Cannabis Industry Awaits U.S. House Vote on the MORE Act

The U.S. House of Representatives is planning a floor vote on the Marijuana Opportunity, Reinvestment and Expungement (MORE) Act, legislation that would federally decriminalize cannabis by removing it from the Controlled Substances Act, and cannabis industry stakeholders are taking notice.

“It’s a fairly comprehensive piece of legislation, talking about descheduling cannabis federally,” Jonathan Havens, co-chair of Saul Ewing Arnstein & Lehr’s Cannabis Law Practice, tells Cannabis Business Times and Cannabis Dispensary. “It would completely change the treatment of the federal regulation of cannabis.”

The upcoming vote, first reported by Marijuana Moment, is planned for September and could lead to monumental progress for the industry, even if the legislation encounters roadblocks in the Senate, where its passage is less likely, according to Patrick Martin, a lobbyist with Cozen O’Connor.

“Passing a legalization bill on the House floor would be tremendous progress, and I think it would set a precedent moving forward that will ultimately help lead to legalization,” he says.

Aside from federal decriminalization, the MORE Act also strives to address the past harms of cannabis prohibition, particularly on communities of color and other marginalized groups.

The legislation would require federal courts to expunge prior cannabis-related convictions, and would impose a 5% excise tax on the legal cannabis industry to fund these expungement efforts, as well as three grant programs. As outlined in the bill, these are:

• The Community Reinvestment Grant Program: Provides services to the individuals most adversely impacted by the War on Drugs, including job training, re-entry services, legal aid, literacy programs, youth recreation, mentoring and substance use treatment
• The Cannabis Opportunity Grant Program: Provides funds for loans to assist small businesses in the marijuana industry that are owned and controlled by socially and economically disadvantaged individuals
• The Equitable Licensing Grant Program: Provides funds for programs that minimize barriers to marijuana licensing and employment for the individuals most adversely impacted by the War on Drugs

The legislation would also establish Small Business Administration funding for cannabis-related businesses and their service providers, and would require the Bureau of Labor Statistics to collect data on the demographics of the industry to ensure people of color and economically disadvantaged individuals can participate.

“We hope to see it pass on the House floor, and that would be historic acknowledgement by Congress, not only of the importance of decriminalizing cannabis, but also the importance of recognizing and trying to right this wrong,” Martin says.

Sponsored by Rep. Jerry Nadler (D-NY), the MORE Act has picked up 78 co-sponsors in the House as of July 31, and cleared the House Judiciary Committee in November 2019.

The legislation was then referred to seven other committees, which must waive or consider the bill before it can come up for a floor vote in the House.

“That’s a lot of committees that have their hands in this piece of legislation,” Martin says. “It’s had some waivers that need to get signed off on from more chairmen before it gets consideration on the House floor, but I think everything we’re hearing is that they’re trying to push to get consideration after the August break.”

While both Martin and Havens are optimistic that the MORE Act has a strong chance of passing the full House, they are also in agreement that its future in the Senate is a bit less certain.

“If it passed the House, I’m afraid that chances of passage in the Senate, at least under the current makeup of the Senate, is quite unlikely,” Havens says. “We know the House has been more apt to advance cannabis deregulatory legislation—it passed the SAFE Banking Act previously—but the Senate continues to be a major hurdle.”

However, even if the bill falters in the Senate, a full House vote on the legislation still signifies a monumental step forward for the industry.

“It recognizes [that] the history of cannabis prohibition is steeped in policies that have disproportionately targeted black and brown communities, and it’s been my sense over the last few months that interest for the legislation has only increased, especially with the recent protests and police reform legislation,” Martin says. “This legislation emphasizes that this kind of reform is essential to fight this inequity.”

MORE Than STATES

The MORE Act is more sweeping in some ways than other recent cannabis reform legislation, such as the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act. That bill, which would protect states’ rights to enact their own cannabis policies without fear of federal interference, has been pending in both chambers of Congress since it was first introduced in June 2018.

“We obviously all followed the STATES Act for a long time, and it was drafted for a different political configuration in Congress than what you’re seeing now,” Martin says. “The thing that makes the MORE Act significant in a very profound way is that it addresses reparative and restorative justice for communities of color that have been unfairly targeted in the war on drugs.”

By completely descheduling cannabis at the federal level, the MORE Act would have broader implications, such as opening up interstate commerce, Havens adds. The legislation also would remove many of the current restrictions on research, banking and taxation, which are all tied to the fact that cannabis is currently prohibited at the federal level.

“It would be a panacea or silver bullet solution to members of the industry,” Havens says, but adds that this would come with a new set of potential challenges.

“I do think that it’s important to recognize that a lot of these operators who are operating in multiple states … have invested all this money and taken all these risks and built up the infrastructure of these pretty robust state markets,” he says. “If you open up the flood gates and let everyone in, … there would certainly be more people growing, processing and dispensing cannabis. You have to wonder how the existing licensees will feel about that because the value of their businesses that they’ve invested a lot of money in to build up these programs would be devalued by the entrance of other market participants.”

A Road to America for Canadian Producers?

For David Culver, Canopy Growth Corp.’s Vice President of Government Relations, if the MORE Act does indeed become law, it would be a triggering event in the Canadian LP’s acquisition agreement with multistate cannabis operator Acreage Holdings, which, when drafted in April 2019, granted Canopy the rights to purchase Acreage should the U.S. federally legalize cannabis.

“Obviously, the full descheduling of cannabis would be a triggering event, and we would execute our agreement right away,” Culver says, adding that the acquisition of Acreage would place Canopy in 21 U.S. states. “It would be a huge moment for our company if it were to pass.”

Canopy, based in Smith Falls, Ontario, operates in 12 countries, but only enters jurisdictions where cannabis is federally legal. The company entered the U.S. hemp/CBD market only after the passage of the 2018 Farm Bill, and is currently building out a facility in Binghamton, N.Y. CBD products from Canopy's First & Free line are currently available in the U.S. through its online platform, www.ShopCanopy.com, and the company will soon launch a Martha Stewart CBD line in the U.S., as well.

“I think that it’s a really significant event that House leadership has started … talking about bringing this bill to a House vote in September,” Culver says. “I can feel the ball starting to roll down the hill on the cannabis issue. I’ve been at this for almost three years now, and I can feel the momentum.”

While the fate of the MORE Act remains to be seen, Culver says that going forward, especially after the upcoming election, federal legalization in the U.S. could inch closer to reality.

“I still don’t think that there is appetite in the Senate for a full legalization bill, but if the House were to pass it, and if the politics do line up next year—if the Senate were to flip, the House remains the same and the Democrats won the White House—then I think it really does set the stage for a full legalization package to go to the president in the first six months of next year,” he says.

Culver and his colleagues at Canopy have been working with Congressional leaders on the MORE Act for quite some time, he adds, and he hopes the various committees charged with considering the bill will think about what a specific regulatory structure might look like, should the legislation come to pass.

“Canadians were very smart prior to legalization in that they had established a full regulatory structure,” Culver says. “We need to put more thought into … what the federal structure will look like here. Obviously, the bulk of it will be punted to the states, but in my opinion, it’s essential that we have that well thought through and as a part of a full legalization bill before we push this through.”

Martin echoes this sentiment, adding that the MORE Act’s momentum will hopefully spark continued conversations about what regulatory structures will look like under federal legalization. In the meantime, he adds, states will likely continue to lead the charge, and the federal-state tension that exists today will continue.

“We’re in this weird place right now where we see signs of progress with things like the MORE Act at the federal level, [and while] the political configuration in Congress and the White House makes large change at the federal level a little more difficult right now, you’re seeing the states act and lead,” Martin says. “The adult-use programs like where I am in Illinois are going incredibly well, so there’s just this disconnect between what’s happening in Washington and what people are living every day out in the country. … The disconnect is real and that tension is felt.”