At least 46 states have passed laws permitting or decriminalizing cannabis or cannabidiol (CBD), despite the fact that the federal government still classifies marijuana as a Schedule I drug. 

The cannabis industry is booming in states it is legal, leading to more jobs and economic growth. As of 2018, the cannabis industry has created 211,000 jobs nationwide. Colorado’s legal marijuana sales have surpassed $6 billion dollars since the state legalized it in 2014, and researchers found that it has had a positive economic impact of more than $58 million in one Colorado county in 2016 alone. 

But these benefits could be jeopardized by conflicting federal and state laws, which leave legal cannabis businesses open to not just uncertainty, but disparities in the tax code and difficulties banking. 

The Strengthening the Tenth Amendment Through Entrusting States (STATES) Act — which was introduced in the House by Representatives David Joyce and Earl Blumenauer — would provide more clarity on this issue. Americans for Tax Reform’s President Grover Norquist sent a letter to the leaders of the House Judiciary Subcommittee on Crime, Terrorism and Homeland Security, urging them to support the legislation. 

The STATES Act does not legalize cannabis nationwide, but it does address key financial issues that businesses face because of the federal prohibition. 

Section 280E of the tax code prevents businesses connected to “illegal” drug sales from using deductions or tax credits. This means that legal cannabis businesses across the nation are unfairly discriminated against and even face income tax rates as high as 90 percent. 

Likewise, many banks will not allow legitimate marijuana businesses to deposit money into bank accounts because of the federal prohibition. This makes it extremely difficult for these companies to pay electric bills, leases and other expenses. It also forces them to hold large sums of cash, leaving them more vulnerable to robberies. 

The STATES Act would get rid of these arbitrary prohibitions, allowing legal cannabis businesses to operate without discrimination. 

States are fully capable of deciding their own marijuana policies, and these conflicting regulations only create confusion. Congress should support the STATES Act to provide more clarity on this issue and prevent the federal government from creating obstacles for law-abiding business owners. 

Read ATR’s letter in support of the STATES Act here