Advocating for Equitable Policy
National Cannabis Industry Association (NCIA)
The National Cannabis Industry Association (NCIA) is an advocacy organization that represents nearly two-thousand member businesses and tens of thousands of professionals in the cannabis industry in the United States.
The association works tirelessly on many fronts to protect legal cannabusinesses, defend state laws, and support the development of federal policy that promotes a vibrant, profitable and responsible cannabis industry. It strongly recognizes that present actions will have a lasting impact on shaping the future of the industry.
As an increasing number of states move to legalize cannabis and the issue continues to gain traction at the federal level, it is important to consider what kind of industry it would like to be, how it would like to operate and how it can best achieve those desired outcomes.
To do this, the industry, stakeholders like the NCIA, and legislators must all take a long, hard look at the sector’s past, the war on drugs, and how to promote equity moving forward. This is particularly important as prohibition disproportionately affected minorities, people of color, women, and low-income individuals and communities.
As Morgan Fox, Media Relations Director for NCIA, explained, “The way that cannabis has been treated historically creates a requirement to address those issues because of the way that cannabis consumers were treated – and that’s something that’s kind of unparalleled in other industries.”
In its report entitled Increasing Equity in the Cannabis Industry, NCIA identifies opportunities for policy makers to promote a more equitable system. Equity in the cannabis industry can serve as the foundation for sound policy and equitable regulatory systems, and until recently, it wasn’t part of the discussion.
The report states, “Cannabis prohibition was not only an attempt at preventing individuals from possessing and using cannabis, but also an accomplished criminal punishment regime that enforced this prohibition through government force.” The same people who were most likely to be charged and convicted, limiting their ability to be educated, employed and travel the world, are now receiving a disproportionate amount of the economic benefits of the industry. The market they were once condemned for participating in is thriving and they are unable to participate fully.
As such, policy makers have a unique opportunity and responsibility to create legislation that will have a positive impact for previously disadvantaged individuals and communities. The end of prohibition alone will not reconcile the past, and if early trends are any indication, the same individuals and communities are once again being disadvantaged by the system.
While expungement is one way to address past wrongs, the government also has an opportunity to integrate social equity into its policies to develop programs that improve equity and correct the orientation of the market to serve as an example for developing cannabis markets worldwide. As noted in the NCIA report on equity, “Collectively, the best practices suggest that the legal cannabis market can be a force for justice, but only if implemented justly,” and there are an ever-growing number of proponents trying to achieve that very feat.
There are programs taking place at the local level in cities like Los Angeles, Oakland, and San Francisco, as well as at the state level in California, New York, Massachusetts and Illinois, which have attracted attention as of late. Illinois recently became the eleventh state to legalize marijuana for recreational use. Effective January 1, 2020, adults 21 years and older can purchase marijuana from licensed dispensaries. What makes Illinois unique is that it is the first state to legalize cannabis through the state legislature and legislated equity alongside it.
The Cannabis Regulation and Taxation Act was signed into law by Governor J. B. Pritzker and includes a racial justice provision, the first bill of its kind to include reparations. The racial justice provision will see the expungement of nearly 800,000 past convictions for marijuana-related offences.
The bill also includes a social equity program that will offer grants and loans to minority-owned businesses to increase their representation and access to capital. Through the Restore, Reinvest and Renew program, one-quarter of tax revenues earned from the market will be earmarked for minority communities that have been disproportionately impacted by the war on drugs.
There are several states that are integrating social equity programs and in doing so, they have significantly changed public perception for the positive, which is leading to greater industry success. But while changes are taking place at the state level, they hang in the balance of federal reform.
The Strengthening the Tenth Amendment Through Entrusting States (STATES) Act is bi-partisan legislation that was introduced by Senator Elizabeth Warren (Democrat, Massachusetts) and Senator Cory Gardner (Republican, Colorado) with the intention to protect states who have taken reform and legalized or decriminalized cannabis from federal interference. A companion bill was introduced in the House by U.S. Representative Earl Blumenauer (Democrat, Oregon) and U.S. Representative David Joyce (Republican, Ohio) to amend the Controlled Substances Act of 1970 to no longer include marijuana as a Schedule One drug.
The Marijuana Freedom and Opportunity Act, which was introduced in the last Congress but failed to gain any traction, has been reintroduced by Senator Chuck Schumer (Democrat, New York), with U.S. Representative Hakeem Jeffries (Democrat, New York) sponsoring companion legislation in the House, another effort to remove marijuana from the list of Schedule One controlled substances.
The act seeks to decriminalize the plant at the national level, leaving states to decide on their own laws and regulations, expunging low-level convictions and allocating funding to supporting minority- and women-owned businesses in the cannabis space. A similar effort, the Marijuana Justice Act, was introduced by Senator Cory Booker (Democrat, New Jersey) to deschedule marijuana and expunge records.
Further to these examples, the bi-partisan support that is being shown for the Secure and Fair Enforcement (SAFE) Banking Act offers great promise that federal action is on its way. After a 45 to 15 vote at the House Financial Services Committee level, the bill will advance to the House and later the Senate for a vote.
There are countless reasons why the SAFE Banking Act is gaining support, as it looks to prevent federal banking regulators from punishing banks and credit unions from working with legal cannabis businesses, while also helping small, minority- and women-owned businesses gain greater access to capital, increasing participation and profitability in the market.
To date, the bill has received a significant amount of support from the banking industry, the National Association of Attorneys General represented by thirty-eight states’ attorneys general, nearly 200 co-sponsors in the House, and 30 more in the Senate – and momentum continues to build.
Fox described it as a “narrowly tailored bill to fix an existing problem that isn’t going away. It doesn’t require lawmakers to weigh in on whether or not they support legalization in order to support this bill because these industries do exist, and they are not going away, and these problems will persist until legislation like this is passed.”
The bill looks to improve public safety in communities, as well as employees of cannabusinesses who are being forced to work on a solely cash basis with large quantities of money on hand. It also looks to improve safety for regulators and tax collectors, as well as law enforcement officials.
“Law enforcement will be aided in this because they will be better able to determine whether or not transactions are in compliance with the law. Regulators will be better able to craft and institute policy on much more easily observable transactions and economic movements in the industry,” said Fox.
The SAFE Banking Act will improve access to capital for small businesses and people from marginalized communities – as Fox explained, “groups that don’t traditionally have access to deep financial networks or angel investors,” who rely on traditional banking as their only source of capital, to which they have long been denied access.
The SAFE Banking Act also takes it a step further; as Fox noted, “The House version contains an amendment that requires a study on whether or not banks are actually servicing marginalized communities and people of color and women, and it requires reporting,” and thus, accountability and hopefully action.
The elimination of unfair taxation is also an area of focus in order to achieve equity in the industry, specifically 26 U.S. Code Section 280E which bars businesses engaged in trafficking Schedule One and Schedule Two controlled substances from tax deductions and tax credits. Cannabusinesses are unfairly and disproportionately taxed compared with other industries at a rate of roughly forty-five to forty-seven percent, which far exceeds the burdens other industries bear. Likewise, there is also concern pertaining to how federal cannabis tax spending is determined.
Both the taxation system and the banking system bar cannabusinesses access to capital, even more so for women and visible minorities, and while the ongoing policy battles are a start, there is still more work to be done to ensure equity is at the core of the legislation that will shape the cannabis market, its structures and regulatory systems for years to come.
With a focus on these matters and many more, NCIA is, and will continue to be, at the forefront of the efforts to create an equitable industry and regulatory structure that will continue to advance the interests of its members and the strength of the market, righting past wrongs and thoughtfully advocating for the best possible industry it can be.