Some GOP officials want to legalize pot. Feds will likely balk

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“Legalization is like knocking over a soda machine. You have to rock it back and forth a few times before that thing goes over,” Leafly Senior Editor David Downs says about the States Reform Act. Photo by David Downs/Leafly.

Since Californians voted to legalize recreational marijuana five years ago, almost 20 states now allow recreational reefer, and polls show roughly two-thirds of Americans support decriminalizing cannabis. 

While pot perceptions have drastically changed, the feds continue to list cannabis as an illicit Schedule 1 Controlled Substance

But now there’s a renewed effort to change the rules as Republican voices join the calls for decriminalization, including GOP Representative Nancy Mace from South Carolina, who recently put forward a bill.

The States Reform Act could have huge cannabis implications, according to Leafly Senior Editor David Downs.

KCRW: What’s in the bill?

David Downs: The big top line item for a lot of people is that it's going to deschedule cannabis — to take it off the list of dangerous drugs where cannabis has sat since the 1970s. 

It is certainly strange to be here in 2021 and see a South Carolina Republican representative say what hippies were saying on Haight-Ashbury in the 60s. It really speaks to the distance the American voters have gone over the last 50 years, from wanting to put cannabis smokers in cages to what we have now, which is an $18 billion adult-use industry. 

Second to the pure descheduling in the States Reform Act is sort of a “high freedom, low tax” approach to legalization, which is a counterpoint to where Democrats have taken things.

The big top line is that the States Reform Act would have a 3% tax at the federal level on marijuana products. That stands in contrast to [the Democrats’] flavor of legalization, which pegged those tax rates at 10% to 25%. Tax rates that we found here in California haven't really been workable for legal cannabis.

Are the low taxes proposed in the bill better for the cannabis market in the long run?

The cannabis market itself is saying it's better for them in the long run. Here in Oakland this last week, a group of minority business owners called Supernova Women held a press conference, asking Oakland to lower its 10% gross receipts tax rate on cannabis businesses in that jurisdiction. Los Angeles has a similar 10% gross receipts tax rate that is being pilloried by the industry there. 

When you're dealing with a commodity like cannabis, as the price crashes, a 10% tax rate is literally going to be your profit margin. The difference between 3% versus 10% or 25% is going to be the difference between a smaller, more closely controlled industry in the hands of a few larger corporations and potentially a bigger cottage-led industry with some of those smaller owners that need some of those bigger margins.

What do you think this Republican-led bill means for the future of marijuana?

I think we're seeing a new split between basically the industry and the activist wing of cannabis legalization. Now that 70% of Americans support it, there are different flavors that they support. 

It's clear that the cannabis industry got to Representative Nancy Mace and got a workable proposal in front of her. That stands in contrast to the MORE Act, which is more of a progressive wish list with those high tax rates, and a lot of those rules that seemed to be coming not from the place of actual people who've been running cannabis businesses.

That's really going to be the tussle that the 21st century is going to be about  — what exactly legalization looks like, who benefits, who doesn't, how these rules are crafted, and who's actually going to get through that process.

Should we read the States Reform Act as the Republican Party  more broadly getting on the cannabis legalization train?

It's the next step in the Republicans getting on board. Right after Representative Mace put out her proposal, the state GOP in South Carolina was like, ‘We don't know what you're doing, lady. We are not in favor of this.’ 

And so there's a bifurcation among Republicans about whether or not we should have legalization and what it should look like. And then there's a bifurcation among Democrats about whether we should have leash legalization and what it should look like. 

Senator Cory Booker, who's behind the MORE Act which passed the House, already came out and said that he would not support things like the States Reform Act, or the SAFE Banking Act. [Those] are milder, more incremental reforms. The progressive wing of the Democratic Party has shown it's ready to make the perfect the enemy of the good with regard to plenty of policies that now include marijuana.

If the States Reform Act passes, does it make other legislation like the SAFE Banking Act moot?

Correct. We're dealing with how much reform to do and how fast. The SAFE Banking Act is the most incremental reform. It gives the green light to banks to bank legal cannabis dollars, versus the MORE Act, which would be the opposite end of the spectrum with its progressive wish list. 

The States Reform Act falls right in the middle. By rescheduling cannabis you allow interstate commerce, you remove the internal revenue services onerous 280E tax provision that's holding back most legal cannabis businesses from being profitable. When you undo that descheduling, a number of things shake loose that have been holding up the ability for legacy operators to transition to the legal market.

Is the States Reform Act going to gain momentum, and could we be on the brink of a bipartisan effort to decriminalize weed?

By the time Congress decides to legalize cannabis, it'll be a foregone conclusion because it's happened at the state, county and city level and so many places in America.  

Medical marijuana polls at 90%, and we still can't get any progress on medical marijuana legalization at the Congress level.

Instead of getting sad about the intransigence on Capitol Hill, I want people to be empowered to use localism and federalism to make that decision on Capitol Hill a foregone conclusion in their lifetime.

Legalization is like knocking over a soda machine. You have to rock it back and forth a few times before that thing goes over.



Matt Guilhem


Tara Atrian