What if Cannabis Was Federally Legalized in America?
With 36 states that have legalized medical cannabis programs, the country may have surpassed the tipping point on marijuana legalization. How difficult will it be for the federal government to continue prohibition legislation for cannabis when more states move to legalize it for patients.
Canada federally legalized cannabis for both medical and adult-use in 2018. In March of 2020, the Canadian representative to the United Nations defended the success of legalization.
Michelle Boudreau, the Director-General for Health Canada’s controlled substances division, shared four criteria that measure federal legalization safety. And how Canada had devised effective public health monitoring and controls.
1) Strict access controls designed to prevent youth access
2) Strong regulations for the legal cannabis industry
3) Extensive public education on the risks associated with cannabis use
4) A comprehensive monitoring and surveillance program
Marijuana Moment reported that Boudreau also commented that Canada had reduced Black-Market or illegal cannabis production, sales, and distribution by more than 30%. In two years. Organized crime, it seems, cannot compete with high-quality cannabis at fair market prices. For patients and for adult-use. According to Health Canada reports, the rate of cannabis use by minors had not increased since legalization.
Mexico is on a path to federal legalization by order of its Supreme Court. The vote to legalize will take place in December 2020, and it is expected to pass. That would make America flanked by two countries that have successfully legalized marijuana at the federal level. And the last in North America to legalize.
Inching Toward Legalization? Landmark U.S. Legislation and Pro-Marijuana Moments
The introduction of the “MORE Act” in 2019 represented the first large-scale attempt to legalize cannabis federally. The proposed laws included a request to remove cannabis from the Controlled Substances Act (CSA). Another proposition in the Act provides a rescheduling of cannabis out of Schedule II, with other drugs that present a low risk of harm or addiction.
The MORE Act was given a low likelihood of being passed by the House of Representatives. Previous attempts to legalize cannabis in the United States had failed. However, the Secure and Fair Enforcement (SAFE) Act was passed in 2019. That opened up legalized banking services for cannabis-related companies. It has, however, been stalled in the Senate.
What Would Happen if Cannabis Was Federally Legalized in the United States?
If by some stroke of compassionate care, what would the end of cannabis prohibition in the United States look like? How would it roll out, and what changes would happen for citizens beyond the ability to purchase weed legally?
- Mass Expungement Would Change Lives and Open New Opportunities
Any legislation to legalize cannabis in the United States will provide a method of mass expungement. Don’t let the term ‘mass expungement’ fool you. It would not be automatic forgiveness of criminal charges. Or a clean slate for people who were convicted of cannabis crimes on an expedited schedule.
A criminal record may also preclude you from:
- Credit approval (including mortgage applications)
- Tenant approval (or renting a home)
- Student loan approval
- Jobs that require bondability
In some states like Illinois, misdemeanor convictions can be expunged after three years; and after five years for felony offenses. However, in some states like Texas, expungement is available only if a conviction was never filed. Or if the individual was a minor at the time of the offense. In states with non-expungement laws, citizens can still apply for an Order of Non-Disclosure to seal the public record.
Decriminalization of cannabis at the federal level would create a path to allow the expungement of personal-use charges if the charge was only for a personal-use amount. It would not grant the same right to an individual with a conviction for manufacturing or distribution.
A criminal record for cannabis use can have lifelong implications that affect education, employability, and almost every aspect of daily life. Federal decriminalization would remove those obstacles and give Americans impacted a fresh start.
- Access to Medical Cannabis Through Multistate or National Providers
Selling cannabis through licensed online dispensaries is legalized only in states with medical or adult-use programs. What does this mean for a patient with one or more qualifying conditions if they live in a non-legalized state? It deprives them of alternative medicine that could improve their quality of life. Another obstacle for patients is access to cannabis. If federal decriminalization occurs, states could create reciprocal agreements for interstate sales.
The current proposed legislation would still allow states to determine their cannabis control laws within their jurisdiction. But the likelihood of national cannabis product providers is high. And that would resolve many barriers for patients who would benefit from therapeutic marijuana.
Even in states where medical and adult-use cannabis is legalized, access to natural medicine is still an issue. Many patients who live in rural regions may not have a licensed dispensary near them. Or they may be unable to travel to a dispensary. This would open up the convenience of secure cannabis e-commerce sales, shipping of products, and home delivery (where permitted by state law).
- Significant Reduction in Organized Crime Related to Cannabis Products
Organized crime syndicates draw a significant amount of revenue from illegal sales. Not just of cannabis, but dangerous and highly addictive drugs. It is unlikely that federal legalization would be enough to completely put the cartels, gangs, and organized crime groups out of business. But it would take a big bite out of their profits. That’s a heck of a deterrent.
States like Colorado have reported a significant decline in Black-Market cannabis activity post-legalization. Not only has it reduced drug-related crimes in the state, but it has also lowered the rate of illegal drug distribution in surrounding states.
The study and report were provided by Guangzhou Wu of the University of Utah, Francis D. Boateng of the University of Mississippi, and Texas-based consultant Thomas Roney.
- The Federal Government Will Receive a Tremendous Injection of Tax Revenue Annually
The currently proposed cannabis legalization reform (MORE Act) outlines a 9% excise tax. For every medical cannabis or adult-use product that is sold, the feds would earn revenue. And at a time when the federal government is experiencing a historic budget deficit, that extra revenue would help quite a lot.
One of the items about taxation that are not clear would be a differentiation between adult-use (recreational) and medical marijuana in terms of taxation. For instance, states like New Jersey have announced they are progressing to a 0% tax rate for medical cardholders. Patients will save money on cannabis purchased from licensed dispensaries. Would a federal sales tax on medical marijuana still apply in that scenario? It is too early to tell.
However, the federal government already profits from keeping cannabis illegal. A tax provision called 280E prevents state-licensed dispensaries from claiming tax credits. They cannot write-off operational expenses like other businesses. On average, a licensed dispensary may be paying up to 70% combined state and federal taxes.
In 2017, Colorado Senator Cory Gardner requested an estimate from the Congressional Joint Committee on Taxation. He asked how much the federal government would collect tax revenue if cannabis remains an illegal Schedule II drug. The joint committee’s reply forecast a tax windfall of up to $5 billion dollars from 2018 to 2027. However, after federal legalization, taxation of adult-use and medical cannabis could draw $28 billion per year in tax revenue for the government.
What Are the Odds for Federal Legalization of Cannabis?
In December 2020, the House of Representatives voted in favor of the MORE Act to federally legalize (and decriminalize) cannabis. The proposed legislation will now go before the Senate for review and vote.
Many people feel that a Republican-controlled Senate is unlikely to approve the MORE Act. Should the RNC lose the Senate majority vote, the Democratic Party is highly likely to move ahead with the federal legalization of cannabis.
The human and fiscal cost of the Covid-19 pandemic has been high in the United States. Both to the federal government and at the state level. The financial benefit of legalizing cannabis may be enough to swing a vote in favor in the Senate. In bi-partisan agreement, the tax revenue could be the fiscal stimulus that can help America navigate and recover from the Novel Covid-19 virus. And get the economy back on track.
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