Cannabis is legal in many U.S. states… or is it? The contradictions between state and federal law are intensifying
The Green Lady Dispensary on Nantucket island sells cannabis products, but that’s not all it does. The shop also grows and processes its own marijuana flower, cooks or bakes all the weed-infused candy and other edibles sold on the shelves, and tests everything for safety and chemical content. In fact, everything the Green Lady sells is made completely in-house – something very uncommon for a dispensary.
Like a growing number of U.S. states, Massachusetts has legalized marijuana for adult use. Over 60 percent of Americans favor legalizing marijuana – roughly the same percentage of voters on Nantucket who voted “yes” on legalization. But since cannabis products cannot cross federal water or travel through federal airspace to reach the island, the production, testing and sale of cannabis on the island must be completely self-contained.
In effect, cannabis legalization has become a massive experiment in the powers and limits of federalism; it is arguably the first time since the Constitution was adopted in 1787 that states have created and operated entire economies outside of federal law. As a result of these tensions, pressure is growing on federal officials to make more accommodations to legalized states. But the political reception in Washington for full legalization — or “descheduling” marijuana from the Controlled Substances Act — shows few signs of shifting, at least for now.
Since then, every year, additional states have decriminalized cannabis or legalized either medical or recreational marijuana. As it stands today, only three states are left in the nation with no laws on the books allowing even minimal use of CBD for specific medical needs: Idaho, Nebraska and South Dakota.
Universities were some of the first institutions to recognize the power of federal law to limit or complicate legalization. At the risk of losing all federal funding – in the form of student loans and Pell grants, research funding, and medical residency programs — institutions of higher education located in legal states have found they must prohibit students and faculty from using cannabis on campus, even if it would be legal a block away.
Some of the most widespread problems facing the nascent cannabis industry, though, are related to commerce and capital — two areas in which the federal government holds full sway. For instance, hundreds of pounds of marijuana sit rotting in garbage bags in Oregon because the state cannot export it across state lines, even into neighboring Nevada, which is also a legal state.
And while it is nearly impossible for his business to retain a bank account because of federal law, he is still required to pay his federal employment taxes electronically each pay cycle. In order to make those biweekly payments, he has to transfer thousands of dollars into his personal bank account and pay them that way – a workaround that may not be fully legal.Federal taxes themselves can be a huge burden for business owners in the cannabis industry.
It’s those same areas of regulatory purview – finance and interstate trade – that are now the source of most problems for state-level cannabis industries. California and West Virginia, meanwhile, instead of waiting for changes in federal banking law, are attempting to create state-level banks for their recreational and medical cannabis industries, respectively. California Assemblyman Rob Bonta was the principal co-author of a bill earlier this year allowing banks and credit unions to offer limited services in the state. But the bill was a Band-Aid fix, not a permanent solution, and was pulled from the floor in September.
Perhaps the most important of those gatekeepers is Senate Majority Leader Mitch McConnell who keeps a very tight rein on what makes it to the Senate floor. He also is not pro-marijuana, though he pushed for hemp – which is cannabis with less than 0.3 percent THC – to be legalized in the 2018 farm bill.
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