Our recent Legal Alert on proposed New York state legislation for cannabis focused on social and tax equity, broader banking access, and other key issues for those exploring business opportunities in the cannabis industry. On the Federal level, several bills also seek to create protective measures for business and banking affiliates, take steps to decriminalize marijuana, and establish product and packaging standards as cannabis continues its tentative journey toward federal legalization. Legislation of note include:
SAFE Banking Act. National and state banking associations have rallied behind the Secure and Fair Enforcement (SAFE) Banking Act, a bipartisan proposal allowing banks to handle proceeds from state-licensed cannabis businesses. Right now, federal law prevents banks from servicing the cannabis industry and ancillary businesses that support it. This federal prohibition limits the ability of regulators, law enforcement officials and tax collectors from monitoring and supporting the growing cannabis industry at a state level. From an equity perspective, those who cannot afford private funding face the daunting task of financing a cannabis business exclusively through private means. The SAFE Banking Act would prevent federal banking regulators from limiting a depository institution’s access to deposit insurance or share insurance, from penalizing depository institutions for providing traditional banking services to a covered business and from discouraging the extension of financial services to any individual or business transacting with a cannabis business.
CLAIM Act. The Clarifying Law Around Insurance of Marijuana Act would ban criminal prosecution of insurers who work with marijuana businesses. In doing so, the CLAIM Act provides a safe harbor from adverse actions for insurance companies that choose to provide services to cannabis-related businesses in jurisdictions where cannabis activity is legal. The bill’s sponsor says it will allow wary insurers to “legally operate in states that legalized marijuana without fear of repercussion.”
MORE Act. The Marijuana Opportunity Reinvestment and Expungement (MORE) Act of 2021 decriminalizes marijuana by removing it from the list of scheduled substances under the Controlled Substances Act, effectively eliminating criminal penalties for anyone who manufactures, distributes or possesses marijuana. With an eye toward social equity, the MORE Act also establishes a trust fund to support programs and services for those impacted by the war on drugs, broadens access to Small Business Administration loans and services to cannabis-related businesses and service providers, and creates a process to expunge federal convictions for cannabis related offenses.
CAOA Act. The Cannabis Administration Opportunity Act remove marijuana from the Controlled Substances Act and allow states to legislate their own cannabis laws, in a process analogous to the regulation of alcohol. Federal tax revenue would support restorative justice, safety investigations, and public health initiatives. Sponsors say that this legislation makes sense in light of both increasing state legalization and public support of decriminalization.
States Reform Act. Similar to the CAOA Act, the States Reform Act would allow states to act independently of federal legislation on cannabis by delisting cannabis as a Schedule 1 drug under DEA rules. The bill’s sponsor asserts the States Reform Act “supports veterans, law enforcement, farmers, businesses, [and] those with serious illnesses” while opening a path to criminal justice reform.
CBD Product Safety and Standardization Act. The CBD Product Safety and Standardization Act is a bipartisan bill establishing a federal framework of standards for CBD food and beverage products. This bill aims to allow the FDA to regulate CBD as it does other food ingredients, subjecting products to safeguards while standardizing content, packaging and labeling requirements. In addition to consumer protection, this bill seeks to provide market stability for growers, manufacturers and retailers.
What questions do you have on this legislation and its impact on your cannabis business? Please reach out to our Cannabis Industry Team.
This alert does not purport to be a substitute for advice of counsel on specific matters.
Harris Beach has offices throughout New York State, including Albany, Buffalo, Ithaca, Long Island, New York City, Rochester, Saratoga Springs, Syracuse and White Plains, as well as New Haven, Connecticut and Newark, New Jersey.