Late last week, a bipartisan team of lawmakers reintroduced the Strengthening the Tenth Amendment Through Entrusting States Act (the "STATES Act") in the Senate and House of Representatives.
The STATES Act would amend the Controlled Substances Act ("CSA") to restrict federal enforcement against state-legal cannabis activity. In particular, the STATES Act would prevent the application of the CSA to persons complying with state law with respect to the manufacture, production, possession, distribution, dispensation, administration or delivery of cannabis. Additionally, the STATES Act would prevent forfeiture of any assets derived from state-legal cannabis businesses, and would also exempt funds derived from state-legal cannabis businesses from the definition of "specified proceeds of illegal activity" under the money-laundering laws.
Senator Elizabeth Warren (D-MA), a co-sponsor of the bill in the Senate, said "Our federal marijuana laws are outdated and pose a threat to our public health and safety. Marijuana should be legalized, and we must reverse the harm of these failed policies by wiping clean the records of those unjustly jailed for minor marijuana crimes." Representative David Joyce (R-OH), a co-sponsor of the bill in the House, said that "[t]he current federal policy interferes with the ability of states to implement their own cannabis laws, and the resulting system has stifled important medical research, hurt legitimate businesses and diverted critical law enforcement resources needed elsewhere."
The STATES Act was first introduced in Congress in 2018.
Last week, the House Financial Services Committee approved sending the SAFE Banking Act, another cannabis-related bill, to the House for a vote.
For ongoing information with regard to interaction between financial regulation and the legal status of cannabis, see the Cabinet Cannabis Finance topic page.
Commentary / Jodi Avergun
The STATES Act is a significant step forward toward eliminating the issues posed by conflicting federal and state cannabis laws. Not only does the bill provide that the CSA is inapplicable to state-legal cannabis activities, it would make clear that federal money laundering and asset forfeiture laws also are inapplicable to funds derived from state legal cannabis activities. If enacted, the STATES Act would go further than any other bill introduced to date to remove the significant hurdles that exist for state-compliant businesses and individuals to expand their cannabis businesses.
Perhaps most notably, the bill would also likely address a number of material issues for financial institutions that have, to date, prevented many such institutions from engaging in transactions with cannabis businesses. Although the STATES Act does not specifically mention the Bank Secrecy Act, it is likely that the current FinCEN SAR regime for marijuana-related businesses would become moot and SARs would be required only in the case of non-State compliant cannabis business activities. Also of note, in announcing the re-introduction of the legislation, Representative Joyce (R-OH) cited studies lauding cannabis use as a possible solution to the opioid crisis. In joining the two issues, Mr. Joyce highlighted the national angst about addiction deaths, which may increase the level of support the bill will receive in Congress.