Pot Legalization Bill Passes House, But Senate Vote Unlikely

The House voted Friday for the first time to legalize marijuana at the federal level, but the bill has little chance of being considered in the Republican-controlled Senate.

The Marijuana Opportunity Reinvestment and Expungement Act would remove marijuana from federal drug schedules under the Controlled Substances Act and expunge convictions for marijuana offenses. The bill would also put a 5% excise tax on cannabis and use the funds to help individuals who have been punished for drug offenses. It passed the House 228-164.

“This long overdue legislation would reverse the failed policy of criminalizing marijuana on the federal level and would take steps to address the heavy toll this policy has taken across the country, particularly on communities of color,” House Judiciary Chairman Jerrold Nadler, who introduced the bill, said in a statement.

If the legislation were to become law, it could be a boon to marijuana companies, including Canopy Growth Corp., Curaleaf Holdings Inc., Green Thumb Industries Inc., Trulieve Cannabis Corp. and Cresco Labs Inc. U.S. companies would all see improved margins from a lower tax burden that would come with decriminalizing marijuana, and could more readily access debt markets and institutional investors, helping them grow faster and keep their heads above water in tough times.

Bloomberg’s index of global cannabis companies traded up almost 2 percent following the news.

The act would “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,” said David Culver, vice president of U.S. government relations at Canopy Growth.

Friday’s House vote comes after five more states, including some led by Republicans, approved marijuana programs in the November election. About 70% of Americans now live in states that permit recreational or medical marijuana. Legal cannabis sales are estimated at approximately $19.1 billion this year, according to New Frontier Data.

About 68% of Americans say they support legalizing marijuana, according to a Gallup poll published in November. Enforcement of marijuana laws have increasingly been de-emphasized and possession has been decriminalized in several states.

Separately, the National Basketball Association said Friday it would suspend random marijuana testing for the rest of the 2020-21 season, league spokesman Mike Bass said in a statement. The league would focus on testing for “performance-enhancing products and drugs of abuse,” the statement said.

Despite strong public support and a nod of approval from some GOP states, Senate Majority Leader Mitch McConnell has said he has no plans to bring up the legislation.

That could change if Democrats are able to secure both Senate seats in the January runoff election in Georgia. President-elect Joe Biden, along with a Democratic House and Senate, could revisit previous Democratic proposals and take steps to establish the industry’s legitimacy, including expanding cannabis businesses’ access to banks and eliminating barriers to medical research.

Senate Minority Leader Chuck Schumer in a statement encouraged members of his chamber to consider the bill, which he said would “address inequities in criminal justice, business and more.”

©2020 Bloomberg L.P.

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