What does the Biden administration mean for the cannabis and hemp industry?
Although Joe Biden’s administration hasn’t been confirmed due to Donald Trump’s legal challenge over allegations of fraudulent ballot votes, these claims seem to be unsubstantiated and we fully expect Biden to be inaugurated as 46th president of the United States on January 20, 2021. A change in power means it is likely that changes in legislation are on the horizon, but how will the cannabis and hemp industry be affected?
Hemp
While there is still some disagreement over the legalisation of cannabis recreationally, the farmers, cultivators and manufacturers in the hemp industry have enjoyed a fruitful relationship with both Democrats and Republicans over the last few presidential terms. This is because hemp policy is something which both sides of the political spectrum share interests in, for a range of different reasons.
Although the use of hemp has been favoured across both left and right-wing politics, the Biden administration is set to make several favourable changes which will likely prioritise hemp for years to come. This is due to Biden’s clear support for prioritising a reduction in carbon emissions and plant-based economies, and hemp clearly fits this vision for a sustainable future.
Biden’s press team released a statement a couple of weeks ago stating that he plans to encourage farmers to cultivate crops which support the environment and sequester carbon from the atmosphere. We know that hemp fits this criterion possibly better than any other crop out there, considering its wide range of uses across many polluting industries.
There is also likely going to be a change in leadership at the FDA, which could support Biden’s new-found position on hemp. If new members are appointed and the FDA’s structure is reorganised, there is a chance of a change in the way hemp is scheduled in terms of rules for extractions. The FDA’s decision on cannabis policy doesn’t just have ramifications for the US — the rest of the world will be watching intently to see the result of new policies and court decisions, and it will likely have an impact on legislation for hemp globally.
Cannabis
On the 5th of December, the US became one step closer to decriminalising cannabis at a federal level as the US House of Representatives passed The Marijuana Opportunity Reinvestment and Expungement Act. However, there are still several barriers to overcome for these new proposed laws to come to fruition.
What does the Act propose?
The Act calls for the decriminalisation of cannabis at a national level, which essentially means that cannabis will not be treated as an illegal substance if the bill comes into fruition.
It also calls for the expungement of non-violent criminal offences relating to cannabis, meaning a large number of criminal records associated with the plant will be erased permanently. Additionally, it supports funding and reinvestment into communities which have suffered due to the long establishment of the ‘war on drugs’ by creating a trust fund from the tax of retail sales relating to cannabis. It would also provide businesses involved in the cannabis industry easier access to loans and funding initiatives such as grants.
While the passing of this bill in the House of Representatives is positive news for the future regulation of the cannabis industry, it is unlikely that cannabis will become decriminalised. This is because the bill has to be passed through a republican-controlled senate who are predicted to be largely against the decriminalisation of cannabis. It also has to be signed off by the President, which adds another barrier to an already complicated process.
If the Republicans win one of two elections for Senate in January, the right-wing party will maintain its majority in the Upper Chamber. The Democrats new-found position of decriminalising cannabis will be held in vain if these elections remain in favour of the Republican party.
Do Biden and Harris support this new bill?
For the last few decades, it has been no secret that Biden’s policies and bills have been unfriendly towards cannabis users. He was one of the leading figures in the democrat party who fiercely opposed the use of cannabis through the war on drugs. In just 2010, Biden went on record saying “I think legalisation is a mistake. I still believe [cannabis] is a gateway drug.”
Harris has also supported restricting policy against the cannabis industry in her time as chief prosecutor for the State of California and as a district attorney. As recently as 2010, Harris opposed the progressive legislation — proposition 19 — which was designed legalise and tax marijuana for adults over 21.
But both Biden and Harris have made no secret in recent times — most notably in recent public debates — that cannabis should be decriminalised. Harris in a Vice Presidential debate vs Mike Pence said: “We will decriminalize marijuana and we will expunge the records of those who have been convicted of marijuana”.
Historically, Republicans have been the ones to ease regulation in these types of industries, and Democrats have been the ones to strengthen. So why the quick change of tune and what does this mean for future legislation on cannabis?
To put it simply, Biden recognises that currently, the majority of the American population is in favour of the legalisation of cannabis, at least in a medical capacity. It was also suggested in a Gallup poll conducted across the United States that an overwhelming majority of Americans (two thirds) are in favour of the decriminalisation of cannabis.
Social inequality is a major sticking point for the majority of Americans in 2020, and cannabis has been innately associated with the war on drugs in a period where we saw many underprivileged men and women locked up for extended periods of time for smoking or handling small amounts of cannabis. Biden knew that it would benefit his campaign if he made it clear to his supporters that he would decriminalise cannabis if he was brought into power.
This change in tune was seen in a speech in New Hampshire in May 2019, where he told voters that no one should be locked up for smoking cannabis. When questioned about imprisonment for cannabis offences, he said on-the-record, that he “hasn’t always gotten things right” but he has “always tried”. Maybe Biden did in fact have a change in heart and realised he made some calamitous errors on cannabis policy in the past, but what’s important is it is likely regulations on cannabis will be eased in more and more states as Biden’s term progresses.
So what policy is likely to change? Firstly, both Biden and Harris have advocated the process of states determining whether cannabis should be legalised or decriminalised in their jurisdiction. Because of this, it is likely we will see the States Act — which was a bill proposed by the 115th congress to allow each state to regulate medicinal and adult use of cannabis — to come into play. Due to Biden’s new-founded position of decriminalising cannabis and that an impressive number of high-profile senators and members of the house are in support of the States Act, it is likely that we will see several states during Biden’s presidential term take the leap to either legalise or decriminalise cannabis. The likelihood of this is further increased by the news that five new states have voted to legalise the controversial plant.
The New States to Legalise Cannabis
The Democratic states of New Jersey, Arizona and Vermont as well as the Republican states of Montana and South Dakota all decided in the presidential ballot to legalise the recreational use of cannabis. This is the first time that more than three states have voted to legalise cannabis in the space of a year, which clearly shows the new wave of desire from the American public and politicians alike to legalise cannabis.
New Jersey
Just after the election, New Jersey became the first mid-Atlantic state to legalise cannabis which was seen as a breakthrough moment across this area of the US. This could jump-start a wave of new regulation of cannabis around the surrounding region including New York, Pennsylvania and Connecticut, but we will find out the new position of states in the next years of Biden’s administration.
Although this new policy is set in stone, there are still a number of hurdles to overcome, such as substantiating the new rules and regulations for the consumer cannabis marketplace.
Vermont
While cannabis has been legalised in Vermont for medicinal purposes since 2004, and it has also been permitted for possession and growing of the plant in 2018, Vermont just became the 11th state to legalise recreational cannabis sales in the US. However, state officials have been given until October 2022 to finish providing licences for retailers, so it could still be two years until we see legalised cannabis sales in the state.
The governor, Phil Scott, has also signed off another bill to authorise expungement for previous cannabis offences that were issued under Vermont jurisdiction. This ultimately means that anyone with a past conviction that was cannabis-related will be freed from their criminal records.
Arizona
Arizona on November the 3rd became the 13th state to legalise cannabis after failing back in 2016. The newly approved bill allows adults over the age of 21 to purchase and own up to one ounce of cannabis. Users are also permitted to grow up to six plants per primary household, but there must be at least two residents living in any property over the age of 21. Unlike Vermont who has given State officials a lengthy period to issue licences to retailers, Arizona is ready to roll out dispensaries as soon as the application acceptance period ends in early 2021 (January 19 to March 9).
It will still be illegal for residents to use cannabis in public spaces, but the Governor has ensured that it will only be classed as a small offence for any person who happens to get caught.
Montana
During the presidential election, Montana legalised the use of cannabis for recreational purposes for adults over the age of 21. In 2005, a bill was approved allowing medicinal cannabis to be used among appropriate patients. Much like Vermont, Montana’s state officials have until 2022 to issue licences for accepted dispensaries, meaning that we will not see legal cannabis sales until then.
However, residents will be allowed to possess and use cannabis from 2021. It also was made clear that citizens who are currently serving sentences for cannabis-related offences will be offered the chance for resentencing or expungement.
South Dakota
South Dakota was the first state to take a multi-step path in legalising cannabis. Most states in the past have taken the process in stages — usually, decriminalisation is the first step, followed by medicinal use and then recreational use. It would be then full legalisation. South Dakota jumped all the way to legalisation without taking the process explained in the former, which is a landmark moment for the legalisation of cannabis in the US.
This is important because many states may follow suit and we could see a more efficient, widespread adoption of legislation in the following years of Biden’s administration.
As we see more and more states fall like dominoes for the legalisation of cannabis, the world will take notice. In a way, America and other countries such as Canada who have recently legalised cannabis are acting as guinea pigs for leaders of countries all over the world. If we see safety and a new successful cannabis industry emerge across America that has the potential to bring in thousands of jobs and new revenue, more and more countries will start to adopt similar laws on cannabis, especially after the devastating economic impact of Covid-19 globally.
The difficulties of Banking and Cannabis: Will it Change?
Further legalisation and with Biden’s fresh advocacy of policy in favour of decriminalisation could also have an effect on banking, which is currently a major issue for the cannabis industry.
Cannabis is currently stuck under schedule 1 regulation at the federal level, meaning that banking in this industry is considered to be high risk from the big, traditional national and international players we are accustomed to. Currently, the gap is filled by state-run charter banks, credit unions and community banks. While this has evidently supported these institutions at a lower level by bringing in new customers, it is vital for the future of the cannabis industry that risk levels are reconsidered.
Banking is critical for any new industry because it helps provide certainty for businesses and keeps a record of financial activity, which in turn gives the general public and the governors who approve policy the confidence that cannabis-related businesses are running with transparency and honesty. This can only be done by implementing the SAFE Banking Act.
And there is good and bad news. The good news is the fact that many Republicans are in favour of the SAFE Banking Act. The bad news is that Mitch McConnell currently holds control of what votes are permitted on the Senate floor, and while he is in favour of the industrial hemp industry, he is not in favour of cannabis being legalised.
More good news, though. A new Chair for the Senate Banking Committee — which is possible under a new Biden administration — would be beneficial to the prospect of establishing the SAFE Banking Act, even if Republicans hold the Senate once Congress is established in January 2021.
Although the impact of Biden’s administration is yet to be seen in front of our eyes, we can make the conclusion that the trajectory has moved in favour of the legalisation of cannabis at a Federal level. This will be a significant boost for the cannabis and hemp industry moving into the next four years of Biden’s term in office. It is also positive that we have seen the never-seen-before movement of legalisation, with five states choosing to permit cannabis for recreational reasons. Also, the implementation of stage-skipping regulation that was seen in South Dakota can pave the way for other states to implement a similar policy leading to more efficient, widespread adoption of the legalisation of cannabis.
It is evident that the consolidation of the cannabis industry could have a significant positive impact on the economy all around the world, and there is hope that this new desire to decriminalise cannabis from Biden could provide the rest of the globe with the push they need to release the shackles that have been restricting a future with cannabis and hemp.
