Is it too late for legalizing weed at the federal level to undo the damage of criminalization and racial disparities in the already multi-billion dollar cannabis industry? We may be about to find out.
The House on Friday passed the Marijuana Opportunity Reinvestment and Expungement Act, legislation that would make weed legal all over the country and attempt to end some notorious quirks in the business. Right now, weed is legal for medical use in 37 states and for recreational use in 18; there is overlap between some states which allow both. But marijuana is still illegal at the federal level, which makes it difficult, for example, for growers, distributors and retailers to do business across state lines. It also means many of them have to do business in cash or find alternative means of financing their operations because banks don’t want their business, and that they can’t access federal loans or deduct all their business expenses even though they pay federal taxes.
Even more problematic are the racial disparities. Millions of people have been incarcerated on local or federal charges over weed possession or distribution, and their criminal records have made it difficult, if not impossible to find employment, apply for student loans or other types of government assistance and to find housing. A 2020 report from the American Civil Liberties Union documented that Black people are still 3.64 percent more likely to be arrested for marijuana possession than whites nationally, and that such disparities exist even in states where weed has been at least partially decriminalized.
With weed now legal in so many places, the racial disparities hit even harder. A key feature of ending marijuana prohibition in some states was the exclusion of people with previous drug convictions. Put another way, it’s baked into the law in some states that the people with the most experience in a high-growth, legal business can’t participate because they have convictions under laws that are no longer relevant. And most of those people are Black and brown.
The bill the House just passed is aimed at remedying much of that. It would expunge federal marijuana convictions and remove the plant from the list of “Schedule I” drugs under the Controlled Substances Act, which also includes heroin and LSD. That would finally allow proceeds and capital from marijuana businesses to flow in the same way that money flows in other industries.
It would also begin the collection of federal taxes on legal weed sales–after all, Uncle Sam allows nothing without getting his cut first–directing those revenues to social programs.
The tax would begin at 5 percent and eventually increase to 8 percent. Funding raised through the tax would go toward a fund to provide job training, mentoring, substance-use treatment, legal aid, re-entry services and youth recreation programs. It would also provide loans to help small businesses in the cannabis industry that are “owned and controlled by socially and economically disadvantaged individuals,” a summary of the bill said.
But the bill still has to pass a divided U.S. Senate, where Republicans, the party that overwhelmingly voted against it in the House, have greater numbers and hope to regain control after next year’s midterm elections. If by some stretch it does pass, the question remains whether it’s too late for Black entrepreneurs to catch up to the head start many others have in the legalized weed space.