Congress Introduces Bills to Reform Federal Cannabis Policies

In a significant move for the cannabis industry, a bipartisan group of U.S. House representatives has introduced two bills aimed at reforming federal marijuana policies: the PREPARE Act and the STATES 2.0 Act.

Key Takeaways

• PREPARE Act: Proposes the creation of a federal commission to develop a regulatory framework for cannabis, respecting state laws.
• STATES 2.0 Act: Seeks to exempt state-legal cannabis businesses from Section 280E of the IRS Code, allowing standard business tax deductions.
• Federal Legalization: Neither bill legalizes marijuana at the federal level but aims to reduce conflicts between state and federal laws.
• Regulatory Oversight: Suggests oversight by agencies like the Alcohol and Tobacco Tax and Trade Bureau (TTB) and the Food and Drug Administration (FDA).

Legislative Details of the PREPARE Act and STATES 2.0 Act

The PREPARE Act (Preparing Regulators Effectively for a Post-Prohibition Adult-Use Regulated Environment) aims to establish a commission under the Department of Justice. This commission would study and recommend a federal regulatory framework for cannabis, drawing parallels to alcohol regulation. The goal is to ensure a smooth transition should federal prohibition end.

The STATES 2.0 Act (Strengthening the Tenth Amendment Through Entrusting States) focuses on aligning federal tax policies with state-legal cannabis operations. By exempting these businesses from Section 280E, the act would allow them to claim standard business deductions, alleviating a significant financial burden. Additionally, the bill emphasizes that federal enforcement should not interfere with state-established cannabis markets.

Industry Implications

If enacted, these bills could provide much-needed clarity and relief to cannabis businesses operating legally under state laws. The exemption from Section 280E would result in substantial tax savings, fostering growth and stability within the industry. Moreover, establishing a federal regulatory framework would pave the way for consistent standards and practices across states.

Outlook

While the introduction of these bills marks progress, their passage remains uncertain. The current political climate and leadership in Congress will play pivotal roles in determining their fate. Nonetheless, the bipartisan support for these measures indicates a growing recognition of the need to reconcile federal policies with state-level cannabis legalization.