It appears increasingly unlikely that federal legalization of cannabis will happen next year. Most observers, including a majority of the CEOs of large cannabis companies, seem to think legalization will come in 2023 at the earliest.
If so, that means the Republicans might well be in charge of Congress by the time lawmakers are ready to take a vote. In that case, all bets would be off, everywhere, on every issue. Congress might well fill all of its time impeaching President Biden and investigating Hillary Clinton for Benghazi and emails. In that case, it’s impossible to guess what might happen with any given piece of legislation.
Nevertheless, we now have before us some idea of what Republicans seek with legalization. Nancy Mace, congresswoman of South Carolina, last month introduced the States Reform Act, which would remove cannabis from the list of controlled substances.
The bill is, not surprisingly, friendly to industry—especially to the biggest players in the cannabis market. It would tax weed at just 3% and, perhaps most consequentially, it would allow states to maintain their existing regulatory schemes. In many states, that means governments would be able to continue to place strict limits on the number of licenses they issue. Industry critics contend that this practice has led to large companies amassing market power at the expense of smaller players. Licenses have sold on the secondary market for tens of millions of dollars, meaning that smaller operators have little chance of obtaining one without some kind of government intervention.
In introducing the bill, Mace was flanked by, among others, Jeremiah Mosteller, a senior policy analyst with Americans for Prosperity, the libertarian-leaning pressure group founded by the Koch Brothers. Also on hand was Steve Hawkins, the president and CEO of the U.S. Cannabis Council and executive director of the Marijuana Policy Project.
Just a week before Mace introduced her bill, Hawkins went on the defensive, after cannabis-journalist Chris Roberts obtained a leaked document from the USCC that argued in favor of a set of industry-friendly stances, including the continuation of limits on state cannabis licenses. The USCC didn’t produce the document, Hawkins insisted, but had merely obtained it. He told Roberts, for a story in The Daily Beast, that “we do not have a position on limited licensing.”
While that’s apparently technically true, Roberts presented heaps of evidence that the USCC’s members, which include the biggest players in cannabis, would like to keep license limits in place. Several companies have told investors so explicitly, in stock prospectuses and elsewhere, sometimes noting that their market share is “protected” by the limits.
Ah, free enterprise.
The States Reform Act is already a formal bill. Meanwhile, the Democrats’ version of legalization, the Cannabis Administration and Opportunity Act, is still in “discussion draft” form, though it was unveiled months ago. Sponsored by several prominent Democrats—Senate Majority Leader Chuck Schumer, of New York; Sen. Ron Wyden, of Oregon; and Sen. Cory Booker, of New Jersey—the bill calls for taxing weed at 10% at first, ratcheting up to 25% after five years.
Last week, Schumer said in an interview with Black Enterprise magazine, that his bill would keep “the big boys” from amassing too much market share. He didn’t spell out who the “big boys” were, but he has talked in the past about how the social-equity provisions in his bill would keep outside industries, like tobacco and liquor, from dominating the cannabis business. Without an actual bill in hand, it’s difficult to assess how well or badly that might work, but most observers seem to believe that neither bill will forestall industry concentration by big players. The Democrats’ bill, however, certainly puts a lot more emphasis than Mace’s bill does on giving communities of color and others harmed by the war on drugs a leg up in the industry.
Still, the high tax rate, and the bill’s proposal to have the Food and Drug Administration regulate cannabis, have drawn lots of criticism from the industry. Mace’s bill would put the Agriculture Department in charge of weed. She said pot should be treated like “raw barley or hops” and that cannabis should be regulated like the liquor business.
Liquor, of course, is one of the most concentrated industries in America, dominated by a handful of players.
.Ah, Free Enterprise: Does legal weed mean ‘Big Weed?’
