The Proposed States Act: Bipartisan Effort Aims To Hand Marijuana Regulation Back To The States
In June, 2018, Senators Elizabeth Warren (D-MA) and Cory Gardner (R-CO) introduced legislation that may finally address the dichotomy between state laws permitting the use of marijuana and the fact that marijuana remains a Schedule I Controlled Substance, making its distribution a federal offense. Entitled Strengthening the Tenth Amendment Entrusting States (STATES) Act, the bill would establish protections for marijuana activity that complied with a state marijuana program. Essentially, the Act would prohibit federal interference with states that had legalized the use of marijuana, whether for medical purposes or otherwise. The legislation marks a huge step in the push to enact cannabis reform at a federal level. This article summarizes the reforms contained within the STATES Act.
Protection for State Marijuana Program Participants
The Act would protect state marijuana program participants by amending the Controlled Substances Act (CSA), the federal law which serves as the basis for controlled substances prosecution. Under the Act, the CSA will be amended to state that persons engaged in marijuana activity who are acting in compliance with state law will not be subject to the prohibitions set forth in the CSA, with certain exceptions.
Prohibitions Under STATES Act
While the Act does provide broad protections for those individuals acting in compliance with state law, certain federal prohibitions related to marijuana activity would remain. Individuals violating the following prohibitions would still be subject to prosecution, even if acting in compliance with their state’s marijuana law:
- Violating the CSA with regard to any other controlled substance
- Distributing or having intent to distribute a controlled substance at or near truck stops or safety rest areas
- Creating a “substantial risk to human life” while manufacturing marijuana
- Employing persons under 18 years of age in drug operations
- Distributing a controlled substance to a person under 21 years of age other than medicinal marijuana
Industrial Hemp Excluded from Definition of Marijuana
The act amends the definition of “marihuana” under the Controlled Substances Act to exclude “industrial hemp,” as defined in section 7606(b) of the Agricultural Act of 2014.
Access to Banking for Marijuana Organizations
One of the difficulties that marijuana organizations face is lack of access to banking services. Because marijuana activity is still illegal under federal law, financial institutions expose themselves to significant risk by accepting money from marijuana organizations. Thus, many simply do not. The Act seeks to address this dilemma by setting forth that conduct in compliance with the Act does not constitute trafficking in a controlled substance or serve as a basis for forfeiture of property under the CSA. Additionally, the proceeds of any transaction in compliance with the Act shall not be deemed to be proceeds of an unlawful transaction under 18 U.S.C. §§ 1956 or 1957. With these impediments removed, it seems likely that financial institutions would be willing to conduct business with marijuana organizations, thus allowing them the legitimacy of other businesses in the banking world.
Likelihood of Passage of STATES Act
While the reforms in the STATES act would be a significant benefit to participants in state cannabis programs, the likelihood of this legislation passing is unknown. Still, proponents of cannabis reform may have reason to be optimistic. First, the President of the United States has expressed that he will “probably support the bill,” despite the hardline stance against cannabis programs previously taken by the Attorney General of the United States.
Second, unlike previous legislation, the STATES Act strikes a more balanced approach to reform and therefore may have a better chance of appealing to legislators. Past efforts have attempted to take more sweeping measures, such as decriminalizing cannabis activity entirely, or rescheduling or removing cannabis from the list of Controlled Substances maintained by the Drug Enforcement Administration. In contrast, the STATES Act only extends protections to individuals in states that have chosen to legalize cannabis activity under state law. In this way, states would retain ultimate authority over how marijuana is regulated within their jurisdiction.
Please contact any of Houston Harbaugh’s health care attorneys with questions or concerns regarding this proposed federal legislation, or Pennsylvania’s medical marijuana program.
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Jessica A. Ellel - Practice Chair
Chair of Houston Harbaugh’s Health Law Practice, Jessica works almost exclusively with health care entities and health practitioners. She has extensive experience with:
- Drafting and negotiating physician employment agreements from both the physician and employer perspectives
- Negotiating contracts between physicians and hospitals
- Preparing purchase agreements to govern the sale of medical practices
- Advising on corporate governance issues, from practice formation to dissolution
- Developing comprehensive compliance plans for physician practices, hospitals, third-party billing administrators, and other health care and related entities
- Organizing strategies for compliance with fraud and abuse laws
- Addressing HIPAA compliance
Jessica is especially well-versed in HIPAA compliance and authors numerous client updates and bulletins on the subject. She conducts on-site and remote HIPAA training and also maintains Houston Harbaugh’s HIPAA compliance manual, ” Federal HIPAA Privacy Standards Simplified: A Comprehensive Tool-Kit”.