House Votes to Decriminalize Cannabis

House Votes to Decriminalize Cannabis

Dec 04, 2020

Client Alert

Brownstein Client Alert, December 4, 2020

One of the most debated cannabis bills in the history of Congress is H.R.3884, the Marijuana Opportunity Reinvestment and Expungement (MORE) Act. Sponsored by House Judiciary Committee Chair Rep. Jerry Nadler (D-NY), the bill has 120 co-sponsors: 119 Democrats and one Republican, Rep. Matt Gaetz (FL). Identical language was introduced in the Senate by now Vice President-elect Sen. Kamala Harris (D-CA) and has seven Democratic co-sponsors.

At its core, the bill aims to remove cannabis from the Controlled Substance Act (CSA), provide reinvestment opportunities for communities and individuals who have been disproportionately impacted by the War on Drugs and expunge nonviolent federal cannabis-related convictions. Additionally, the bill imposes a 5% tax on cannabis products and makes Small Business Administration (SBA) loans and services available to entities that are legitimate cannabis businesses.

Alongside heroin and lysergic acid diethylamide (LSD), the U.S. Drug Enforcement Administration (DEA) has categorized cannabis in the most restrictive class, as a Schedule I drug. Medical practitioners are not allowed to prescribe cannabis as an alternative form of medicine, even in states where cannabis is legal. In order to study the drug, researchers face daunting regulatory hurdles and must have their research application approved by the DEA and National Institute on Drug Abuse (NIDA). Once approved, researchers may only collect samples from the University of Mississippi (UM), which is the only federally approved institution in contract with the NIDA, to produce cannabis. However, researchers have found that samples produced by UM do not replicate the products sold on the market and are oftentimes contaminated. This draws into question the facility’s ability to supply cannabis samples for clinical trials and studies. Removing cannabis from the CSA, via the MORE Act, would streamline the research registration process, allowing researchers to study what elements of the plant contain medical properties and compare potency levels to market-rate levels.

The criminal justice reform aspect of the bill reinvests in communities that have been impacted by the War on Drugs. The MORE Act arranges a trust fund to support various programs and services for individuals and businesses, establishes a process to pardon convictions and conducts sentencing review hearings related to federal cannabis offenses. An uprise in racial-inequality protests has pushed Congress to address structural and sentencing disparities, as well as decades of mass incarceration. The MORE Act provides minority and low-income communities an opportunity to overcome job, education and housing barriers and participate in the growing industry.

In July 2019, Rep. Nadler introduced the MORE Act to the House of Representatives. The bill shortly after was referred to the House Judiciary Committee; House Judiciary Subcommittee on Crime, Terrorism and Homeland Security; House Energy and Commerce Committee; House Energy and Commerce Subcommittee on Health; House Committee on Agriculture; House Education and Labor Committee; House Ways and Means Committee; House Small Business Committee; House Natural Resources Committee; Natural Resources Subcommittee on National Parks, Forests, and Public Lands; and House Oversight and Reform Committee. The House Judiciary Committee held a markup on Nov. 20, on prescription drug pricing and cannabis legislation, which included the MORE Act. Reps. Nadler, Gaetz, Tom McClintock (R-CA), Cedric Richmond (D-LA), Ken Buck (R-CO), and Barbara Lee (D-CA) all introduced substitute amendments. The measure reported favorably in a 22 to 10 vote, with 22 Democrats and two Republicans, Gaetz and McClintock voting yea.

The House Energy and Commerce Subcommittee on Health held a hearing on Wednesday, Jan. 15, titled, “Cannabis Policies for the New Decade.” The committee heard testimony from Matthew Strait, senior policy advisor of the Diversion Control Division for the DEA, Douglas Throckmorton, deputy director for Regulatory Programs of the Center for Drug Evaluation and Research at the Food and Drug Administration (FDA) and Nora Volkow, director of the National Institute on Drug Abuse for the National Institutes of Health (NIH). The discussion focused on six cannabis-related bills, H.R. 171, the Legitimate Use of Medicinal Marihuana Act, H.R. 601, the Medical Cannabis Research Act, H.R. 1151, the Veterans Medical Marijuana Safe Harbor Act, H.R. 2843, the Marijuana Freedom and Opportunity Act, H.R. 3797, the Medical Marijuana Research Act of 2019, and H.R. 3884, the MORE Act. The legislation stalled until late August when 220 national advocacy organizations and more than 120 national, state and local drug policy, criminal justice reform and civil rights organizations sent a letter to House Speaker Nancy Pelosi (D-CA) and Majority Leader Steny Hoyer (D-MD), requesting a House floor vote for the legislation. Amid coronavirus negotiations, Rep. Hoyer placed the MORE Act on the calendar for a floor vote. However, Democrats who were up for reelection were hesitant to vote on the measure. Advancing a cannabis bill before passing another relief package could raise voter concern and harm to middle-of-the-road Democrats running in moderate districts. Hoyer ultimately decided to delay the vote until December.

This week the House Committee of Rules held a virtual hearing on the legislation. The committee heard testimony from Reps. Sheila Jackson Lee (D-TX), Earl Blumenauer (D-OR) and Ben Cline (R-VA). Rep. Jackson Lee presented a handful of modifications to the bill, which included clarification on regulatory authority for federal agencies and cannabis policies as it relates to drug testing for federal workers. However, the most notable is the tax provision. In the original text, all cannabis products would have a 5% tax, and the revenue would fund a grant program that supported communities that were negatively impacted by the War on Drugs. The modified text would impose a 5% tax on all cannabis products for two years and annually increase the tax by 1% until rates reached 8%. After five years, tax rates will apply to the weight of the product, not the price.

Rep. Cline said the new language does not reflect bipartisan input. The tax rates applied to cannabis products are one of the lowest CEN tax on the market and are not competitive with the cigarette, beer and alcohol tax rates. He also suggested for co-sponsors of the bill to consider rescheduling cannabis rather than descheduling it entirely. Rescheduling will allow researchers to conduct clinical trials and studies under a more limited scope and learn more about the drug’s short- and long-term health effects. Rep. Rob Woodall (R-GA) argued that unlike tobacco legislation, the MORE Act does not address the vaping epidemic in youths and does contain advertising restrictions. Rep. Jamie Raskin (D-MD) said the drug prohibition has failed. Similar to alcohol, prohibition builds up organized crime, enriches bad actors and allows them to spoil the industry. By descheduling cannabis, Congress can end the War on Drugs, which has disproportionately impacted young and minority populations. Rep. Jackson Lee concluded that rescheduling the drug is only beneficial to businesses and the industry. The MORE Act focuses on communities that have been incarcerated or negatively affected by possession or distribution of cannabis.

Georgia’s Senate runoff races will determine which party will take the majority in the 117th Congress. If the two Georgia seats flip, then Democrats will hold a narrow lead in the Senate and Sen. Chuck Schumer (D-NY) will be the Senate majority leader. As the sponsor of S.1552, the Marijuana Freedom and Opportunity Act, and majority leader, the legislation is very likely to be addressed in the Senate. However, with a Republican majority and Mitch McConnell (R-KY) as Senate majority leader, the bill is likely dead on arrival. Like McConnell, many Republicans do not want to consider, or even bring the bill to the floor for a vote. However, as Congress transitions into the year, some Republicans are becoming more open to the issue of cannabis. Senate Majority Whip John Thune (R-SD) admitted he had not thought about the matter much and said, “I still think it is kind of a fluid issue,” and Sen. Pat Toomey (R-PA), presumably the next chair of the Senate Banking Committee, shared his sympathy to the industry and its struggles. 

On Friday, Dec. 4, the House voted on the MORE Act. In a majority Democratic chamber, the legislation passed 228 to164 in a bipartisan vote, with 223 Democrats and five Republicans, Reps. Gaetz, McClintock, Brian Mast (FL), Denver Riggleman (VA), and Don Young (AK) voting yea. The bill will advance to the Senate where its future remains unknown.

This document is intended to provide you with general information regarding cannabis policy updates. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions.

Meet The Team

Melissa Kuipers Blake Shareholder T 303.223.1164 mkblake@bhfs.com
Osiris Morel Policy Analyst T 202.383.4705 omorel@bhfs.com
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