Much of the cannabis industry’s progress (or lack thereof) is directly tied to legislation. Many companies and business leaders look to the state and federal governments to get an idea of what’s to come and how these plans may affect their business. Which federal and state bills are we keeping an eye on? These five are making headlines in 2023 and can have a great impact on our region and on all 50 states.
1. The Secure and Fair Enforcement (SAFE) Banking Act
Cannabis industry veterans are familiar with this legislation. First introduced in 2017, the Secure and Fair Enforcement (SAFE) Banking Act would essentially codify into law the rules that permit banks to do business with cannabis companies. It’s passed in the House of Representatives multiple times since its introduction, but has died in the U.S. Senate on each attempt. It’s widely assumed that the bill will be reintroduced in Congress yet again this year, and with it comes a renewed hope that it will pass the Senate this time around.
Why is the SAFE Banking Act so closely watched by many in the cannabis industry? The SAFE Banking Act would do three main things for banks that want to work with state-regulated cannabis-related businesses:
- Prohibit federal regulators from penalizing banks for providing financial services to state-regulated cannabis-related businesses
- Clarify that funds obtained from a state-regulated and compliant cannabis business would not be considered “proceeds from an unlawful activity” solely because the source of those funds arising from a plant-touching enterprise
- Provide protection against federal liability for banks, the Federal Reserve, and Federal Home Loan Banks, as well as insurers engaged with state-regulated and compliant cannabis-related businesses
The SAFE Banking Act remains a priority for many in the industry, who’ve often faced unstable banking situations and limited access to conventional banking and lending services.
2. Marijuana 1-to-3 Act of 2023 (H.R. 610)
U.S. Representative Greg Steube (R-FL) has reintroduced the Marijuana 1-to-3 Act, also known as H.R. 610, to reschedule cannabis from Schedule I to Schedule III under the U.S. Controlled Substances Act. Although this bill has been introduced and denied twice in the past, the reintroduction comes on the heels of Biden’s October 2022 announcement to issue pardons to people convicted of cannabis possession and request that the secretary of Health and Human Service review cannabis’ current schedule I status.
The bill seeks to change the classification of cannabis from Schedule I, reserved for drugs with no accepted medical use and a high potential for abuse, to Schedule III, which includes substances with a moderate to low potential for physical and psychological dependence. This change in scheduling would acknowledge the therapeutic potential of cannabis, allow for more research, and could significantly impact law enforcement and criminal justice reform, among other significant impacts.
3. Maryland’s cannabis reform (H.B. 556)
Maryland voters voted in favor of H.B. 556 – a bill to legalize adult use cannabis beginning July 1, 2023 – allowing all 21+ adults in the state to consume and possess up to 1.5 ounces of cannabis. In March 2023, the Maryland House of Delegates committee advanced an amended bill outlining proposed rules for legal cannabis sales and production in the state. In a lengthy reprint, the House Economic Matters Committee adopted dozens of changes, including minor technical amendments and revised provisions on delivery and how the industry’s regulatory body and social equity office would be structured.
Proposals included a 6 percent excise tax for the first fiscal year following legalization, which would increase by 1 percent each year until 2028, maxing out at 10 percent. Additionally, 30 percent of tax revenue from Maryland’s cannabis industry would go toward community reinvestment funds for at least the next 10 years.
Lawmakers voted 16 to 5 to advance HB 556, with three members excused. The House will need to give final third approval before the bill would proceed to the state’s Senate.
4. New York State Senate Bill S4831
Two key Democratic lawmakers in the New York Legislature are advocating for changes to the state’s cannabis tax system as the industry launches in the Empire State. Assembly Majority Leader Crystal D. Peoples-Stokes and state Senator Jeremy Cooney have proposed Senate Bill S4831, which would repeal the potency tax that currently exists. This legislation would simultaneously increase the existing excise tax to recoup some of the lost revenue.
“No other state in the country has implemented the potency (THC) tax on adult-use cannabis that New York State has,” the bill reads. “This tax is excessively complex, costly to cannabis enterprises, and will lead to shopping for the best lab results. Furthermore, such a tax results in burdens that fall disproportionately on small business and social equity applicants.”
5. Adult-use legalization in Pennsylvania
With Democrats winning control of the house in the 2022 midterms and the election of former Attorney General Josh Shapiro (D) as the state’s next governor, adult-use cannabis legalization may finally be on the table in Pennsylvania. Although the Pennsylvania House and Senate each had a legalization bill introduced last year, neither got out of the legislature. However, with Shapiro’s vocal support for legalizing adult-use cannabis during his campaign, there is renewed hope for the passage of a cannabis bill in the near future.
Shapiro frequently tweeted support for legalizing adult-use cannabis during his campaign. Furthermore, a CBS poll found that 66% of registered Pennsylvanian voters said they support adult-use cannabis legalization. This level of support is difficult to ignore and could put pressure on lawmakers to act on the issue.
Keeping tabs on state and federal legislative developments
As we continue to monitor the progress of these cannabis bills in 2023, it’s essential to remember the potential impact they could have on individuals and communities across the nation. Whether or not these bills ultimately become law, we may see significant changes in how we approach drug policy as more lawmakers and citizens recognize the potential benefits of cannabis.
If you want to bring your cannabis business to the next level, sign up for the 2023 CWCBExpo, which will be held June 1 – 3 at the Javits Center in New York City. There’s no better place to meet the industry’s foremost leaders and network with some of the most exciting entrepreneurs and professionals in cannabis today.