sullivan joined a bipartisan group of lawmakers in Congress June 8 to support legislation that ensures states the right to regulate marijuana and allow banking services for the industry.
Murkowski said the new legislation “brings the policy swing to an end, by saying unequivocally that the states have supremacy when it comes to marijuana regulation.”
President Donald Trump told a group of news reporters in Washington, D.C., the same day as the STATES Act was introduced that he will likely support it.
The Strengthening the Tenth Amendment Through Entrusting States Act, or STATES, doesn’t legalize marijuana in states that haven’t passed their own measures. But it works to address conflicts between state and federal marijuana laws.
The bill was co-authored by Sens. Cory Gardner, R-Colo., and Elizabeth Warren, D-Mass.
Sullivan said it’s important for this bill to advance in light of confusion cast over states with legal marijuana when the so-called Cole Memorandum was rescinded by Attorney General Jeff Sessions in January.
The memo authored by former Deputy Attorney General James Cole under the Obama administration outlined guidelines that amounted to nonenforcement of federal marijuana laws in states where it had been legalized.
Rescinding it created uncertainty of whether Sessions, an opponent of legalization, would begin enforcing federal law that classifies marijuana as a schedule one substance under the Controlled Substances Act, along with heroin, cocaine and LSD.
“When the Cole memo was rescinded, it created a lot of additional confusion,” said Sullivan spokesman Matthew Shuckerow. “It was already out there, particularly in states that have it legalized and that created confusion as well.”
Marijuana businesses have achieved a level of industry acceptance, he noted. Sullivan has heard from bankers saying they would not mind doing business with the industry. Credit unions and banks signed on as endorsing the bill.
“This (act) would in many ways address those concerns,” he added. “By stating that bank transactions do not constitute illegal trafficking. It would pave the way to do business with banks and for banks to accept dollars from the operations.”
One of the biggest problems facing cannabis business owners is the cash-only nature of transactions. Even to pay their state license renewals, they are taking cash to the bank and purchasing money orders that then are sent into the Alcohol and Marijuana Control Office, said Jana Weltzin, an attorney specializing in Alaska cannabis regulations. She analyzed the STATES Act to see how it might impact her clients.
“If it goes through, and it looks like it has some likelihood, it would exempt marijuana businesses from being subject to the CSA (Controlled Substance Act) as long as they are in full compliance with the state regulatory process,” Weltzin said.
Banks and credit unions could open accounts for marijuana business owners after going through their own due diligence to make sure the business is in compliance with state laws, Weltzin said.
Weltzin has spoke with officials from Key Bank, answering questions about what forms should they ask for in determining if a potential client is operating under state regulations.
“If this passes, and a company owner comes in and says he want to open a bank account, the bank will look at all his documents from AMCO. If there are notices of violations, then he is not within the exemptions,” Weltzin said.
“This (law) would not be a change on prohibition. It’s a deference to the state laws and trusting the compliance and regulatory system to the state.”
Alaska’s congressional delegation has seen the federal-state divide on marijuana legalization as a states’ rights issue. Rep. Don Young, a founding member of the Cannabis Caucus, has long taken this position and has repeatedly introduced bills in the House of Representatives to reconcile the conflict.
“We’ve come together — lawmakers from both sides of the aisle — to offer a state-based solution to areas where state and federal marijuana laws are in conflict, including issues relating to production, sale, distribution, enforcement and longstanding challenges surrounding banking and the lack of access to financial institutions for marijuana-related businesses,” Sullivan said in a statement.
Months ago, he stated that the repeal of the Cole Memorandum could be the impetus necessary for Congress to find a permanent legislative solution to these issues.
The STATES Act should be an effective vehicle and its strength comes in terms of broad support from diverse groups.
The act would amend the Controlled Substances Act so that its provisions would no longer apply to people in compliance with state or Tribal laws relating to marijuana activities as long they comply with a limited number of basic safeguards.
On the banking front, it would clarify that state-compliant financial transactions do “not qualify as trafficking and do not result in proceeds of an unlawful transaction.”
It would remove industrial hemp from the list of controlled substances under the CSA and prohibit the distribution of marijuana at transportation safety facilities such as rest areas and truck stops.
The bill emphasizes no-distribution or sale of marijuana to persons under the age of 21, other than for medical purposes.
Certain criminal provisions under the CSA would continue to apply such as prohibiting endangering human life while manufacturing marijuana and prohibiting employment of people under age 18.
Supporters of the legislation include the American Civil Liberties Union, Americans for Prosperity (founded by Charles and David Koch), and a cross section of advocacy, law enforcement and financial organizations.
Where other legislation addressing legal marijuana has fallen by the wayside, this bill holds promise of passage because of Gardner’s prep work on the bill, Shuckerow said.
Gardner, a Republican, represents Colorado, one of the first to legalize recreational marijuana. He threatened to hold up judicial nominees if something couldn’t be resolved in the federal-state conflict over legal marijuana after Sessions rescinded the Cole Memo. According to the Denver Post, Gardner succeeded in holding up 11 nominees from getting a Senate floor vote between January and April, the last step before they can be seated on a bench.
In early April, Trump and Gardner struck a deal that ended the deadlock: Trump would support “legislative solution(s) to fix this states’ rights issue once and for all,” Gardner told the Washington Post.
In the end, Gardner achieved broad bipartisan support for this bill.
“We’ve seen steady momentum building,” Shuckerow said. “The tide is switching. Now two-thirds of Americans live in states where there is some kind of legal marijuana.”
Since the bill was just introduced, it’s difficult to tell when it will come to a vote.
“The reality is there’s a shrinking calendar left this session. But there’s a sincere bipartisan effort,” Shuckerow said. “The legwork is already done. It’s been negotiated and discussed, and that is very helpful.”
Naomi Klouda can be reached at n[email protected].