CBD OIL

The drug war has harmed communities of color since its inception. For decades and decades, BIPOC (Black, Indigenous, and other People of Color) have been nearly six times more likely to be arrested for drug use than White Americans, despite similar rates of use.

Over the years that legalized cannabis has proliferated across the country, the same trends of market consolidation have emerged in every state that has legalized the plant. BIPOC communities already impacted by the drug war have less access to capital and therefore less access to the cannabis industry. Cannabis market consolidation has always led to white people taking a greater market share while BIPOC communities are left behind.

The legal cannabis industry currently lacks representation of BIPOC executives, business owners, and professionals. Ernest Toney, former global marketing and partnerships manager at Marijuana Business Daily, wants to change that. He founded the BIPOC Cannabis Business Network – a membership community that is working to make the cannabis industry more accessible and profitable for BIPOC professionals and business owners.

BIPOCANN is a place to meet cannabis industry leaders, a place to exchange goods, services and ideas that promote BIPOC economic growth in cannabis, an innovation hub for unique voices and perspectives, and it’s all BIPOC-owned and managed.

In this interview, we sit down with Ernest Toney to hear about BIPOCANN and ask him some questions about the what the future of the cannabis industry could look like.

Cannabis Industry Journal: Tell me about your background- how did you get involved in the cannabis industry?

Ernest Toney: I grew up in Virginia and went to James Madison University where I studied kinesiology, and sports management in graduate school. That led me to pursue a career in sports administration, beginning as a sales and marketing director for a large YMCA in the southwest, followed by a stint as a sales consultant for the Arizona Diamondbacks in Major League Baseball. Immediately prior to joining the cannabis industry, I worked at USA Ultimate – the national governing body for the niche sport of ultimate (frisbee) in the United States. During that time, I managed and scaled adult programs and events across the country. A big part of my job required collaborating with national stakeholders and creating and enforcing policies to grow the sport by making it more accessible to diverse demographics. We also worked hard to increase the commercial visibility of the sport through mainstream media, including ESPN, with gender equity being a the major focus area It was cool because looking back, I learned a lot of things during that five-year period that have been able to apply to the work I’m doing to support the cannabis industry.

But my interest in the cannabis industry became strong when I moved to Denver in 2011, a year before Amendment 64 passed. When Colorado became the first adult use cannabis market in the USA, it was an exciting time. I have always been someone who thinks big picture, about economics and how policies can impact people’s lives. I was interested in what weas going to happen with this new market when it opened.

Early on, I followed the industry trends very closely. Living in downtown Denver, I saw firsthand the effects the cannabis industry was having on day-to-day life, like increased tourism, a housing market boom, a lot of new start-ups, dispensaries opening everywhere. It was just something I knew I wanted to learn more about.

Around 2016, I started making industry connections, but didn’t pursue opportunities until a few years later. Eventually, I was hired in 2018 by MJBizDaily to focus on new business initiatives. Some of my past successes with scaling programs, national and international event management, and community-building aligned with what they were looking for.

I started as the company’s first international marketing manager. In that role, I was responsible for driving marketing campaigns to increase the company’s global readership, event registrations, and business conference presence in foreign markets. After the first year, I transitioned to identify and manage marketing partnerships for the company – which included international and domestic media, event, and affiliate partnerships within and outside of cannabis.

I felt compelled to make a change amidst the social unrest this summer. I was doing my own protesting and volunteer advocacy in Denver, but started to see more broadly, in the cannabis industry, that cannabis executives and companies were bringing attention to the fact that the War On Drugs has been problematic for minorities and communities of color. There was greater talk about social equity programs and how they are not as effective as they should be. There was greater attention to the fact that over 40,000 people are still incarcerated for the plant that others are profiting from – and that the people behind bars are predominantly coming from communities of color. I was in a position that afforded me the opportunity to see what the composition of the global cannabis industry looked like, and I  could see minority representation was lacking in business ownership, leadership positions, and more.

I thought – what is the best way for me to use my talents, insights, and knowledge to affect and change this narrative? Ultimately, I decided to start my own business. Not only was this an opportunity for me to walk the walk being a black man starting a business in this industry where there is a lack of black ownership, but more importantly I was uniquely positioned to be able to educate and let people know about the opportunities to be a part of the booming industry. So, I did some brainstorming and came up with a company, which is called BIPOCANN and it stands for connecting BIPOC communities to the cannabis industry.

The work I have been doing for the last quarter includes directly recruiting people into the industry. If you are curious and want to learn more about the industry, then BIPOCANN can be the entry point. We figure out what your goals are and use the network and our resources to get you connected and figure out where you want to go. Likewise, if you are a service provider, like a graphic designer, accountant, marketer or business owner for example, that sees opportunities for your business to play a role and support it from an ancillary standpoint, BIPOCANN can be an entry point for you too.

The other component to it is working with existing businesses who are trying to make the industry more accessible. I work with existing companies and brands to create platforms that amplify voices and make BIPOC folks more visible, seen and heard within the cannabis industry. We are also helping businesses increase their profitability through diversification tactics and marketing tactics that contribute to their bottom line.

CIJ: Tell me about BIPOCANN- what is it, what are your goals with this project and how has it been received so far?

Ernest: BIPOCANN is a small business working to make the cannabis industry more accessible and profitable for BIPOC professionals and business owners. The prohibition of cannabis has disproportionately impacted communities of color in the Americas. I alluded to this earlier, but there are more than 40,000 people behind bars in the U.S. for cannabis possession and use. There’s evidence suggesting that Black Americans are up to six times more likely to get arrested for cannabis use than White Americans despite use rates being the same.

And then you look at the makeup of the professional industry, there is small representation of business ownership by people of color. The Cannabis Impact Fund references that only 4.3% of dispensaries are Black or Latinx-owned. These problems intersect in a lot of ways.

Now, I know that one company cannot change 100 years of cannabis prohibition and how policy works. But if you want to make this industry more accessible, inclusive, and profitable for those who do not have the access then there a lot of levers to pull. Policy is one. But BIPOCANN is using is more direct strategies now.  We actively recruit people to come in and be a part of this industry, through employment, entrepreneurship, consulting, and collaborations.

We have also created BIPOC Cannabis Business Network and we treat it like a chamber of commerce where members can exchange services, network, and collaborate. It’s all about creating more opportunities for BIPOC professionals and business owners, and it’s a safe space to share your experiences and to ideate. Similar to what you did in the Cannabis Quality Virtual Conference, where there was a dedicated space for BIPOC folks to be seen and heard and tell their story through your virtual panels, we use our resources and network to help advocates for equity and access be seen, heard, and find opportunities to thrive as a business owner or professional.

CIJ: How do you hope BIPOCANN will be embraced by the cannabis community?

Ernest: I think it has been received well in its first quarter of business. We have had opportunities to share our story across a lot of platforms, including multiple cannabis industry conferences, podcasts, and interviews with varied media outlets. We are in startup mode, so currently we are about building a brand, being seen, and helping people understand what we are trying to achieve. We are working towards that right now. We have had some success and folks are supporting our vision and goals.

I am hoping the cannabis industry will look at BIPOCANN as another important resource within the social equity, business development, and networking landscape. I don’t want to be seen as a competitor to the organizations and individuals who have been doing similar work in this space, for much longer, but as an ally. Some of our approaches to bring new people into the industry will include strategically aligning communities and markets where we have strong ties – such as state governments, national nonprofits, and global cannabis networks.

CIJ: Where do you see the cannabis industry making progress with respect to diversity and including people of color?

Ernest: When I look at the types of conversations  and coverage the industry is having, even compared to last year, it seems like more conferences, media entities, brands, and individual leaders are tuned in and trying to figure out how they can contribute to making this industry better, more equitable and more accessible. I am seeing a lot of more attention, attempts to understand where the gaps are and what to do about it.

When I take a step back to think of all the virtual conferences that have made dedicated conference tracks or even entire programs – like the National Association of Cannabis Business’ Social Equity Conference, the Emerge Canna Conference, the Cannabis Sustainability Symposium, and the Cannabis Industry Journal’s post-election social justice panel – or weekly segments from Black leaders like Dasheeda Dawson (She Blaze) and Tahir Johnson (The Cannabis Diversity Report) — those are good signs. They are creating opportunities for voices representing underserved communities in cannabis to share their perspectives and be advocates for change.

But there is still much to do and that includes greater education about the realities, histories, and challenges BIPOC and other minority communities are facing. Going back to the NACB, they recently drafted a social equity standard for state legislatures to use as a baseline for crafting policies and provisions for social equity programs. That and resources from organizations like the Minority Cannabis Business Association, Supernova Women, Cannaclusive, Minorities for Medical Marijuana, and the Massachusetts Recreational Consumer Council, for example are some useful resources for the industry.

Wana Brands is continuing to do good work, and it was exciting to see them become the first sponsor the inaugural Black CannaConference by the Black CannaBusiness Magainze. That was a great example of an industry leader using their dollars, marketing resources, and company values to support an event specifically dedicated to creating, developing, and enhancing Black entrepreneurs and businesses in the cannabis industry.

“It is hard to know what even a year from now will look like.”On the policy front, we just saw on election day cannabis having a ton of success at the polls, passing in every single state where there was a ballot measure.

Arizona did a good job with having social equity provisions directly included in the language on their ballot measure. I think for the states that have yet to draft a social equity program, they can look at what has worked well in some other states and also look at what has not worked well, and how there are loopholes and that invite predatory actions.

I’m excited to see that Governor Ralph Northam and the Virginia Marijuana Legalization Working Group are already identifying the best ways to make a recreational market a beneficial and sustainable one, and tackling how to incorporate social equity, racial equity, and economic equity into a future legalization bill. I am looking forward to learning more after an upcoming meeting with Working Group members. I hope to contribute towards any social equity efforts that will benefit my home state and hometown (a high poverty community at the crossroads of America’s major civil rights movements, with a correctional facility that houses an inmate population equivalent to nearly 10% of the town population).

CIJ: Where do you see the industry moving in the next five years?

Ernest: Ha-ha! It is hard to know what even a year from now will look like.

Just this week the United Nations rescheduled cannabis, which is a big deal! We also saw the U.S. House of Representatives pass the MORE Act. We are inching closer towards federal legalization in the US and I think it will happen within that five-year timeframe, and it will be contentious. There will be compromises on things some folks don’t want compromises on, there will be more big money influencing the outcomes of the industry, and there will be unforeseen or unintended consequences to whatever the federal legislation looks like. I recently moderated a panel of social equity license holders, who were very much felt that federal legalization would harm the disproportionately impacted areas (by the War on Drugs) even more! Their preference was to see cannabis de-scheduled and remain under state control.

I think federal legalization will bring another wave of major mergers and acquisitions, similar to what the Canadian market experienced in 2019, benefiting big business over small business. “We need folks who are educated and informed about these matters to be at the policymaking level to have a fighting chance.”

CIJ: Do you think we can change that?

Ernest: There are so many things at play. The legislators need to have diverse perspectives and representation from the folks in the industry, especially people of color who can speak to the impact that a century of prohibition policies have had on their communities. Those voices and stories need to be heard, but that type of representation is grossly lacking on Capitol Hill…which is all the more reason we need leaders from the aforementioned communities to have a seat at the table when decisions are made.

I say that because a lot of time there are unforeseen consequences when policies are created, so decision makers at the federal level can learn from those of us already doing the work on the local level. I recently had a conversation with a former journalist and colleague who is currently in a cannabis regulatory role. We were talking about how policy and operations intersect with social equity He made the point that “many markets implement license caps, which are intended to prevent oversaturation of cannabis business (the idea being that density of outlets impacts use rates, and particularly youth use rates); in theory, that’s a good policy – but it comes with very real consequences for social equity applicants (because those licenses often go to the wealthiest applicants).  License caps also artificially inflate the cost of those licenses (for a transfer of ownership), which also harms social equity applicants. Lotteries are also generally the result of policy and usually have disastrous results for the social equity applicant.”

So yeah – the rare opportunity to define a new industry that doesn’t just do business as usual, that can right its historical wrongs, and that will reward the communities that have been most harmed by cannabis enforcement, is now. And we need folks who are educated and informed about these matters to be at the policymaking level to have a fighting chance. The optimist in me says “we can do it!” The pessimist in me reminds me that it is 2020 and people still believe the Earth is flat. I’ll keep pushing for change, but I also won’t be surprised if this perfect opportunity to get it right goes wrong.

CIJ: How can people get involved in BIPOCANN?

Ernest: The best way to get involved is to visit www.bipocann.com and support our efforts by becoming an individual member or business member. Not only does that give you the opportunity to connect directly with other members in our business network, but it gives you the chance to be the first to be notified about the latest projects, events, and opportunities we’re working on to change the industry, how we can. By joining, you also directly support BIPOCANN’s goals, contribute to the operating budget of a black-owned business in cannabis, and support the nonprofit partners who we allocate a percentage of monthly sales towards.

You can also get involved by subscribing to our monthly newsletter through the website or by following our social media accounts @bipocann. We are also available for speaking, media, or consulting projects that support social equity, diversity, and inclusion in cannabis. For those types of inquiries, please contact ernest@bipocann.com.

Updated: 11:13 a.m. Eastern Standard Time, Dec. 5

The U.S. House of Representatives has passed the Marijuana Opportunity Reinvestment and Expungement (MORE) Act, H.R. 3884, to remove cannabis from the U.S. Controlled Substances Act. It passed 228-164.

“We applaud the House of Representatives for passing meaningful legislation aimed at ending the federal prohibition on cannabis,” David Culver, vice president of U.S. government & stakeholder relations for Canopy Growth Corporation, told Cannabis Business Times and Cannabis Dispensary. “The MORE Act, which effectively legalizes cannabis nationwide, will help spark a post-COVID economic recovery by creating millions of new jobs, and billions in new tax revenue annually when America needs it most.”

“A body of the U.S. Congress voting to legalize cannabis for the first time is an historic event that will be celebrated by long-time advocates, criminal justice reform proponents, patients, veterans, and the millions of Americans who continue to express their support for legalization at the ballot box,” added Patrick Martin, principal and director of the Midwest arm of Cozen O’Connor Public Strategies in Chicago.

Screenshot of vote tallies as the vote was called Dec. 4

The bill will now go to the U.S. Senate, where Congress members expect it will not pass.

However, Charlie Bachtell, CEO and co-founder of multi-state cannabis operator Cresco Labs, said the symbolic significance of this bill passing the U.S. House is important to celebrate.

“I’m big on the incremental nature of how change occurs in this industry with this subject matter. You know, even if … this doesn’t get heard or let alone pass in the Senate, the fact that you have your second bill that’s cannabis related get approved by the House is fundamentally important. It is the incremental nature of change on cannabis. This is how it looks, this is how it happens,” Bachtell said. “We are witnessing cannabis kind of cross the barrier into not only good policy, but good politics. People get elected on platforms that are supported by being a more progressive view on cannabis. It’s great to see. It’s great to be a part of.”

Victoria Mendicino, chief of staff to the CEO at Revolution Global, an Illinois-based vertically integrated cannabis company, said company leaders see the vote “as the latest signal of increasing momentum around federal cannabis legalization and reform. MORE is the farthest reaching cannabis reform bill to ever pass and ever be voted on by a whole chamber of Congress, so it really stands apart.”

Culver noted that the MORE Act could have fresh support from the incoming Biden administration, as Vice President-Elect Kamala Harris is an original sponsor of the Senate version of the bill.

“We urge the Senate to recognize that cannabis legalization is on the march—supported by a vast majority of Americans—and pass this legislation immediately,” Culver said. “It’s time to unlock the economic and social equity benefits of cannabis, and end this outdated prohibition that has disproportionately punished minority communities for far too long.”

Cannabis’ removal from the U.S.’ list of controlled substances, said U.S. Rep. Sheila Jackson Lee (D-Texas) in a Dec. 2 Rules Committee hearing, “means that going forward, individuals could no longer be prosecuted federally for marijuana offenses. This does not mean that marijuana would now be legal in the entire United States—a very important point. It will simply remove the federal government from the business of prosecuting marijuana cases and will leave the question of legality to the individual states.” Jackson Lee is an original cosponsor of the act.

RELATED: UPDATE: UN Votes to Remove Cannabis From List of Most Dangerous Drugs 

The tension between federal and state cannabis policies has long created issues for businesses operating within state-legal cannabis programs.

“The primary concern has been simple illegality—with cannabis on Schedule I, we’ve been operating businesses, on the adult-use side, that are subject to interference from federal law enforcement,” said Nick Etten, VP of governmental affairs for multi-state cannabis operator Acreage Holdings. “Because of federal illegality, there is no interstate commerce, which is how all other industries in this country function.”

“Any widget in commerce would be allowed to be sold outside of state lines if the demand was there, [but] obviously that’s not the case with the current overarching federal regime,” added Dan Pabon, general counsel and chief government affairs officer with Schwazze, and a former Colorado House representative. “I think the [federal-state] tension is most palpable when you look at the business side of the industry, which in turn, of course, affects the patients and the consumers. It makes the products more expensive, it makes them less available. It makes patients potentially seek out relief in the black market. These are all of the things that no one wants, especially in the kind of pandemic situation that we’re in. It’s certainly something that needs to be straightened out as soon as possible. And I think that’s what the vote in Congress is trying to do.”

Legislation like the MORE Act could also help change the minds of private investors and larger corporate entities that have been hesitant to get involved in the U.S. cannabis industry due to federal prohibition, Etten said.

“Many more traditional entities have sat on the sidelines because of federal illegality issues, and are closely watching these votes as well as opportunity with a new administration,” he said.

“Between decriminalization and the election results not only in White House but all around the country, [these latest moves] signal that cannabis reform, whether it’s the medical or recreational level, is on its way,” Pabon added. “And just like anything else, capital follows a potential new trend or seizes an opportunity. Capital will follow.”

Kim Stuck, CEO of Allay Consulting, agreed that the biggest impact of the MORE Act on licensed cannabis businesses would be financial.

“Nothing really will change for them except that the federal government can’t impose any rules on states and make them follow,” she said. “They’re pretty much saying, ‘Hey, we’re going to leave it up to the states for what they want to do. We’re not going to go in and make any issues against you for having legal cannabis or anything like that.’ … It’ll definitely bring investors in from other places. It doesn’t make it legal, but it’s not completely illegal. I think that people will be a little more [willing to be involved].”

In addition to descheduling and decriminalizing cannabis, the MORE Act creates a “Criminal Justice Office,” which will, among other things, create a grant program to provide job training and reentry services; and provide legal aid, including for the “expungement of cannabis convictions.”

“Importantly, the MORE Act would legalize cannabis with a focus on social justice and equity—an important step in righting many of the wrongs caused by the decades-long failed War on Drugs,” Culver said.

The act places a 5% federal tax on the sale of cannabis products; that tax will then increase by 1% each year and cap at 8%, according to Congress members who spoke during the Dec. 4 full-floor U.S. House debate.

It also directs the Small Business Administration to create a “Cannabis Opportunity Program” that would “assist small business concerns owned and controlled by socially and economically disadvantaged individuals.”

“The damage of cannabis prohibition has left a broad multi-issue path of destruction including justice, incarceration, employment, healthcare and income inequities,” said Hilary Black, Canopy Growth’s chief advocacy officer. “Prohibition of cannabis—the war on drugs—is a war on people, a war on families. Today I am hopeful we are seeing the beginning of the end of that war.  … This is about human rights, about social justice, and access to healthcare.”

The MORE Act would not change all federal laws regarding cannabis, however, according to Stuck.

“The FDA, for example, they still are seeing this as a drug that needs to be approved to be put in product,” she said. “They’re there and they’re going to recognize it when they want to. And they’re going to write regulations when they want to. So, this certainly doesn’t make it federally legal or federally regulated either. It just opens that gate and allows states to do what they want without any federal issues.”

Harris originally introduced the MORE Act in the Senate, and Jerrold Nadler (D-N.Y.) introduced the bill in the House.

In the Dec. 4 House debate on the MORE Act, original cosponsor Barbara Lee (D-CA) expressed her support for it.

Matt Gaetz (R-Fla.) is the only Republican in the U.S. House or Senate to cosponsor the MORE Act, according to Congress.gov.

RELATED: How U.S. House, Senate Results Could Influence Cannabis Legislation

The Dec. 4 vote was bipartisan, with five Republicans and one Independent, Justin Amash (D-Mich.), voting in favor of the act. Six Democrats voted against it. 

Gaetz said in the Dec. 4 hearing that Congress members who oppose the act are not aligned with the opinions of a majority of Americans.

“I’m going to vote for the MORE Act,” Gaetz said during the hearing. “It won’t pass the Senate. It won’t become law. But then we should come back in the 117^th Congress, and we should truly do more for our people.”

David Mangone, director of policy and government affairs for The Liaison Group, echoes this sentiment.

“For industry, the MORE Act paves the way for cannabis reform that seeks to develop a more diverse industry, create access to banking, the potential of capital markets and the elimination of 280E,” he said. “Industry should cheer this vote and be ready to get to work in the 117th Congress on other ‘components of progress,’  including taxation structures, importation paradigms and ensuring that any legislation that ultimately becomes law will protect the communities that the MORE Act seeks to protect.”

According to Jonathan Havens, co-chair of the Cannabis Law Practice at Saul Ewing Arnstein & Lehr, major policy reform will not happen overnight, and even if the bill doesn’t come up for a vote in the Senate, the House’s passage of the legislation lays the groundwork for future change.

“If the House votes to pass the MORE Act, that is one of the two chambers of Congress saying, ‘We approve the legalization of cannabis,’ and our country’s policy toward cannabis has been the same for decades—that would be a significant step forward,” Havens said. “Of course, it would be a lot more helpful if the Senate agreed, took it up, voted on it, and the president signed it into law because that would mean that cannabis is no longer federally illegal.”

Numerous opponents of the MORE Act expressed concerns in the Dec. 4 hearing, as well as in the Dec. 2 House Rules Committee hearing, that Congress should not prioritize cannabis legalization over a new COVID-19 relief package. Supporters of the bill have indicated that the two initiatives are not mutually exclusive.

The Minority Cannabis Business Administration (MCBA) stated in a press release that it supports the bill but opposes specific provisions.

“Although Minority Cannabis Business Association (MCBA) supports and applauds the social equity provisions including the expungement of records and the establishment of an Opportunity Trust Fund and the Cannabis Justice Office, we have grave concerns over the provisions in this bill that we believe would have an immediate chilling effect on individual members in our community and minority business owners more broadly,” stated the release.

A recent U.S. House amendment changed the MORE Act. Alterations include limiting cannabis expungement to people who have been charged with nonviolent federal offenses and to those who have not been sentenced with an “aggravating role adjustment” for directing or overseeing federal criminal activity. It also directs the U.S. Comptroller General to include, as part of broader research on cannabis, the “uses of marijuana and its byproducts for purposes relating to the health, including the mental health, of veterans.”

Chris Lindsey, legislative analyst for the Marijuana Policy Project (MPP), said other provisions in the bill would be “very good” for the cannabis business community. The descheduling of cannabis would allow the industry to access banking, for example, and would provide tax relief for businesses who have long bore the burden of 280E.

“It’s likely that more states would adopt regulatory programs if there were a clear path provided to them by the federal government,” Lindsey said. “Clearly, it’s not stopped the states that have wanted to go that way already, but no doubt, having a system in place that states can recognize would be very helpful, from my own perspective as an advocate.”

Cannabis Dispensary Editor Cassie Neiden, Digital Editor Eric Sandy and Cannabis Business Times Editor Michelle Simakis contributed to this report.

Updated: 11:13 a.m. Eastern Standard Time, Dec. 5

The U.S. House of Representatives has passed the Marijuana Opportunity Reinvestment and Expungement (MORE) Act, H.R. 3884, to remove cannabis from the U.S. Controlled Substances Act. It passed 228-164.

“We applaud the House of Representatives for passing meaningful legislation aimed at ending the federal prohibition on cannabis,” David Culver, vice president of U.S. government & stakeholder relations for Canopy Growth Corporation, told Cannabis Business Times and Cannabis Dispensary. “The MORE Act, which effectively legalizes cannabis nationwide, will help spark a post-COVID economic recovery by creating millions of new jobs, and billions in new tax revenue annually when America needs it most.”

“A body of the U.S. Congress voting to legalize cannabis for the first time is an historic event that will be celebrated by long-time advocates, criminal justice reform proponents, patients, veterans, and the millions of Americans who continue to express their support for legalization at the ballot box,” added Patrick Martin, principal and director of the Midwest arm of Cozen O’Connor Public Strategies in Chicago.

Screenshot of vote tallies as the vote was called Dec. 4

The bill will now go to the U.S. Senate, where Congress members expect it will not pass.

However, Charlie Bachtell, CEO and co-founder of multi-state cannabis operator Cresco Labs, said the symbolic significance of this bill passing the U.S. House is important to celebrate.

“I’m big on the incremental nature of how change occurs in this industry with this subject matter. You know, even if … this doesn’t get heard or let alone pass in the Senate, the fact that you have your second bill that’s cannabis related get approved by the House is fundamentally important. It is the incremental nature of change on cannabis. This is how it looks, this is how it happens,” Bachtell said. “We are witnessing cannabis kind of cross the barrier into not only good policy, but good politics. People get elected on platforms that are supported by being a more progressive view on cannabis. It’s great to see. It’s great to be a part of.”

Victoria Mendicino, chief of staff to the CEO at Revolution Global, an Illinois-based vertically integrated cannabis company, said company leaders see the vote “as the latest signal of increasing momentum around federal cannabis legalization and reform. MORE is the farthest reaching cannabis reform bill to ever pass and ever be voted on by a whole chamber of Congress, so it really stands apart.”

Culver noted that the MORE Act could have fresh support from the incoming Biden administration, as Vice President-Elect Kamala Harris is an original sponsor of the Senate version of the bill.

“We urge the Senate to recognize that cannabis legalization is on the march—supported by a vast majority of Americans—and pass this legislation immediately,” Culver said. “It’s time to unlock the economic and social equity benefits of cannabis, and end this outdated prohibition that has disproportionately punished minority communities for far too long.”

Cannabis’ removal from the U.S.’ list of controlled substances, said U.S. Rep. Sheila Jackson Lee (D-Texas) in a Dec. 2 Rules Committee hearing, “means that going forward, individuals could no longer be prosecuted federally for marijuana offenses. This does not mean that marijuana would now be legal in the entire United States—a very important point. It will simply remove the federal government from the business of prosecuting marijuana cases and will leave the question of legality to the individual states.” Jackson Lee is an original cosponsor of the act.

RELATED: UPDATE: UN Votes to Remove Cannabis From List of Most Dangerous Drugs 

The tension between federal and state cannabis policies has long created issues for businesses operating within state-legal cannabis programs.

“The primary concern has been simple illegality—with cannabis on Schedule I, we’ve been operating businesses, on the adult-use side, that are subject to interference from federal law enforcement,” said Nick Etten, VP of governmental affairs for multi-state cannabis operator Acreage Holdings. “Because of federal illegality, there is no interstate commerce, which is how all other industries in this country function.”

“Any widget in commerce would be allowed to be sold outside of state lines if the demand was there, [but] obviously that’s not the case with the current overarching federal regime,” added Dan Pabon, general counsel and chief government affairs officer with Schwazze, and a former Colorado House representative. “I think the [federal-state] tension is most palpable when you look at the business side of the industry, which in turn, of course, affects the patients and the consumers. It makes the products more expensive, it makes them less available. It makes patients potentially seek out relief in the black market. These are all of the things that no one wants, especially in the kind of pandemic situation that we’re in. It’s certainly something that needs to be straightened out as soon as possible. And I think that’s what the vote in Congress is trying to do.”

Legislation like the MORE Act could also help change the minds of private investors and larger corporate entities that have been hesitant to get involved in the U.S. cannabis industry due to federal prohibition, Etten said.

“Many more traditional entities have sat on the sidelines because of federal illegality issues, and are closely watching these votes as well as opportunity with a new administration,” he said.

“Between decriminalization and the election results not only in White House but all around the country, [these latest moves] signal that cannabis reform, whether it’s the medical or recreational level, is on its way,” Pabon added. “And just like anything else, capital follows a potential new trend or seizes an opportunity. Capital will follow.”

Kim Stuck, CEO of Allay Consulting, agreed that the biggest impact of the MORE Act on licensed cannabis businesses would be financial.

“Nothing really will change for them except that the federal government can’t impose any rules on states and make them follow,” she said. “They’re pretty much saying, ‘Hey, we’re going to leave it up to the states for what they want to do. We’re not going to go in and make any issues against you for having legal cannabis or anything like that.’ … It’ll definitely bring investors in from other places. It doesn’t make it legal, but it’s not completely illegal. I think that people will be a little more [willing to be involved].”

In addition to descheduling and decriminalizing cannabis, the MORE Act creates a “Criminal Justice Office,” which will, among other things, create a grant program to provide job training and reentry services; and provide legal aid, including for the “expungement of cannabis convictions.”

“Importantly, the MORE Act would legalize cannabis with a focus on social justice and equity—an important step in righting many of the wrongs caused by the decades-long failed War on Drugs,” Culver said.

The act places a 5% federal tax on the sale of cannabis products; that tax will then increase by 1% each year and cap at 8%, according to Congress members who spoke during the Dec. 4 full-floor U.S. House debate.

It also directs the Small Business Administration to create a “Cannabis Opportunity Program” that would “assist small business concerns owned and controlled by socially and economically disadvantaged individuals.”

“The damage of cannabis prohibition has left a broad multi-issue path of destruction including justice, incarceration, employment, healthcare and income inequities,” said Hilary Black, Canopy Growth’s chief advocacy officer. “Prohibition of cannabis—the war on drugs—is a war on people, a war on families. Today I am hopeful we are seeing the beginning of the end of that war.  … This is about human rights, about social justice, and access to healthcare.”

The MORE Act would not change all federal laws regarding cannabis, however, according to Stuck.

“The FDA, for example, they still are seeing this as a drug that needs to be approved to be put in product,” she said. “They’re there and they’re going to recognize it when they want to. And they’re going to write regulations when they want to. So, this certainly doesn’t make it federally legal or federally regulated either. It just opens that gate and allows states to do what they want without any federal issues.”

Harris originally introduced the MORE Act in the Senate, and Jerrold Nadler (D-N.Y.) introduced the bill in the House.

In the Dec. 4 House debate on the MORE Act, original cosponsor Barbara Lee (D-CA) expressed her support for it.

Matt Gaetz (R-Fla.) is the only Republican in the U.S. House or Senate to cosponsor the MORE Act, according to Congress.gov.

RELATED: How U.S. House, Senate Results Could Influence Cannabis Legislation

The Dec. 4 vote was bipartisan, with five Republicans and one Independent, Justin Amash (D-Mich.), voting in favor of the act. Six Democrats voted against it. 

Gaetz said in the Dec. 4 hearing that Congress members who oppose the act are not aligned with the opinions of a majority of Americans.

“I’m going to vote for the MORE Act,” Gaetz said during the hearing. “It won’t pass the Senate. It won’t become law. But then we should come back in the 117^th Congress, and we should truly do more for our people.”

David Mangone, director of policy and government affairs for The Liaison Group, echoes this sentiment.

“For industry, the MORE Act paves the way for cannabis reform that seeks to develop a more diverse industry, create access to banking, the potential of capital markets and the elimination of 280E,” he said. “Industry should cheer this vote and be ready to get to work in the 117th Congress on other ‘components of progress,’  including taxation structures, importation paradigms and ensuring that any legislation that ultimately becomes law will protect the communities that the MORE Act seeks to protect.”

According to Jonathan Havens, co-chair of the Cannabis Law Practice at Saul Ewing Arnstein & Lehr, major policy reform will not happen overnight, and even if the bill doesn’t come up for a vote in the Senate, the House’s passage of the legislation lays the groundwork for future change.

“If the House votes to pass the MORE Act, that is one of the two chambers of Congress saying, ‘We approve the legalization of cannabis,’ and our country’s policy toward cannabis has been the same for decades—that would be a significant step forward,” Havens said. “Of course, it would be a lot more helpful if the Senate agreed, took it up, voted on it, and the president signed it into law because that would mean that cannabis is no longer federally illegal.”

Numerous opponents of the MORE Act expressed concerns in the Dec. 4 hearing, as well as in the Dec. 2 House Rules Committee hearing, that Congress should not prioritize cannabis legalization over a new COVID-19 relief package. Supporters of the bill have indicated that the two initiatives are not mutually exclusive.

The Minority Cannabis Business Administration (MCBA) stated in a press release that it supports the bill but opposes specific provisions.

“Although Minority Cannabis Business Association (MCBA) supports and applauds the social equity provisions including the expungement of records and the establishment of an Opportunity Trust Fund and the Cannabis Justice Office, we have grave concerns over the provisions in this bill that we believe would have an immediate chilling effect on individual members in our community and minority business owners more broadly,” stated the release.

A recent U.S. House amendment changed the MORE Act. Alterations include limiting cannabis expungement to people who have been charged with nonviolent federal offenses and to those who have not been sentenced with an “aggravating role adjustment” for directing or overseeing federal criminal activity. It also directs the U.S. Comptroller General to include, as part of broader research on cannabis, the “uses of marijuana and its byproducts for purposes relating to the health, including the mental health, of veterans.”

Chris Lindsey, legislative analyst for the Marijuana Policy Project (MPP), said other provisions in the bill would be “very good” for the cannabis business community. The descheduling of cannabis would allow the industry to access banking, for example, and would provide tax relief for businesses who have long bore the burden of 280E.

“It’s likely that more states would adopt regulatory programs if there were a clear path provided to them by the federal government,” Lindsey said. “Clearly, it’s not stopped the states that have wanted to go that way already, but no doubt, having a system in place that states can recognize would be very helpful, from my own perspective as an advocate.”

Cannabis Dispensary Editor Cassie Neiden, Digital Editor Eric Sandy and Cannabis Business Times Editor Michelle Simakis contributed to this report.

Updated: 11:13 a.m. Eastern Standard Time, Dec. 5

The U.S. House of Representatives has passed the Marijuana Opportunity Reinvestment and Expungement (MORE) Act, H.R. 3884, to remove cannabis from the U.S. Controlled Substances Act. It passed 228-164.

“We applaud the House of Representatives for passing meaningful legislation aimed at ending the federal prohibition on cannabis,” David Culver, vice president of U.S. government & stakeholder relations for Canopy Growth Corporation, told Cannabis Business Times and Cannabis Dispensary. “The MORE Act, which effectively legalizes cannabis nationwide, will help spark a post-COVID economic recovery by creating millions of new jobs, and billions in new tax revenue annually when America needs it most.”

“A body of the U.S. Congress voting to legalize cannabis for the first time is an historic event that will be celebrated by long-time advocates, criminal justice reform proponents, patients, veterans, and the millions of Americans who continue to express their support for legalization at the ballot box,” added Patrick Martin, principal and director of the Midwest arm of Cozen O’Connor Public Strategies in Chicago.

Screenshot of vote tallies as the vote was called Dec. 4

The bill will now go to the U.S. Senate, where Congress members expect it will not pass.

However, Charlie Bachtell, CEO and co-founder of multi-state cannabis operator Cresco Labs, said the symbolic significance of this bill passing the U.S. House is important to celebrate.

“I’m big on the incremental nature of how change occurs in this industry with this subject matter. You know, even if … this doesn’t get heard or let alone pass in the Senate, the fact that you have your second bill that’s cannabis related get approved by the House is fundamentally important. It is the incremental nature of change on cannabis. This is how it looks, this is how it happens,” Bachtell said. “We are witnessing cannabis kind of cross the barrier into not only good policy, but good politics. People get elected on platforms that are supported by being a more progressive view on cannabis. It’s great to see. It’s great to be a part of.”

Victoria Mendicino, chief of staff to the CEO at Revolution Global, an Illinois-based vertically integrated cannabis company, said company leaders see the vote “as the latest signal of increasing momentum around federal cannabis legalization and reform. MORE is the farthest reaching cannabis reform bill to ever pass and ever be voted on by a whole chamber of Congress, so it really stands apart.”

Culver noted that the MORE Act could have fresh support from the incoming Biden administration, as Vice President-Elect Kamala Harris is an original sponsor of the Senate version of the bill.

“We urge the Senate to recognize that cannabis legalization is on the march—supported by a vast majority of Americans—and pass this legislation immediately,” Culver said. “It’s time to unlock the economic and social equity benefits of cannabis, and end this outdated prohibition that has disproportionately punished minority communities for far too long.”

Cannabis’ removal from the U.S.’ list of controlled substances, said U.S. Rep. Sheila Jackson Lee (D-Texas) in a Dec. 2 Rules Committee hearing, “means that going forward, individuals could no longer be prosecuted federally for marijuana offenses. This does not mean that marijuana would now be legal in the entire United States—a very important point. It will simply remove the federal government from the business of prosecuting marijuana cases and will leave the question of legality to the individual states.” Jackson Lee is an original cosponsor of the act.

RELATED: UPDATE: UN Votes to Remove Cannabis From List of Most Dangerous Drugs 

The tension between federal and state cannabis policies has long created issues for businesses operating within state-legal cannabis programs.

“The primary concern has been simple illegality—with cannabis on Schedule I, we’ve been operating businesses, on the adult-use side, that are subject to interference from federal law enforcement,” said Nick Etten, VP of governmental affairs for multi-state cannabis operator Acreage Holdings. “Because of federal illegality, there is no interstate commerce, which is how all other industries in this country function.”

“Any widget in commerce would be allowed to be sold outside of state lines if the demand was there, [but] obviously that’s not the case with the current overarching federal regime,” added Dan Pabon, general counsel and chief government affairs officer with Schwazze, and a former Colorado House representative. “I think the [federal-state] tension is most palpable when you look at the business side of the industry, which in turn, of course, affects the patients and the consumers. It makes the products more expensive, it makes them less available. It makes patients potentially seek out relief in the black market. These are all of the things that no one wants, especially in the kind of pandemic situation that we’re in. It’s certainly something that needs to be straightened out as soon as possible. And I think that’s what the vote in Congress is trying to do.”

Legislation like the MORE Act could also help change the minds of private investors and larger corporate entities that have been hesitant to get involved in the U.S. cannabis industry due to federal prohibition, Etten said.

“Many more traditional entities have sat on the sidelines because of federal illegality issues, and are closely watching these votes as well as opportunity with a new administration,” he said.

“Between decriminalization and the election results not only in White House but all around the country, [these latest moves] signal that cannabis reform, whether it’s the medical or recreational level, is on its way,” Pabon added. “And just like anything else, capital follows a potential new trend or seizes an opportunity. Capital will follow.”

Kim Stuck, CEO of Allay Consulting, agreed that the biggest impact of the MORE Act on licensed cannabis businesses would be financial.

“Nothing really will change for them except that the federal government can’t impose any rules on states and make them follow,” she said. “They’re pretty much saying, ‘Hey, we’re going to leave it up to the states for what they want to do. We’re not going to go in and make any issues against you for having legal cannabis or anything like that.’ … It’ll definitely bring investors in from other places. It doesn’t make it legal, but it’s not completely illegal. I think that people will be a little more [willing to be involved].”

In addition to descheduling and decriminalizing cannabis, the MORE Act creates a “Criminal Justice Office,” which will, among other things, create a grant program to provide job training and reentry services; and provide legal aid, including for the “expungement of cannabis convictions.”

“Importantly, the MORE Act would legalize cannabis with a focus on social justice and equity—an important step in righting many of the wrongs caused by the decades-long failed War on Drugs,” Culver said.

The act places a 5% federal tax on the sale of cannabis products; that tax will then increase by 1% each year and cap at 8%, according to Congress members who spoke during the Dec. 4 full-floor U.S. House debate.

It also directs the Small Business Administration to create a “Cannabis Opportunity Program” that would “assist small business concerns owned and controlled by socially and economically disadvantaged individuals.”

“The damage of cannabis prohibition has left a broad multi-issue path of destruction including justice, incarceration, employment, healthcare and income inequities,” said Hilary Black, Canopy Growth’s chief advocacy officer. “Prohibition of cannabis—the war on drugs—is a war on people, a war on families. Today I am hopeful we are seeing the beginning of the end of that war.  … This is about human rights, about social justice, and access to healthcare.”

The MORE Act would not change all federal laws regarding cannabis, however, according to Stuck.

“The FDA, for example, they still are seeing this as a drug that needs to be approved to be put in product,” she said. “They’re there and they’re going to recognize it when they want to. And they’re going to write regulations when they want to. So, this certainly doesn’t make it federally legal or federally regulated either. It just opens that gate and allows states to do what they want without any federal issues.”

Harris originally introduced the MORE Act in the Senate, and Jerrold Nadler (D-N.Y.) introduced the bill in the House.

In the Dec. 4 House debate on the MORE Act, original cosponsor Barbara Lee (D-CA) expressed her support for it.

Matt Gaetz (R-Fla.) is the only Republican in the U.S. House or Senate to cosponsor the MORE Act, according to Congress.gov.

RELATED: How U.S. House, Senate Results Could Influence Cannabis Legislation

The Dec. 4 vote was bipartisan, with five Republicans and one Independent, Justin Amash (D-Mich.), voting in favor of the act. Six Democrats voted against it. 

Gaetz said in the Dec. 4 hearing that Congress members who oppose the act are not aligned with the opinions of a majority of Americans.

“I’m going to vote for the MORE Act,” Gaetz said during the hearing. “It won’t pass the Senate. It won’t become law. But then we should come back in the 117^th Congress, and we should truly do more for our people.”

David Mangone, director of policy and government affairs for The Liaison Group, echoes this sentiment.

“For industry, the MORE Act paves the way for cannabis reform that seeks to develop a more diverse industry, create access to banking, the potential of capital markets and the elimination of 280E,” he said. “Industry should cheer this vote and be ready to get to work in the 117th Congress on other ‘components of progress,’  including taxation structures, importation paradigms and ensuring that any legislation that ultimately becomes law will protect the communities that the MORE Act seeks to protect.”

According to Jonathan Havens, co-chair of the Cannabis Law Practice at Saul Ewing Arnstein & Lehr, major policy reform will not happen overnight, and even if the bill doesn’t come up for a vote in the Senate, the House’s passage of the legislation lays the groundwork for future change.

“If the House votes to pass the MORE Act, that is one of the two chambers of Congress saying, ‘We approve the legalization of cannabis,’ and our country’s policy toward cannabis has been the same for decades—that would be a significant step forward,” Havens said. “Of course, it would be a lot more helpful if the Senate agreed, took it up, voted on it, and the president signed it into law because that would mean that cannabis is no longer federally illegal.”

Numerous opponents of the MORE Act expressed concerns in the Dec. 4 hearing, as well as in the Dec. 2 House Rules Committee hearing, that Congress should not prioritize cannabis legalization over a new COVID-19 relief package. Supporters of the bill have indicated that the two initiatives are not mutually exclusive.

The Minority Cannabis Business Administration (MCBA) stated in a press release that it supports the bill but opposes specific provisions.

“Although Minority Cannabis Business Association (MCBA) supports and applauds the social equity provisions including the expungement of records and the establishment of an Opportunity Trust Fund and the Cannabis Justice Office, we have grave concerns over the provisions in this bill that we believe would have an immediate chilling effect on individual members in our community and minority business owners more broadly,” stated the release.

A recent U.S. House amendment changed the MORE Act. Alterations include limiting cannabis expungement to people who have been charged with nonviolent federal offenses and to those who have not been sentenced with an “aggravating role adjustment” for directing or overseeing federal criminal activity. It also directs the U.S. Comptroller General to include, as part of broader research on cannabis, the “uses of marijuana and its byproducts for purposes relating to the health, including the mental health, of veterans.”

Chris Lindsey, legislative analyst for the Marijuana Policy Project (MPP), said other provisions in the bill would be “very good” for the cannabis business community. The descheduling of cannabis would allow the industry to access banking, for example, and would provide tax relief for businesses who have long bore the burden of 280E.

“It’s likely that more states would adopt regulatory programs if there were a clear path provided to them by the federal government,” Lindsey said. “Clearly, it’s not stopped the states that have wanted to go that way already, but no doubt, having a system in place that states can recognize would be very helpful, from my own perspective as an advocate.”

Cannabis Dispensary Editor Cassie Neiden, Digital Editor Eric Sandy and Cannabis Business Times Editor Michelle Simakis contributed to this report.

Updated: 4:20 p.m. Eastern Standard Time, Dec. 4

The U.S. House of Representatives has passed the Marijuana Opportunity Reinvestment and Expungement (MORE) Act, H.R. 3884, to remove cannabis from the U.S. Controlled Substances Act. It passed 228-164.

“We applaud the House of Representatives for passing meaningful legislation aimed at ending the federal prohibition on cannabis,” David Culver, vice president of U.S. government & stakeholder relations for Canopy Growth Corporation, told Cannabis Business Times and Cannabis Dispensary. “The MORE Act, which effectively legalizes cannabis nationwide, will help spark a post-COVID economic recovery by creating millions of new jobs, and billions in new tax revenue annually when America needs it most.”

“A body of the U.S. Congress voting to legalize cannabis for the first time is an historic event that will be celebrated by long-time advocates, criminal justice reform proponents, patients, veterans, and the millions of Americans who continue to express their support for legalization at the ballot box,” added Patrick Martin, principal and director of the Midwest arm of Cozen O’Connor Public Strategies in Chicago.

Screenshot of vote tallies as the vote was called Dec. 4

The bill will now go to the U.S. Senate, where Congress members expect it will not pass.

However, Charlie Bachtell, CEO and co-founder of multi-state cannabis operator Cresco Labs, said the symbolic significance of this bill passing the U.S. House is important to celebrate.

“I’m big on the incremental nature of how change occurs in this industry with this subject matter. You know, even if … this doesn’t get heard or let alone pass in the Senate, the fact that you have your second bill that’s cannabis related get approved by the House is fundamentally important. It is the incremental nature of change on cannabis. This is how it looks, this is how it happens,” Bachtell said. “We are witnessing cannabis kind of cross the barrier into not only good policy, but good politics. People get elected on platforms that are supported by being a more progressive view on cannabis. It’s great to see. It’s great to be a part of.”

Culver noted that the MORE Act could have fresh support from the incoming Biden administration, as Vice President-Elect Kamala Harris is an original sponsor of the Senate version of the bill.

“We urge the Senate to recognize that cannabis legalization is on the march—supported by a vast majority of Americans—and pass this legislation immediately,” Culver said. “It’s time to unlock the economic and social equity benefits of cannabis, and end this outdated prohibition that has disproportionately punished minority communities for far too long.”

Cannabis’ removal from the U.S.’ list of controlled substances, said U.S. Rep. Sheila Jackson Lee (D-Texas) in a Dec. 2 Rules Committee hearing, “means that going forward, individuals could no longer be prosecuted federally for marijuana offenses. This does not mean that marijuana would now be legal in the entire United States—a very important point. It will simply remove the federal government from the business of prosecuting marijuana cases and will leave the question of legality to the individual states.” Jackson Lee is an original cosponsor of the act.

RELATED: UPDATE: UN Votes to Remove Cannabis From List of Most Dangerous Drugs 

The tension between federal and state cannabis policies has long created issues for businesses operating within state-legal cannabis programs.

“The primary concern has been simple illegality—with cannabis on Schedule I, we’ve been operating businesses, on the adult-use side, that are subject to interference from federal law enforcement,” said Nick Etten, VP of governmental affairs for multi-state cannabis operator Acreage Holdings. “Because of federal illegality, there is no interstate commerce, which is how all other industries in this country function.”

“Any widget in commerce would be allowed to be sold outside of state lines if the demand was there, [but] obviously that’s not the case with the current overarching federal regime,” added Dan Pabon, general counsel and chief government affairs officer with Schwazze, and a former Colorado House representative. “I think the [federal-state] tension is most palpable when you look at the business side of the industry, which in turn, of course, affects the patients and the consumers. It makes the products more expensive, it makes them less available. It makes patients potentially seek out relief in the black market. These are all of the things that no one wants, especially in the kind of pandemic situation that we’re in. It’s certainly something that needs to be straightened out as soon as possible. And I think that’s what the vote in Congress is trying to do.”

Legislation like the MORE Act could also help change the minds of private investors and larger corporate entities that have been hesitant to get involved in the U.S. cannabis industry due to federal prohibition, Etten said.

“Many more traditional entities have sat on the sidelines because of federal illegality issues, and are closely watching these votes as well as opportunity with a new administration,” he said.

“Between decriminalization and the election results not only in White House but all around the country, [these latest moves] signal that cannabis reform, whether it’s the medical or recreational level, is on its way,” Pabon added. “And just like anything else, capital follows a potential new trend or seizes an opportunity. Capital will follow.”

Kim Stuck, CEO of Allay Consulting, agreed that the biggest impact of the MORE Act on licensed cannabis businesses would be financial.

“Nothing really will change for them except that the federal government can’t impose any rules on states and make them follow,” she said. “They’re pretty much saying, ‘Hey, we’re going to leave it up to the states for what they want to do. We’re not going to go in and make any issues against you for having legal cannabis or anything like that.’ … It’ll definitely bring investors in from other places. It doesn’t make it legal, but it’s not completely illegal. I think that people will be a little more [willing to be involved].”

In addition to descheduling and decriminalizing cannabis, the MORE Act creates a “Criminal Justice Office,” which will, among other things, create a grant program to provide job training and reentry services; and provide legal aid, including for the “expungement of cannabis convictions.”

“Importantly, the MORE Act would legalize cannabis with a focus on social justice and equity—an important step in righting many of the wrongs caused by the decades-long failed War on Drugs,” Culver said.

The act places a 5% federal tax on the sale of cannabis products; that tax will then increase by 1% each year and cap at 8%, according to Congress members who spoke during the Dec. 4 full-floor U.S. House debate.

It also directs the Small Business Administration to create a “Cannabis Opportunity Program” that would “assist small business concerns owned and controlled by socially and economically disadvantaged individuals.”

“The damage of cannabis prohibition has left a broad multi-issue path of destruction including justice, incarceration, employment, healthcare and income inequities,” said Hilary Black, Canopy Growth’s chief advocacy officer. “Prohibition of cannabis—the war on drugs—is a war on people, a war on families. Today I am hopeful we are seeing the beginning of the end of that war.  … This is about human rights, about social justice, and access to healthcare.”

The MORE Act would not change all federal laws regarding cannabis, however, according to Stuck.

“The FDA, for example, they still are seeing this as a drug that needs to be approved to be put in product,” she said. “They’re there and they’re going to recognize it when they want to. And they’re going to write regulations when they want to. So, this certainly doesn’t make it federally legal or federally regulated either. It just opens that gate and allows states to do what they want without any federal issues.”

Harris originally introduced the MORE Act in the Senate, and Jerrold Nadler (D-N.Y.) introduced the bill in the House.

In the Dec. 4 House debate on the MORE Act, original cosponsor Barbara Lee (D-CA) expressed her support for it.

Matt Gaetz (R-Fla.) is the only Republican in the U.S. House or Senate to cosponsor the MORE Act, according to Congress.gov.

RELATED: How U.S. House, Senate Results Could Influence Cannabis Legislation

The Dec. 4 vote was bipartisan, with five Republicans and one Independent, Justin Amash (D-Mich.), voting in favor of the act. Six Democrats voted against it. 

Gaetz said in the Dec. 4 hearing that Congress members who oppose the act are not aligned with the opinions of a majority of Americans.

“I’m going to vote for the MORE Act,” Gaetz said during the hearing. “It won’t pass the Senate. It won’t become law. But then we should come back in the 117^th Congress, and we should truly do more for our people.”

David Mangone, director of policy and government affairs for The Liaison Group, echoes this sentiment.

“For industry, the MORE Act paves the way for cannabis reform that seeks to develop a more diverse industry, create access to banking, the potential of capital markets and the elimination of 280E,” he said. “Industry should cheer this vote and be ready to get to work in the 117th Congress on other ‘components of progress,’  including taxation structures, importation paradigms and ensuring that any legislation that ultimately becomes law will protect the communities that the MORE Act seeks to protect.”

According to Jonathan Havens, co-chair of the Cannabis Law Practice at Saul Ewing Arnstein & Lehr, major policy reform will not happen overnight, and even if the bill doesn’t come up for a vote in the Senate, the House’s passage of the legislation lays the groundwork for future change.

“If the House votes to pass the MORE Act, that is one of the two chambers of Congress saying, ‘We approve the legalization of cannabis,’ and our country’s policy toward cannabis has been the same for decades—that would be a significant step forward,” Havens said. “Of course, it would be a lot more helpful if the Senate agreed, took it up, voted on it, and the president signed it into law because that would mean that cannabis is no longer federally illegal.”

Numerous opponents of the MORE Act expressed concerns in the Dec. 4 hearing, as well as in the Dec. 2 House Rules Committee hearing, that Congress should not prioritize cannabis legalization over a new COVID-19 relief package. Supporters of the bill have indicated that the two initiatives are not mutually exclusive.

The Minority Cannabis Business Administration (MCBA) stated in a press release that it supports the bill but opposes specific provisions.

“Although Minority Cannabis Business Association (MCBA) supports and applauds the social equity provisions including the expungement of records and the establishment of an Opportunity Trust Fund and the Cannabis Justice Office, we have grave concerns over the provisions in this bill that we believe would have an immediate chilling effect on individual members in our community and minority business owners more broadly,” stated the release.

A recent U.S. House amendment changed the MORE Act. Alterations include limiting cannabis expungement to people who have been charged with nonviolent federal offenses and to those who have not been sentenced with an “aggravating role adjustment” for directing or overseeing federal criminal activity. It also directs the U.S. Comptroller General to include, as part of broader research on cannabis, the “uses of marijuana and its byproducts for purposes relating to the health, including the mental health, of veterans.”

Chris Lindsey, legislative analyst for the Marijuana Policy Project (MPP), said other provisions in the bill would be “very good” for the cannabis business community. The descheduling of cannabis would allow the industry to access banking, for example, and would provide tax relief for businesses who have long bore the burden of 280E.

“It’s likely that more states would adopt regulatory programs if there were a clear path provided to them by the federal government,” Lindsey said. “Clearly, it’s not stopped the states that have wanted to go that way already, but no doubt, having a system in place that states can recognize would be very helpful, from my own perspective as an advocate.”

Cannabis Dispensary Editor Cassie Neiden, Digital Editor Eric Sandy and Cannabis Business Times Editor Michelle Simakis contributed to this report.

Licensed cannabis companies pay more than their fair share of taxes thanks to the business deduction restrictions placed on them by IRS Tax Code Section 280E. That tax law prevents cannabis producers from taking any deduction or credit unrelated to the cost of goods sold (COGS). With some well-thought-out corporate structure, however, cannabis cultivators can find ways to reduce their overall tax burden.

The Research and Development (R&D) Tax Credit is one such vehicle that potentially is available to cultivators, according to Jonathan Storper and Daren Shaver, attorneys with California-based Hanson Bridgett.

“What the R&D credit is designed to do is reward innovation and problem-solving. And there’s really no industry limitation,” Shaver tells Cannabis Business Times and Hemp Grower. “Any business that is eliminating technical uncertainty in the development of products or experimenting and relying on science to really develop a product [is] a very good candidate for an R&D credit.”

Expenses relating to breeding programs, equipment modification and/or design, and developing novel or innovative consumer products can all be used to apply for an R&D tax credit, the attorneys say, as long as the corporate structure separates the plant-touching business from the R&D business. “The corporate structure is extremely important in this kind of thing,” Storper stresses.

Having multiple corporate entities is not new to the cannabis industry and is highly common in other industries. For example, some cannabis companies have created separate corporate entities under which real estate assets are held. That real estate company, which leases the property to the cultivation operation, can then take deductions (as it is a federally legal business) that would not have been available if the cultivation operation held those assets. Thus, that structure lowers the overall tax burden for the cultivation business.

The same idea applies to the R&D credit, the attorneys say.

“The better approach for somebody who’s looking to take the R&D credit is to achieve as much separation [between companies] as possible,” Shaver says.

Easier Path for Hemp Companies

Hemp cultivation companies have an easier path to applying for and receiving these R&D tax credits since hemp cultivation is legal at the federal level and 280E has not applied since the 2019 tax year.

However, Storper and Shaver both emphasize the importance of excellent bookkeeping to keep track of what qualifies as an R&D expense and what does not. “Recordkeeping becomes very important on something like this. … Bifurcating expenses between good R&D expenses and otherwise is very important,” Shaver says.

For example, if a hemp (or cannabis) company has an employee whose sole job is to oversee and conduct research and analysis, that employee’s salary could be used in applying for an R&D tax credit, Shaver explains. If that employee is a part-time researcher, then the company should keep track of how much of that employee’s time is spent on R&D and only use that portion of the employee’s salary when applying for the credit.

Costs for supplies and equipment also can be eligible as long as the research being done is science-based. “I don’t think throwing some extra fertilizer, for example, would be enough [to qualify for an R&D credit],” Shaver says.

If cannabis and hemp cultivators structure their corporate entities correctly and apply proper due diligence in tracking expenses, the IRS is more likely to grant the credit, especially if the research has benefits outside of the cannabis industry (e.g. a new way to emulsify cannabinoids (hydrophobic compounds) into water would have applications to the entire beverage and supplement industry). With that in mind, they advised companies interested in applying for R&D credits take the time to plan out their efforts early in the tax year. “It’s always better to do early planning than try to look back and ask for forgiveness,” Storper says.

Anyone looking to leverage the R&D tax credit also should consult with their legal and accounting team, they say, to ensure the corporations are properly structured and separated.

Maryland-based vertically integrated cannabis operator Curio Wellness has announced a new funding program that will provide $30 million in startup capital to up to 50 minority business owners to allow them to open a Curio franchise in one of multiple states.

“At its root, it was born of an interest in making a statement about diversity,” Jerel Registre, managing director of the Curio WMBE Fund, told Cannabis Business Times and Cannabis Dispensary.

Curio CEO Michael Bronfein started thinking about ways to support diversity in the industry back in 2018, Registre said, and worked with one of the company’s key investors to move beyond Curio’s focus on a diverse employee base to create business ownership opportunities for women, minorities and disabled veterans.

RELATED: More Than Medicine: How Curio Wellness is Redefining Its Marketplace

Access to capital is a key challenge for many prospective business owners, Registre said, due to the cannabis industry’s limited access to banking, as well as diverse communities historically having a more difficult time accessing capital to build businesses.

“That is where the idea for a fund was born,” Registre said. “Then, as we looked at how to make sure that both the fund and the entrepreneurs were successful over time, we wanted to be able to provide operational support that went beyond advice, really. … We settled on franchising because that really enabled us to partner with the franchisees or the entrepreneurs to drive both the performance and the brand of the store in a way that created sustainable business and business models.”

How to best address diversity remains an important challenge as the cannabis industry matures and faces the prospect of federal legalization, Registre said, and in taking a stab at solving this issue, the Curio team hopes to bring industry stakeholders together on what a diverse marketplace really means.

Curio hopes to provide entrepreneurs access to franchises in up to 10 states, which will be chosen based on their regulatory structures and the overall health of their medical cannabis programs. Curio is largely a medical company with a clinical approach to cannabis, Registre said, and plans to launch its franchisees’ businesses primarily in medical markets.

The company is currently awaiting regulatory approval for its franchising model, but once it has the green light, it will establish an application process for prospective franchisees in early 2021. Registre will work with Curio’s president of retail services, Andy Cohen, to develop specific criteria for applicants.

“[We want potential franchisees] to be a great leaders, but there’s also an aspect of being excited for regulation,” Registre said. “We really need people who … are willing to color inside the lines, to really make sure that compliance is at the forefront of the management of the store.”

Curio will require franchisees to appoint a clinical director for each store, he added. “In a lot of cases, we expect that a clinician will seek to be the franchisee themselves and serve as the clinical director, and then [will hire a team with] experience around retail, marketing, sales and all of those other skills that will make for a successful store.”

As the franchisor, Curio will provide launch support to franchisees for the first six months to a year, including help in the licensing process, initial employee hiring and training, site selection, and the buildout of the dispensaries. In the longer term, Curio will help develop standard operating procedures for its franchisees, as well as provide day-to-day guidance in running the stores.

The company also offers Curio College, which will educate franchisees and their teams about the clinical aspects of medical cannabis.

“We need a mechanism to keep our franchisees and their employees current on the latest in research and development in the space,” Registre said.

Curio is currently fundraising for the program and is about halfway to its $30-million goal, which will ultimately allow the company to help launch 40 to 50 minority-owned dispensaries.

Curio’s franchising model ultimately leads to 100% ownership for entrepreneurs, Registre said, as the fund is structured as a launch vehicle rather than a permanent investment in each store. The franchisee will purchase the fund’s ownership over time, he said, and as capital is returned to investors, it will be reinvested in even more minority-owned businesses.

“From our perspective, when we looked at the opportunity to make a statement about diversity, it’s hard to assemble all the components to drive a long-term impact,” Registre said. “Even if you’re able to support an entrepreneur in receiving a license, there’s a need for ongoing support so they can get their business established, let alone operate successfully over time. So, we’re really enthusiastic and we have a lot of conviction around the idea that pairing the financing with the franchise element creates … a long-term relationship.”

Updated: 1:51 p.m. Eastern Standard Time, Dec. 4

The U.S. House of Representatives has passed the Marijuana Opportunity Reinvestment and Expungement (MORE) Act, H.R. 3884, to remove cannabis from the U.S. Controlled Substances Act. It passed 228-164.

The bill will now go to the U.S. Senate, where Congress members expect it will not pass.

Cannabis’ removal from the U.S.’ list of controlled substances, said U.S. Rep. Sheila Jackson Lee (D-Texas) in a Dec. 2 Rules Committee hearing, “means that going forward, individuals could no longer be prosecuted federally for marijuana offenses. This does not mean that marijuana would now be legal in the entire United States—a very important point. It will simply remove the federal government from the business of prosecuting marijuana cases and will leave the question of legality to the individual states.” Jackson Lee is an original cosponsor of the act.

RELATED: UPDATE: UN Votes to Remove Cannabis From List of Most Dangerous Drugs 

In addition to descheduling and decriminalizing cannabis, the MORE Act creates a “Criminal Justice Office,” which will, among other things, create a grant program to provide job training and reentry services; and provide legal aid, including for the “expungement of cannabis convictions.”

The act places a 5% federal tax on the sale of cannabis products; that tax will then increase by 1% each year and cap at 8%, according to Congress members who spoke during the Dec. 4 full-floor U.S. House debate.

It also directs the Small Business Administration to create a “Cannabis Opportunity Program” that would “assist small business concerns owned and controlled by socially and economically disadvantaged individuals.”

Vice President-Elect Kamala Harris originally introduced the MORE Act in the Senate, and Jerrold Nadler (D-N.Y.) introduced the bill in the House.

In the Dec. 4 House debate on the MORE Act, original cosponsor Barbara Lee (D-CA) expressed her support for it.

Matt Gaetz (R-Fla.) is the only Republican in the U.S. House or Senate to cosponsor the MORE Act, according to Congress.gov.

RELATED: How U.S. House, Senate Results Could Influence Cannabis Legislation

The Dec. 4 vote was bipartisan, with five Republicans and one Independent voting in favor of the act. Six Democrats voted against it. 

Gaetz said in the Dec. 4 hearing that Congress members who oppose the act are not aligned with the opinions of a majority of Americans.

“I’m going to vote for the MORE Act,” Gaetz said during the hearing. “It won’t pass the Senate. It won’t become law. But then we should come back in the 117^th Congress, and we should truly do more for our people.”

Numerous opponents of the MORE Act expressed concerns in the Dec. 4 hearing, as well as in the Dec. 2 House Rules Committee hearing, that Congress should not prioritize cannabis legalization over a new COVID-19 relief package. Supporters of the bill have indicated that the two initiatives are not mutually exclusive.

The Minority Cannabis Business Administration (MCBA) stated in a press release that it supports the bill but opposes specific provisions.

“Although Minority Cannabis Business Association (MCBA) supports and applauds the social equity provisions including the expungement of records and the establishment of an Opportunity Trust Fund and the Cannabis Justice Office, we have grave concerns over the provisions in this bill that we believe would have an immediate chilling effect on individual members in our community and minority business owners more broadly,” stated the release.

A recent U.S. House amendment changed the MORE Act. Alterations include limiting cannabis expungement to people who have been charged with nonviolent federal offenses and to those who have not been sentenced with an “aggravating role adjustment” for directing or overseeing federal criminal activity. It also directs the U.S. Comptroller General to include, as part of broader research on cannabis, the “uses of marijuana and its byproducts for purposes relating to the health, including the mental health, of veterans.”