In 2012 a majority of voters throughout the states of Colorado and Washington declared that adults should not be punished for using cannabis. Rather, the citizens of those two states declared that the cultivation and sale of cannabis should be regulated and taxed by the state, to facilitate the removal of cannabis sales from the dangerous criminal market. In short, they voted to end cannabis prohibition. This is how democracy operates in our federalist system, with engaged citizens at the local and state level driving legislative change and determining how they will live their lives in their own communities.
Today, just five years later, nine states and the District of Columbia have eliminated all penalties for the possession of cannabis by adults. Another 20 states have adopted effective medical cannabis laws. In most of these states, systems for the licensed production and sale of cannabis have been established. Combined, it is likely that these states will see in excess of $7 billion in state-legal cannabis sales in 2018. These markets have created hundreds of thousands of jobs and will soon be generating over a billion dollars in tax revenue.
These jobs and tax revenues do not appear out of thin air. They are the result of hard work and significant investments by entrepreneurs and small business owners. Under extremely unique and challenging circumstances, these operators have essentially taken on the burden of helping state officials displace the criminal cannabis market. They must do so without reliable access to banking services and while being subject to a federal tax provision that results in their effective tax rate being roughly 80 percent or more on average.
We know that change does not come quickly at the federal level. However, in order to protect the economies and constitutional rights of the majority of states who have decided to opt out of federal cannabis prohibition, the cannabis industry needs both President Trump’s administration and Congress to embrace the spirit of federalism and respect state cannabis laws.
Fortunately, there is strong momentum in that direction. We can start at the very top with President Trump. During the 2016 campaign, a television reporter in Colorado asked him whether he would respect that state’s cannabis laws if he were elected. His response didn’t leave any room for doubt: “I think it’s up to the states. I’m a states person. I think it should be up to the states, absolutely,” he said.
That attitude seems even more pervasive in the halls of Congress. Whereas support for cannabis policy reform was once predominantly found on the Democratic side of the aisle, we now see Republicans stepping up in a significant way. House members like Rep. Carlos Curbelo (R-Fla.), Rep. Matt Gaetz (R-Fla.), Rep. Morgan Griffith (R-Va.), and Rep. Thomas Garrett (R-Va.), are not just co-sponsoring cannabis bills, but are introducing them. Sen. Cory Gardner (R-Colo.) has become a passionate and vocal defender of his state’s cannabis laws.
We need to channel this energy into the adoption of policies consistent with the federalist spirit that drives it. In the short term, this means retaining language in the omnibus appropriations bill that prevents the federal government from interfering with state medical cannabis laws, while adding additional language to prevent interference with any state cannabis law.
With those protections as a foundation, Congress should also immediately address the tax and banking issues described above. With respect to banking, the failure to address the issue at the federal level is punishing states with regulated cannabis markets by forcing them to handle hundreds of millions of dollars in cash. This is a clear public safety threat. And the aforementioned tax provision literally robs states of tens of millions of dollars or more that should be staying in local economies. By what logic does the federal government penalize states that are working to put drug cartels out of business?
Under our federalist system, states should be free to pursue their own laws that they believe are best suited to protect the health and safety of their citizens. The U.S. Constitution clearly reserves the power to regulate commerce within a state’s borders to the individual states. Policies at the federal level should support that pursuit, not stymie it.
