Is Cannabis Legalization in the United States
Just Around the Corner?

Every now and then there is an expectation that the federal legalization of cannabis is just around the corner. This time the focus has shifted to the upcoming November elections and a growing anticipation that the Democrats will win the White House and both houses of Congress. Maybe so, but earlier this week the Democratic National Committee rejected an amendment to its platform supporting legalization.

Legalization faces multiple obstacles. First, whatever the results in November, the Republicans will control the Senate (at least) until January 2021. Polls indicate that only 50% of Republicans support legalization. Therefore, if Republicans remain in control after November than attempts by lawmakers to bring cannabis reform legislation to the Senate floor for vote will fail.

In addition, despite two-thirds of Americans supporting legalization, the issue is not a polarizing one. About 80% of voters say they will support a political candidate who does not share their views on cannabis legalization. In other words, lawmakers do not risk their seat if they are against legalization.
Legalization would lead to an estimated loss of US $5 billion in revenues for the Federal government over the next decade. American cannabis businesses are subject to a very high income tax rate since they are barred from taking tax deductions or credits. They must pay taxes on all their revenue without the benefit of being able to use business expenses to reduce their taxable income. Lawmakers could pass a federal tax to generate additional revenue, but this would widen the gap between legal and black market cannabis, in favor of the latter. The federal government wants to avoid this outcome.

Safety data is lacking. The FDA have made their position on CBD well known. They will not change their stance that the compound may be harmful to consumers so long as they are not convinced by an accumulation of scientific evidence proving otherwise. If this is the case with CBD, then we can assume that the FDA will place an even much higher bar for THC. Meanwhile, regulator and law enforcement concerns about the risks of driving under the influence of cannabis also need to be addressed.

The bottom line is that federal legalization remains unlikely for the foreseeable future. A more likely outcome, especially if the Democrats win big in November, is the decriminalization of cannabis use and more support (and maybe funds) for medical cannabis treatment and research. The federal government will also likely be prevented from launching federal prosecutions of cannabis related conduct that is legal at the state level. The industry should not wait for the politicians. They have enough on their plates these days, especially with COVID-19, an economy in crisis and a society on the brink. Cannabis businesses must take control of their future and independently pursue scientific and medical research to back safety and efficacy claims. The future of the industry depends on scientific, not anecdotal, evidence.