6 ways new federal bills would protect California cannabis consumers, businesses

March 30, 2017 

Updated 11:12 p.m.

Hemant Lata, left, and Suman Chandra work at a federally-approved medical marijuana facility at the University of Mississippi in Oxford in 2014. (File photo by Lance Murphey, The New York Times)

Federal legislators are working on a cluster of proposed laws aimed easing the growing conflict between state and federal marijuana laws, with a number of protections and new regulations that could impact cannabis consumers and businesses in California.

Cannabis remains illegal at the federal level, though medical marijuana is now legal in 28 states and recreational cannabis is allowed in eight. So even though state law says Californians can now smoke weed and give some to a friend, they still risk criminal prosecution by federal authorities and can be denied benefits such as subsidized housing. People who own cannabis-related businesses also face federal raids and can’t access most banking services or claim standard tax deductions. And researchers also have a tough time getting access to study cannabis because the plant remains illegal under federal law.

Oregon Democrats Sen. Ron Wyden and Rep. Earl Blumenauer aim to change all of that in one fell swoop with the “Path to Marijuana Reform,” a package of bills introduced Thursday in both houses.

Also included in the package is the reintroduction of legislation from Rep. Jared Polis, D-Colorado, to regulate marijuana like alcohol.

The bills would remove marijuana from a national registry of controlled substances and add a slew of new protections for consumers and industry workers. Wyden said the new rules could spur industry growth and investment, which have been hampered by the looming threat of a federal crackdown – a threat that's gained traction since long-time marijjuana opponent Jeff Sessions became Attorney General.

The bills would also create a new federal tax on all cannabis products that would start at 10 percent and escalate to 25 percent. And marijuana businesses would be required to get federal permits to operate, with new rules on advertising, labeling and more.

The proposed bills drew quick praise from supporters of marijuana legalization, who argued that such reforms will bring federal marijuana laws more in line with public opinion and state policies.

“States are clearly realizing the benefits of regulating marijuana, and we are glad to see a growing number of federal policy makers taking notice,” said Aaron Smith, executive director of the National Cannabis Industry Association.

Opponents of legal marijuana expressed concern about Wyden and Blumenauer’s legislation, claiming the emerging industry is focused on profits and not public health.

“We need to end, not expand, the special interest big marijuana lobby,” said Kevin Sabet, a former White House drug policy senior adviser who now heads Smart Approaches to Marijuana.

Most policies in the bills have been proposed previously in some form, though they’ve never gotten past initial committee hearings. And that was before Republicans controlled both the House and the Senate.

But Wyden and Blumenauer pointed out in a joint statement that public support for cannabis legalization has never been higher, with the Democrats’ package of bills drawing early support from both sides of the aisle.

Here are six ways the federal bills would impact Californians and residents in other legal weed states if they become law.

1. Add criminal protections: Federal agents could no longer arrest people who are complying with their state’s cannabis laws and slap them with fines or jail time. The feds also couldn’t raid state-legal pot shops and seize their assets. No one could be deported or denied entry to the country for consuming weed in state where it’s legal. And Native American tribes would be protecting from punishment under federal marijuana laws.

2. Open bank access: Banks and credit card companies that handle marijuana funds would get immunity from federal criminal charges. That should help the industry move away from operating all in cash, since financial institutions would no longer have to worry about being penalized for money laundering if they take on cannabis clients.

3. Remove obstacles for research: A new process would make it easier for researchers to study medical marijuana by reducing approval wait times, costly security measures and layers of review that experts say stifle the number and quality of studies now taking place. And once researchers get approval, it would be easier for them to access marijuana for use in their studies. That should increase the volume of rigorous trials involving cannabis.

4. Eliminate tax restrictions: Marijuana retailers would be able to claim tax deductions and credits like any other business. That’s because the bills would make an exception for marijuana in IRS tax rule 280E, which says businesses dealing in Schedule I or II substances can’t write off common expenses such as rent, utilities or advertising. That should save businesses significant money each year.

5. Clear criminal records: Anyone with a federal charge for a marijuana-related activity that was legal in their state at the time or who was charged with possessing an ounce or less of marijuana could petition to have their records cleared. California’s Proposition 64 included a similar provision, though it could only apply to state charges.

6. Allow for federal benefits: People in legal weed states could no longer be drug tested for marijuana when applying for a federal job or denied access to subsidized housing. College students couldn’t be turned down for financial aid because they have minor marijuana offenses on their record. And health care workers at Veteran Affairs clinics could recommend medical marijuana to veterans.

Staff writer Alicia Wallace contributed to this report.