On December 7, 2020, cannabis industry leaders, former federal government officials, and leading state regulators met for a Virtual Public Policy Summit, a policy discussion among key leaders in the cannabis industry that was co-hosted by the Marijuana Policy Project and the National Cannabis Industry Association (NCIA). Participating industry leaders discussed how to define and address key issues to help advance the cannabis industry in 2021 and beyond. To help facilitate candid discussion, the event was closed to the media (likewise, comments made and positions taken described below have not been ascribed to particular speakers).

As participants acknowledged, the 2020 election results (particularly the results of state ballot initiatives) indicate a massive bipartisan shift in public support for cannabis legalization, which marks an opportunity for the industry to work with legislators, both Republican and Democratic, to craft a national framework for cannabis legalization. Nevertheless, even as federal cannabis prohibition is eroding, the results of the imminent January 5 runoff elections for Georgia’s U.S. Senate seats may have a major impact on the pace of cannabis reform moving forward.

As discussed during the summit, pathways for federal legalization of cannabis include the following:

  • Passage of legislation, such as the STATES (Strengthening the Tenth Amendment Through Entrusting States) Act and the MORE (Marijuana Opportunity Reinvestment and Expungement) Act, will depend upon the ultimate composition of the U.S. Senate. Legislative change will likely occur incrementally. For example, a last-minute amendment to the MORE Act prohibits those with prior felony convictions from lawfully participating in the industry, thus impeding a major social justice effort to include those convicted of nonviolent cannabis offenses.
  • Ballot initiatives to legalize cannabis, which have been successful on the state level, provide no opportunity for standardization of regulations at the federal level. But successful ballot initiatives can provide legislators the safety to act on cannabis reform where such action may have been risky otherwise.
  • The Biden administration’s current position on cannabis involves decriminalizing possession of cannabis and rescheduling the substance under the Controlled Substances Act. (Cannabis is currently a Schedule 1 drug, deemed to have no medical value and high potential for abuse.) This is at odds with the many states that have legalized medicinal cannabis use. Moreover, rescheduling of cannabis falls under the authority of the U.S. Drug Enforcement Administration (DEA), but since the DEA has historically eschewed taking action to reschedule cannabis, the issue will be in the hands of the incoming administration. Summit participants agreed that rescheduling is a step in the right direction, but that it does not go far enough to enable a regulated market and reduce consumer participation in the illicit cannabis market, which is a major problem for the cannabis industry.
  • The consensus among participants was that descheduling cannabis altogether is preferable. Descheduling would likely occur through an amendment to the Controlled Substances Act to specifically exempt cannabis. It is also plausible that descheduling could be done through administrative action by the president-elect and his incoming attorney general.

Participants also contemplated various proposals for cannabis taxation and solutions to social equity concerns in the cannabis industry. This included the NCIA’s own proposed regulatory approach, which is linked here. Major discussion surrounded how to harmonize myriad state regulations to build national standards that protect the existing cannabis industry while ensuring that those disproportionately harmed by the War on Drugs have an equitable opportunity to participate in the growing cannabis market.

Below are some takeaways from these conversations:

  • Participants agreed that the regulated cannabis marketplace should not only be easy to navigate but also include solid regulations to ensure that products are safe and coming from licensed operators. According to participants, one way to do this is through the Alcohol and Tobacco Tax and Trade Bureau (TTB) as opposed to the DEA, from which much of the harm of the War on Drugs originated. Summit participants noted that the TTB can rely on its own model of alcohol’s successful transition from prohibition, plus the TTB has experience with taxation, labeling guidance, and consumer protection.
  • Simple taxation on cannabis is key to preventing tax avoidance and removing barriers for entry for smaller operators. Interplay between state and federal tax rates is important to consider, because high taxes can drive consumers to the illicit market. The tax structure proposed under the final version of the MORE Act is complicated and burdensome for operators. One option is an excise tax at the point of retail sale, which is relatively inexpensive to administer and audit, as well as relatively easy to follow.
  • Social equity programs will be dependent upon a strong regulatory framework, revenue derived from taxes, and top-down commitments to programs such as the Cannabis Opportunity Program operated by the Small Business Administration.
  • The jurisdiction of the U.S. Food and Drug Administration (FDA) is constitutionally authorized over interstate commerce, and therefore FDA involvement hinges upon legalization. The FDA has been addressing CBD, THC, and other cannabinoids, but research is hampered by cannabis’s Schedule 1 status and the FDA has mostly had to rely on foreign studies. Summit participants agreed that research is imperative to a safe and well-regulated market.
  • New regulatory organizations such as the Cannabis Regulators Association and the Cannabis Regulators of Color Coalition will be invaluable resources to educate federal legislators and regulators about what has been learned to date by state cannabis industries.

A key overarching takeaway from the summit was that a successfully regulated federal legal cannabis market can be developed on the basis of existing regulatory systems by leveraging state-level experience, and also by prioritizing consumer safety and social equity.