David N. Feldman is a partner at law firm of Hiller PC in New York. He is also a partner in the cannabis consulting firm Skip Intro Advisors LLC. His law practice focuses on corporate and securities matters and general representation of public and private companies, investment banks, private equity firms and high net worth individuals.
In his blog post today David writes….
US House Passes Historic Cannabis Legalization Bill
Is the number 3884 magic? It is if you are a supporter of legalizing adult use of cannabis in the United States. That is because HR 3884 is the bill the House of Representatives just passed by a party-line vote of 228-164* to federally decriminalize marijuana. It is not a big surprise that the Democrat-controlled House could muster the support to pass this bill, called the MORE Act. It is not, however, expected that the current Senate would approve it to go to the President for signing. Even so, it is still a big, big deal. Why? For several reasons, let’s go through them.
- The House didn’t want to do it until now. Despite control of the House since 2018, Speaker Pelosi waited until this lame-duck period to have this vote. The fact that she felt ready to do so showed not only the strength of her caucus but her belief that it could create leverage on the Senate and both the outgoing and incoming President to consider going along with the action.
- Biden and Harris are coming into office. VP-elect Harris is a strong supporter of full legalization, with Biden a bit less so. But one assumes he is not likely to veto the MORE Act if it gets through the Senate. Trump might have resisted this type of bill since he preferred more of a states’ rights approach.
- Control of the Senate is in question. If the Georgia senate runoffs lead to a Democrat-controlled Senate, passage of the MORE Act is much more likely. Even if they do not, this puts pressure on Republicans, who will at a minimum have a smaller majority than currently, to consider some action. This could include banking relief, legalizing medical marijuana or even a states- rights approach.
- Public support is at an all time high. This is the big unknown factor that could influence legislators. Roughly 90% of Americans want to legalize medical marijuana, about 70% would legalize adult use, and these include a majority of Republicans for the last several years.
- Taxes and jobs. As we hopefully start coming to the end of the pandemic, rebuilding our economy will be quite the uphill battle. Both states and federal players understand the need to increase tax revenue and job creation, which legalizing cannabis will do.
What does the MORE Act do? Removes cannabis as a scheduled controlled substance, institutes a 5% tax on cannabis sales, expunges many low level marijuana crimes and will regulate some aspects of the industry. There were some last minute attempts by Republican House members to add amendments, but it appears these were defeated. What is the impact of legalization on existing US players? What should we bet on in terms of where this goes? You tell me.