The National Cannabis Industry Association (NCIA) announced last week their newest addition to the Cannabis Business Summit: former Deputy Attorney General James M. Cole as the keynote speaker. Cole will be joining Aaron Smith, executive director of NCIA, for a fireside chat where they will take a look at his legacy in the cannabis industry as author of the Cole Memo. They will also discuss his predictions for the future of federal cannabis policy under the Justice Department.
As author of the Cole Memo, James Cole was an instrumental figure in the fight for legal cannabis in the United States. The Cole Memo was a policy directive issued in 2013 that instructed U.S. attorneys general in states that have legalized cannabis to use their resources in prosecuting Controlled Substances Act offenses only if they violated specific federal enforcement priorities. The Obama-era policy directive essentially served to protect state-legal medical cannabis businesses from federal raids and prosecution as long as they were abiding by the state’s regulations.
At the Cannabis Business Summit, James Cole will share insights on the future of the Justice Department’s policy towards cannabis. “The Justice Department holds a huge number of cards when it comes to the future of our industry, but its inner workings and internal debates on cannabis policy aren’t well understood,” says Smith. “That’s what makes this keynote with Jim Cole so exciting and valuable for anyone trying to predict what comes next for the industry.”
The Justice Department rescinding the Cole Memo, the Omnibus bill including Leahy Amendment protections, a host of potential bills for federal cannabis policy change: a lot has been happening in Washington D.C. recently with respect to cannabis business. With the National Cannabis Industry Association’s (NCIA) Cannabis Business Summit in San Jose fast approaching, as well as the 8th Annual Cannabis Industry Lobby Days, we thought it would be a good time to hear what NCIA has been up to recently.
We sat down with Aaron Smith, co-founder and executive director of NCIA, to learn what the organization is working on right now and how we might be able to make some real federal policy changes for cannabis.
CannabisIndustryJournal:With the Department of Justice rescinding the Cole Memo, working as a group to tackle federal policy reform is now more important than ever. Can you give us a 30,000-foot view of what NCIA is doing right now to help us work together as a group and affect policy change?
Aaron Smith: So our team in D.C. consists of three full-time staff members as well as lobbying consultants, who have been really focused on the appropriations process, which is the way we’ve been able to affect change in such a dysfunctional congress by affecting the budget and restricting law enforcement activities. The medical marijuana protections, formerly known as the Rohrabacher–Farr amendment, [and now known as the Leahy Amendment] prevent the Department of Justice from using funds to prosecute state-legal medical marijuana businesses and patients. Going into the fiscal year, thankfully after a lot of hard work, we were able to include protections for medical marijuana, which just happened last week. Now we are really focused on the next year’s fiscal budget, working to hopefully expand those protections to cover all state-legal marijuana activity so the Department of Justice cannot go after all state-legal cannabis businesses, including those businesses in the recreational cannabis industry, which is certainly one of our priorities right now. As Congress starts to transition into fiscal year 2019 appropriations, the D.C. team is working with Capitol Hill staff and other cannabis groups in D.C. to ensure an organized, uniformed strategy through the appropriations process.
CIJ: What are some other priorities for NCIA in the House and Senate right now? What is NCIA focusing its resources on?
Smith: Another big issue for us is the 280E section of tax code, which prevents legal cannabis businesses from deducting normal business expenses. A lot of these businesses face upwards of a 70 percent effective tax rate. Working with our champions in Congress, we are working on reforms to 280E so we can make normal deductions and be treated fairly, just like any other legal business. The Small Business Tax Equity Act of 2017 addresses this issue and has bipartisan support in the House and the Senate right now, and we are working to build more support for that. This bill currently has 43 cosponsors in the House.
The other big issue for us right now is banking reform, which is a very high priority for NCIA as it affects most of our members. The Secure and Fair Enforcement (SAFE) Banking Act of 2017 provides a “safe harbor” and additional protections for depository institutions who provide “financial product or service” to a covered business. This bill currently has 89 cosponsors in the House. NCIA’s D.C. team and lobbying consultants continue to push for cosponsors and support on these important bills.
CIJ: I saw that the Omnibus spending package includes Leahy Amendment protections for cannabis businesses through September. Would you consider that a win in your book? How are you working to maybe extend those protections?
Smith: It was a big win for us. It doesn’t always seem like it because it is really just maintaining the status quo, but we are up against an Attorney General lobbying congress to strip those protections and the house didn’t allow us to vote on it. But by including the Leahy Amendment in the budget we are not only protecting medical marijuana patients and businesses, but we sent a clear signal to Congress that the intention is not to go backwards. We have been playing some defense recently given the current administration’s policies. But we are working with our allies in congress to negotiate those protections for recreational businesses as well. Negotiations for that are just getting started now.
The fiscal year ends September 30th so the protections are in place for now, but Congress needs to pass another budget for the next fiscal year with those protections included. It’s hard to say when the vote will be, because they haven’t been passing budgets in a timely manner, but usually it’s in May or June, right around our Lobby Days. This is what we are focused on now, getting as many of these cannabis businesses and NCIA members out there to really show Congress what the legal industry looks like.
CIJ: NCIA is hosting the 8th Annual Cannabis Industry Lobby Days a little more than a month from now; do you have any goals for that event? Is there anything in particular you hope to accomplish there? How can cannabis businesses get involved?
Smith: The primary purpose of Lobby Days is to show members of Congress and their staff (many of whom have never had exposure to cannabis businesses) what a responsible industry really looks like. And it lets business owners come tell Congress how current policies and laws are affecting their business. It is great for the cause and helps change minds in DC.
Last year, we came out of Lobby Days with several new co-sponsors of cannabis legislation and we hope to get that again this year. It is a great opportunity to connect and network as well; some of the top people in the industry will be there.
The Senate Appropriations Committee approved the amendment to continue protecting state-legal medical cannabis markets from the Department of Justice. The amendment, previously known as the Rohrabacher-Farr Amendment, prevents the DOJ from using funds to target medical cannabis operations, patients and businesses in states where it is legal.
Every time Congress reviews the budget, this amendment needs to be included to keep protecting the medical cannabis community. While the rider still needs to make it through the final version of the appropriations bill, it is a big win for the status quo.
According to Aaron Smith, executive director and co-founder of the National Cannabis Industry Association (NCIA), this indicates that Congress is resisting Attorney General Jeff Sessions’ calls to end the protections. In a letter sent back in May, Sessions urged the Senate on both sides of the aisle to stop protecting medical cannabis.
Many see this morning’s vote as Congress standing up to Jeff Sessions, and standing up for medical cannabis patients. In a letter to NCIA members, Smith says that a lot of work still needs to be done, but this is an important first step. “This is not the end of the story. There are still many steps to go before a new budget is finalized,” says Smith. “But this is an important indicator that our allies in Congress are standing up for us, even in the face of DOJ opposition.” In an official NCIA statement, Smith acknowledges the hurdles that still face the amendment. “Now it’s time for the House to do the same,” says Smith. “Patients deserve access to care, states deserve respect, and members of the House deserve the opportunity to vote on amendments like this that have the strong support of their constituents.” Bipartisan support like this in Congress is needed to prevent the current administration and the DEA from meddling in states with legal medical cannabis.
President-elect Donald Trump nominated Sen. Jeff Sessions (R-AL) for Attorney General back in November. For Sessions to become a member of the cabinet and head of the Department of Justice, the Senate must approve the nomination during a confirmation hearing, taking place today in Washington D.C.
According to CNN’s coverage of the events, Sen. Mike Lee (R-Utah) mentioned the Obama Administration’s tolerance of states with legal cannabis. “There are federal laws prohibiting the use of marijuana, the sale of marijuana, the production of marijuana, that apply regardless of whether a state has independently criminalized the drug,” says Senator Lee. He then asks if Obama’s actions were indicative of a breach of “the understanding that we [Congress] are the lawmaking body.”
Sessions replied to that by saying that as federal law stands, cannabis is illegal. He says if keeping cannabis illegal is “not desired any longer, Congress should pass a law to change the rule.” He adds that it’s not the AG’s job to enforce or not enforce certain laws. “We should do our job and enforce laws as effectively as we’re able,” says Sessions.
In April of 2016 according to USA Today, Sen. Jeff Sessions was quoted saying “Good people don’t smoke marijuana.” Sessions has a history of making inflammatory remarks, including racist statements. He has also previously mentioned his proud support for the War on Drugs.
Sessions’ comments during the exchange today shed some much-needed light on his stance toward legal cannabis. National Cannabis Industry Association (NCIA) executive director Aaron Smith issued a statement on Sessions’ comments made today. In the statement, Smith sounds optimistic regarding Sessions’ comments. “In today’s hearing, Sen. Sessions indicated that the Justice Department’s current guidelines for marijuana policy enforcement are ‘truly valuable’ in setting departmental priorities,” says Smith. “That belief, along with the support for state sovereignty on cannabis policy expressed by President-elect Trump and his team, should lead Sen. Sessions to maintain the current federal policy of respect for state-legal, regulated cannabis programs if he is confirmed as Attorney General.”
“Sen. Sessions also highlighted the conflict created by a Congress that has failed to reflect the will of the voters on cannabis policy,” says Smith. “Voters in 28 states, representing approximately 60% of the nation’s population, have now chosen some form of legal, regulated cannabis program. National polling shows that 60% of Americans believe cannabis should be legalized. It’s time for federal lawmakers to represent the clear choices of their constituents.” Given the Republican support for state sovereignty and Sessions’ comments on Congressional lawmaking, Smith is hopeful that if Sessions becomes the new Attorney General, he will respect states with legal cannabis programs.
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