(Editor’s Note: This story is part of a recurring series of comments from professionals in the cannabis industry. Julie A. Werner-Simon is a law professor at Drexel University’s School of Law, a legal analyst for “Cannabis as a Business” class in the LeBow School of Business in Drexel and former federal attorney. This is the second in a three-part series. Part 1 explained the various degrees of legalization of cannabis in US states.)
Fewer than 7 million of America’s 335 million people live in places without some legalization of marijuana.
The rest have three degrees of legalization. There are 11 third-degree states (shown in yellow in the pyramid figure above) with severely restricted access (SLA) programs that cover a population of nearly 90 million people.
There are also 20 other states and two territories (Puerto Rico and the U.S. Virgin Islands) that are strictly second-degree medical applications (shown in blue) and that have a total population of nearly 118 million people.
After all, the 16 states and territories of the first degree (the green space in the pyramid) have more than 120 million residents, all of whom have legalized recreational marijuana use while also having medical use (second degree) status.
The apex of the pyramid illustration shows that there are only three outliers in the mainland state and one US territory where marijuana is “totally illegal” – that is, it cannot be used in any form.
These are Idaho, Kansas, Nebraska, and American Samoa.
However, these “totally illegal” places have movements that result in either severely restricted access (SLA) third degree or second degree medical use status.
Typically, medical marijuana states and second-degree territories at least allow patients to possess and smoke medical marijuana, while SLAs (like Texas, which tried in a state court this week to ban smokable hemp), don’t.
In Idaho, where the governor vetoed an SLA proposal in 2015 that would have allowed the use of low-THC marijuana for epilepsy, residents are pushing for reform despite legal obstacles to Republican legislation.
If a 2022 marijuana initiative proposal passes the vote and is successful, Idaho skips SLA status and moves it straight to the second-degree column.
Approximately 190,000 Nebraskans (more than 10% of the state’s registered voters) have signed up to include a medical constitutional amendment in the 2020 vote.
However, in September 2020 law enforcement agencies sued to block the election initiative.
The Nebraska Supreme Court kept the move off the vote on “procedural grounds” finding that it violated Nebraska’s single-subject formalities in attempting to legalize the possession, distribution and manufacture of medical marijuana.
Unconcerned Nebraska residents have proposed another medical marijuana initiative for the 2022 election.
In Kansas, where citizens do not have the power to initiate national campaigns, lawmakers drafted a medical marijuana bill last year, but it died on committee.
However, the Kansas governor recently picked up the mantle and pushed for new medical marijuana legislation on the grounds that the increased revenue could be used to expand Medicaid in the state, and a new move was made last month at the Kansas Statehouse introduced for medical marijuana.
And this month, Democratic lawmakers in Kansas passed recreational laws legalizing them.
Due to budget constraints, legalization is even being discussed in American Samoa, an American territory in the South Pacific about 5,000 miles west of California. American Samoa, consisting of approximately 55,000 people, is the only inhabited US territory in which its residents were born on “American soil” but are legally considered to be US citizens who are not citizens.
Now consider the federal government’s approach to marijuana.
To date, it is illegal for virtually all Americans nationwide to own any amount of marijuana. It is illegal to take marijuana on a plane, put it in the U.S. post office, or move it across state lines.
The movement of marijuana between states constitutes an “interstate trade” that the federal government has regulated since the nation was founded.
Marijuana companies cannot get small business loans or federal COVID-19 aid funds, and they are shunned by the majority of federally insured banks due to the possibility of federal money laundering exposure to a nationwide illegal drug for financial relief.
Marijuana companies cannot file for bankruptcy, a federal economic “privilege” granted to other American companies and individuals to “start over” or retool.
Credit card transactions for marijuana companies are difficult. But big companies like American Express, Mastercard, and Visa have traditionally not allowed their cards to be used for what appears to be marijuana transactions.
And marijuana, even if used medicinally, cannot be deducted as medical expenses for federal tax returns.
Marijuana companies (like other companies) cannot deduct normal and necessary business expenses, a position the Biden administration only endorsed in February.
At that time, acting Attorney General Elizabeth Prelogar filed with the US Supreme Court in the case of Standing Akimbo LLC et al. v. US, No. 20-645, on the grounds that marijuana continues to be illegal nationwide under federal law.
As a result, the government argued that the IRS acted properly in finding tax records for a “state legal” marijuana company in Colorado that was being investigated for improper federal deductions.
Additionally, it is illegal for a member of the armed forces to use marijuana – it is prohibited under Article 112a of the United Military Law – and it is still illegal to use marijuana as a federal employee, including those currently working in the White House.
America’s constitutional framework is based on dual and often competing systems of government: federal and state. Marijuana has been illegal nationwide for more than 50 years.
None of the state’s legalization regimes in space replace the federal requirement. Anyone (and any company) who ignores the state illegality of marijuana is at great risk.
Ignorance is not happiness.
(This section is the third part of Werner-Simon’s identification of the level of legalization of marijuana across the country. Part 3 details how, despite the recent layoffs from the White House for cannabis use, there are indications that the federal marijuana ban in Strength is losing weight.)
Julie A. Werner-Simon is a legal analyst for the class “Cannabis as an emerging company” at the LeBow School of Business in Drexel. She can be reached at [email protected].
The previous edition of this series can be found here.
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