2022 brought more change and visibility to the cannabis industry than nearly any year before. Two of the five legalization ballot measures passed, bringing the total number of states with legal medical or medical and recreational laws to 39. President Biden issued an executive order pardoning nonviolent offenders and directing a review of the rescheduling of cannabis. The Medical Marijuana and Cannabidiol Research Expansion Act was enacted. Cannabis was a hot topic in legislatures across the country, with more than 50 federal bills and hundreds of state-level bills introduced.
But as 2022 came to a close, only a handful of actions were carried into the new year, and the industry faces more hardship and turmoil than it has since the inception of legalization. Retailers and growers of legal cannabis in markets all over the country continue to struggle with strict rules and competition from the black market. Oversupply in these markets is driving down prices while growers and manufacturers on the West Coast anxiously wait for interstate trade.
Looking ahead to the coming year, industry watchers can anticipate certain issues and legislation: further investigation into cannabis’ classification on the Controlled Substances Act (CSA) from federal agencies; federal cannabis pardons coming to fruition; a follow-up from the Department of Justice’s technical report; and the reintroduction of high-profile federal legislation, like the Cannabis Opportunity Act (CAOA), the States Reform Act, the Marijuana Opportunity Reinvestment and Expungement (MORE) Act, the Harnessing Opportunities by Pursuing Expungement (HOPE) Act, and the Secure and Fair
Below, we recap some of the big moments of 2022 and what to expect in 2023.
A Presidential Pardon for Simple Possession
On Oct. 6, President Biden made a historic announcement that he would “grant a full, complete, and unconditional pardon to all current United States citizens and lawful permanent residents who committed the offense of simple possession of marijuana in violation of the Controlled Substances Act” and “all current United States citizens and lawful permanent residents who have been convicted of the offense of simple possession of marijuana in violation of the Controlled Substances Act.” In his executive order, he also asked the secretary of Health and Human Services and the attorney general to “quickly” review how cannabis is scheduled under federal law and asked governors to do the same for state crimes.
The president’s strategic plan attempts to at least partly address some of the adverse impacts of the United States’ war on drugs on certain populations, like low-income and black and Latino Americans. While an admirable and important effort, certain portions of his executive order will take much longer than others to yield a tangible impact. A federal pardon can take anywhere from two to five years, and the laws and duration of state-level pardons vary depending on the state and its governing practices. Also, the president’s executive order does not require governors to pardon people, so some people who have been convicted may never see justice or be able to seek it. And the review of how cannabis is classified on the CSA is the part of the timeline that is the least clear. Under the CSA, rescheduling or de-scheduling a substance can be a long and hard process that, as we’ve seen with other substances, can take anywhere from four to ten years. But the exercise is still going on, and even though the results might not be ready in time for the 118th Congress, the issue is likely to be talked about in depth in 2023 and beyond.
Descheduling, Decriminalizing & Banking Legislative Efforts
When it comes to legislation, there is no question that Majority Leader Chuck Schumer (D-NY) and Sens. Ron Wyden (D-OR) and Cory Booker (D-NJ) will reintroduce the CAOA in 2023. The comprehensive legislation aims to decriminalize cannabis by removing the drug from the CSA and tackles issues related to research, public safety, restorative justice and equity, taxation and regulation, public health, and industry practices.
2. States Reform Act.
Another piece of legislation we anticipate seeing in the 118th Congress is Rep. Nancy Mace’s (R-SC) States Reform Act. Coming from a state without any cannabis laws, the freshman congresswoman introduced a measure that would federally decriminalize cannabis by fully deferring to state powers over prohibition and commercial regulation and regulating cannabis products like alcohol. In 2022, people in the industry liked the bill, and it was the main topic of conversation at a congressional hearing called “Developments in State Cannabis Laws and Bipartisan Cannabis Reforms.” The States Reform Act will be front and center in 2023, thanks to its brave cannabis sponsor, who will now lead the House Oversight Subcommittee on Civil Rights and Civil Liberties.
3. MORE Act.
Sponsored by Rep. Jerry Nadler (D-NY), the MORE Act will also be reintroduced in 2023; however, it remains to be seen how much attention the bill will receive. The MORE Act aims to decriminalize cannabis by removing the drug from the CSA and eliminating criminal penalties for anyone who manufactures, distributes, or possesses cannabis. In the 117th Congress, Rep. Nadler served as chair of the House Judiciary Committee and was able to advance his measure through the chamber with ease. But since the House majority has flipped and Rep. Jim Jordan (R-OH) is likely to serve as the chair, getting the MORE Act to the floor for a vote may be challenging—especially given Rep. Jordan’s opposition to the cannabis sector.
4. HOPE Act.
The HOPE Act often flies under the radar, but this Republican-sponsored bill made headlines during the 117th Congress. Rep. Dave Joyce (OH), who is Co-Chair of the Congressional Cannabis Caucus (CCC), is behind the bipartisan bill. Its goal is to help states get rid of cannabis offenses by giving them federal grants to help with the costs and paperwork. Although it was not considered in the House, the language of the bill was heavily debated by the Senate, particularly toward the end of the year when the chamber was negotiating the final text for end-of-year must-pass packages like the National Defense Authorization Act (NDAA), the Omnibus, and the Continuing Resolution (CR). Along with the SAFE Banking Act, the HOPE Act was one of the only cannabis bills that had a real chance of moving forward as part of a larger piece of legislation. It is clear that the congressman will reintroduce the bill in the next session of Congress.
5. SAFE Banking Act.
And last, but certainly not least, is the most discussed cannabis bill this year: the SAFE Banking Act. The goal of the bill is to make it safe for banks to offer traditional banking services to cannabis businesses in states where the drug is legal. It also allows cannabis businesses to access lines of credit, loans, and wealth management. It has now passed in the House seven times with bipartisan support. And although the SAFE Banking Act was debated by the House several times throughout the year, the Senate did not tackle the bill until November. By the time discussions for the bill’s language had taken off, Sen. Booker remained firm that he would only support a cannabis bill if it included criminal justice and social equity reform language. In order to meet the senator’s needs, Majority Leader Schumer thought about combining the SAFE Banking Act and the HOPE Act into a bigger bill.
However, and much to the cannabis industry’s detriment, not only was the timeline for those bills a little too late, but Democrats were, unfortunately, unable to fix the money laundering and cash legacy concerns of Sen. Chuck Grassley (R-IA) and other Republicans.
The bill’s sponsor, Congressman Ed Perlmutter (D-CO), who is leaving office, and Sen. Chuck Schumer tried to attach the SAFE Banking Act to a number of other bills, but they were not successful. In a final Hail Mary, Sen. Schumer attempted to add the language to the Omnibus, but compounded with the technical assistance report from the Department of Justice (DOJ) and ongoing media flurry, he and the Democratic party yet again came up empty-handed.
The question now is: who will carry the SAFE Banking Act and Rep. Perlmutter’s legacy in 2023? Many will look toward cannabis industry champions like Reps. Joyce, Mace, Earl Blumenauer (D-OR), and Brian Mast (R-FL). However, it would be worth considering other members of the CCC and some of the incoming freshmen, particularly those from states with legal cannabis laws. It is also entirely possible that Sen. Jeff Merkley (D-OR) finds his own sponsor to carry his companion bill in the House since he has already announced that he looks forward to working on the legislation in the upcoming year. Even so, it is likely that the SAFE Banking Act will be brought up again in 2023 and discussed all year.
6. Other Measures
Other measures that are likely to reappear in 2023 are the Capital Lending and Investment for Marijuana Businesses (CLIMB) Act, the Veterans Equal Access Act, the GRAM Act, Common Sense Cannabis Reform for Veterans, the Small Businesses and Medical Professionals Act, the VA Medicinal Cannabis Research Act, and the Homegrown Act. Additionally, the passage of the Medical Marijuana and Cannabidiol Research Expansion Act and the advancement of many of these federal bills have opened the gates for new legislation related to medical and recreational cannabis, research, veterans’ access, financial services, criminal justice reform, social equity, and public health and safety to emerge.
For states with legal cannabis laws, bills related to enhancing the state’s medical or medical and recreational programs, preventing industry oversaturation and price gouging, expanding licensing opportunities, criminal justice reform, youth and advertising protections, and impaired driving are likely to be introduced. States where cannabis ballot measures failed will likely see those measures resurface.
The continued growth of legalization across the country is all but inevitable. In the near term, the industry will focus on how to remain viable in the face of high taxes and oversupply in 2023. New Congressional leadership could lead to bipartisan cannabis legalization if enough members are willing to rally behind their colleagues who are pushing for cannabis legislation. While the road is long before we will see the full impact of President Biden’s Oct. 6 announcement, the action proves those in power cannot ignore the ever-growing numbers of Americans across party lines and demographics who agree that cannabis use should be legal and regulated.