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STATES Act 2.0 Would Make the Federal Government More In Sync with the States and the People on Marijuana

Jeffrey A. Singer

Yesterday, December 7, 2023, Representative David Joyce (R‑OH), joined by four colleagues—Earl Blumenauer (D‑OR), Brian Mast (R‑FL), Lori Chavez‐​DeRemer (R‑OR), and Troy Carter (D‑LA)— introduced a revised version of the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act. As its name implies, the bill seeks to bring US marijuana policy more in line with the Tenth Amendment and federalism.

The Tenth Amendment states:

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

The bill, which some call “STATES Act 2.0,” removes marijuana as a substance covered by the federal Controlled Substances Act. This means marijuana will no longer be on the Drug Enforcement Administration’s list of controlled substances. While the Biden administration has been open to the idea of rescheduling marijuana, the STATES Act would de‐​schedule it, a move I have long advocated.

It would also federally decriminalize people using, selling, or transferring marijuana if it is legal in their state, territory, or tribal reservation and if they comply with state regulations. Moreover, it allows for interstate commerce in marijuana. The legislation states:

IN GENERAL—No State or Indian Tribe may prohibit the transportation or shipment of marijuana through the State or the territory of the Indian Tribe, as applicable, if the originating and destination States or territories permit, as applicable, the manufacture, production, possession, distribution, dispensation, administration, or delivery of marijuana.

The bill authorizes the federal government to regulate and track interstate marijuana commerce to make sure the commerce remains between jurisdictions where it is legal.

The bill also removes existing federal obstacles to marijuana retailers’ financial transactions involving financial institutions by declaring that federal law will not consider transactions that are compliant with state laws to be drug trafficking, and such transactions will not be subject to the part of the Internal Revenue Service code that addresses revenue and expenses connected to federally prohibited drug sales.

The bill authorizes the Food and Drug Administration to regulate marijuana as it does other non‐​prescription and prescription drugs, as well as tobacco products. While I believe the FDA and the drug regulatory system need drug reformation, that is a matter for a separate discussion.

The legislation also maintains a federal prohibition on the sale of marijuana to people under the age of 21 and on the distribution or sale of marijuana at transportation safety facilities such as truck rest areas on highways. These are both matters on which Congress should defer to the states.

When Congress repealed alcohol prohibition in 1933, it respected states’ rights to regulate and prohibit alcohol use and commerce within their borders. The STATES Act exhibits the same federalist precepts. After 1933, several states continued to prohibit alcohol within their boundaries. In 1966, Mississippi became the last state to end alcohol prohibition. Still, many Mississippi counties remained “dry” until 2020, when Mississippi Governor Tate Reeves signed a bill legalizing alcohol possession in all state counties. By now, 46 states have passed laws that legalize or decriminalize marijuana or marijuana‐​based products to some degree and under some circumstances. The STATES Act respects states’ rights to prohibit, legalize, or regulate marijuana, mostly free from federal government interference.

The bill also allows for a federal excise tax on marijuana to help fund “a framework that supports critical components such as proper administration and oversight, consumer safety protections, and enforcement.”

Several states that have legalized recreational marijuana have imposed exorbitant marijuana sales taxes along with onerous regulations on retailers, which have increased the price to consumers and driven them to the cheaper black market. As I have written here, “The unintended consequences of excessive taxation are a weakening of the legal market in favor of the black market and lower government revenues.”

Notably, the authors of the STATES Act seem aware of this. The legislation states the federal excise tax should “be low enough to not exacerbate the level of taxation set by States, thereby avoiding the pyramid effect of adding Federal taxes on top of high State taxes.”

STATES Act 2.0 significantly improves the original version. With its bipartisan support and with 70 percent of American adults supporting marijuana legalization, the bill provides an excellent opportunity for Washington politicians to catch up to the people on this issue.

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