STATES Act reintroduced in Congress with bipartisan support

A small bipartisan group of U.S. House of Representatives members on Thursday reintroduced the long-stalled STATES Act, a pro-marijuana bill that would both nullify the hated 280E tax provision for cannabis companies and also exempt states that have legalized marijuana from federal interference.

The bill, this time called the STATES 2.0 Act, was introduced by U.S. Reps. Dave Joyce (R-OH), Dina Titus (D-NV) and Max Miller (R-OH). Joyce also introduced a separate bill co-sponsored by House Minority Leader Hakeem Jeffries (D-NY) dubbed the PREPARE Act, which is designed to pave the way for federal marijuana legalization.

The first bill’s full name is the Strengthening the Tenth Amendment Through Entrusting States (STATES) 2.0 Act. If approved by both chambers and President Donald Trump, it would effectively remove states that have legalized marijuana from the jurisdiction of the federal Controlled Substances Act, reconciling legal tension between federal cannabis prohibition and state marijuana legality.

The bill would also nullify the 280E provision of the federal tax code for licensed cannabis companies in states with legalized marijuana markets, thereby allowing the industry to claim standard business tax deductions and saving companies billions of dollars in taxes per year.

Under the legislation, federal regulation of the national cannabis trade would fall to the Alcohol and Tobacco Tax and Trade Bureau and the Food and Drug Administration, meaning there would likely be a new federal regulatory framework for businesses that would apply to every state and U.S. territory that has legalized cannabis.

“We can all agree that the current federal approach to cannabis policy is not working. As President Trump has acknowledged, the existing policy has caused unnecessary harm and squandered taxpayer dollars by diverting law enforcement resources from combatting violent crimes,” Joyce, the co-chair of the Congressional Cannabis Caucus, said in a press release. “The STATES 2.0 Act remedies this issue by bridging the gap between federal and state policy to create a more logical approach to cannabis regulation that allows each state to put the policies in place that work best for their communities.”

Titus, the other co-chair of the Cannabis Caucus, said the STATES Act “ensures the federal government does not interfere with states or tribes that have chosen to legalize cannabis.”

“It’s time for national policy to catch up with the states or at least get out of the way,” Titus said.

The bill would also allow for interstate cannabis commerce, according to Shanita Penny, executive director of the Coalition for Cannabis Policy, Education and Regulation (CPEAR). Penny said the bill would also provide safe harbor for financial institutions, opening access to broader capital markets for marijuana companies.

“We hit on all the typical business concerns” with the new STATES Act, Penny said, adding that if the bill was to become law it would make the SAFE Banking Act unnecessary.

“This is that overarching federal framework that is going to ensure consistency across states for not only businesses … it’s an exciting bill for everybody involved,” Penny said.

That said, the measure’s chances of getting through both chambers of Congress and all the way to the president’s desk are unclear. In past years, most pro-cannabis bills have died in the Senate, even if they made it through the House of Representatives. Penny also noted that so far there’s no Senate version of the STATES Act this year.

“We don’t have a Senate companion bill. So before we can even talk about giving them an opportunity to move forward with this … we still have some work to do there,” she said. “While we certainly haven’t had any indications from Trump that there’s going to be action on this, what we have right now is an opportunity to reengage members… to make sure that when the administration gives us the green light, that we have a bill we can get passed and get onto his desk.”