US Congressman Introduces Bill to Remove Cannabis From CSA, Allow Interstate Commerce, Provide 280E Relief

Another federal cannabis reform bill entered the ring in Washington, but this one is more focused on states' rights, opening the door for interstate commerce and eliminating 280E tax barriers for the industry.

U.S. Rep. Dave Joyce, R-Ohio, announced Dec. 7 he reintroduced the latest version of the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act, legislation that aims to ensure each state within the nation has the right to determine for itself the best approach to cannabis legalization within its borders. This right would also apply to Washington, D.C., U.S. territories and federally recognized tribal nations.

The legislation, which has bipartisan support with four other primary sponsors, also aims to amend the Controlled Substances Act to no longer classify cannabis as a controlled substance while ensuring states that do choose to maintain cannabis prohibition receive federal support and assistance for enforcement.

While states would have the power to determine what happens within their own borders, they cannot make laws permitting or restricting interstate commerce unilaterally, according to the legislation.

“In the absence of federal movement, the illicit interstate trade in cannabis has persisted even in the face of significant state policy changes,” the bill’s text states. “The federal government should be responsible for regulating and tracking this interstate trade to ensure cannabis does not end up where it does not belong.”

The act would still allow for federal criminalization involving the distribution of cannabis to anyone under the age of 21 with an exception for medical purposes.

Additionally, the act would provide tax relief to state-sanctioned cannabis businesses, stating they “shall not be subject” to section 280E of the Internal Revenue Code, which relates to expenditures and revenue in connection with sales of illicit drugs. In other words, cannabis businesses would be able to deduct ordinary businesses expenses just like other every other American company.

“The current federal approach to cannabis policy infringes on the rights of states to implement their own laws, stifling critical medical research, hurting legitimate businesses, and diverting vital law enforcement resources needed elsewhere,” said Joyce, who co-chairs the Congressional Cannabis Caucus with Reps. Earl Blumenauer, D-Ore., and Brian Mast, R-Fla., who also sponsor the STATES Act.

Reps. Lori Chavez-DeRemer, R-Ore., and Troy Carter, D-La., also sponsor the legislation.

Joyce and Blumenauer first introduced the STATES Act in 2018 with Sen. Elizabeth Warren, D-Mass., and former Sen. Cory Gardner, R-Colo.

“The STATES Act does what every federal bill should do—help all 50 states succeed,” Joyce said in a Dec. 7 press release. “This bill respects the will of the states that have legalized cannabis in some form and allows them to implement their own policies without fear of repercussion from the federal government.”

The STATES Act is the third federal cannabis reform bill that aims for broader legalization introduced in recent months.

Rep. Jerry Nadler, D-N.Y., reintroduced the partisan Marijuana Opportunity, Reinvestment and Expungement (MORE) Act on Sept. 20, which now has 77 U.S. House members signed on—all Democrats.

And Rep. Nancy Mace, R-S.C., reintroduced the bipartisan States Reform Act Oct. 24, which has five U.S. House members signed on for sponsorship.

Joyce’s STATES Act calls on the Alcohol and Tobacco Tax and Trade Bureau (TTB) and the Food and Drug Administration (FDA) to regulate cannabis products by calling on the FDA classify cannabis products as they fall into specific categories, such as drug, food and dietary supplements, or cosmetics, to ensure products meet the standards for contaminant testing, manufacturing expectations and marketing practices.

However, the legislation also states that the FDA will not have the authority to require premarket approval.

In addition, the legislation indicates there should be a federal cannabis excise text levied on sales that should be “low enough to not exacerbate the level of taxation set by states, thereby avoiding the pyramid effect of adding federal taxes on top of high state taxes.” But the bill doesn’t explicitly recommend a specific federal tax percentage nor mandate the tax.

Other notable provisions in the STATES Act include:

• Prohibits the employment of persons under the age of 18 in cannabis operations
• Prohibits the distribution of cannabis at transportation safety facilities, such as rest areas and truck stops
• Instructs the U.S. Comptroller General to conduct a study on the effects of cannabis legalization on traffic safety, including whether states are able to accurately evaluate cannabis impairment, testing standards used by these states, and a detailed assessment of traffic incidents
• Allow for research on cannabis being consumed in regulated marketplace
  

Following are what Reps. Blumenauer, Mast, Chavez-DeRemer and Carter had to say about their sponsorships for the bill:

“I am proud to have worked on multiple iterations of the STATES Act with my friend Dave Joyce. Cannabis reform benefits from such true bipartisan engagement. I look forward to our work to make the federal government a better partner to the states of all political stripes leading the path forward.” –Rep. Blumenauer

“The Constitution never says the word ‘cannabis,’ but it does say clearly that all powers not explicitly given to the federal government remain with the states. Cannabis policy should be based on that: 50 states should be able to set 50 different policies that are going to be best for their constituents, and that’s exactly what the STATES Act will do.” –Rep. Mast

“As more and more states have adopted their own laws regarding cannabis legalization, it’s more important than ever to create a safe and professional environment for one of the fastest-growing industries. That’s why I’m honored to help lead the STATES Act. By recognizing state cannabis laws at the federal level, we can help bring certainty and safety to businesses and communities.” –Rep. Chavez-DeRemer. 

“Current federal cannabis policy limits state’s autonomy, hindering vital medical research and businesses. The STATES Act will fix this by allowing states to shape their own cannabis policies, fostering a secure environment for the industry’s growth and development. This bill’s comprehensive provisions, including FDA regulation, youth protection measures, and addressing financial challenges, is a positive step in the right direction towards cannabis reform.” –Rep. Carter