Aaron Smith, Founder of Third Rail Advisory – Interview Series

National advocacy and trade organizations have played a crucial role in driving the normalization and legal reform of cannabis over the past several years. While grassroots and community organizers are vital to giving voice to local causes, having a national presence and dedicated political action committee gives the industry an even greater advantage. From advising on nearly every state legalization measure from California to Maine to engaging with supportive and skeptical lawmakers alike on Capitol Hill, these policy experts have been instrumental in pushing reform forward.

To explore the key components of effective cannabis advocacy and the critical role these national organizations play, mycannabis.com spoke with Aaron Smith, Founder of Third Rail Advisory.

Where did your journey/career in non-profit work first begin? What did you study prior to entering that field, and what did you initially find meaningful about non-profit work?

I became an advocate early on while coming of age in Northern California. A bad experience with police at 17, over a pipe with a little cannabis resin in it, showed me how prohibition distorts law enforcement priorities and infringes on personal liberties. While studying political science at Sonoma State, I was exposed to the drug policy reform movement and attended a NORML conference shortly after California voters passed Prop 215.

I became active in the California Libertarian Party and ran for State Assembly in 2004, with ending the state’s failed war on cannabis as a central issue. All of that was unpaid. In 2005, the Marijuana Policy Project recruited me to run a medical cannabis project in California, which eventually evolved into the role of state policy director. I’m most motivated by work that helps people and expands freedom for society, and I had a knack for policy and lobbying, so it was a perfect fit. There were probably no more than 30 people in the country working full time on cannabis reform then, and it was an honor to get one of those early seats.

Working with patients and justice-involved people every day, I saw the personal cost of prohibition up close. Medical cannabis wasn’t just a step toward adult-use legalization. It was a lifeline for so many people, and the government was callously standing in the way.

What early cannabis efforts did you oversee as California Policy Director with Marijuana Policy Project? How did medical cannabis access for California patients change and expand while you were serving in that role?

I started by pushing for local implementation of Prop 215, mostly in conservative counties that were resisting it. At the time, most local governments and law enforcement agencies didn’t recognize the law, still arrested patients, and refused to issue state ID cards. We combined coalition work, grassroots pressure, press relations, and direct lobbying. By the time I left that position, thanks to many great advocates and legal minds working in the state, nearly every county was protecting patients from arrest, and many were regulating dispensaries locally.

Later, I lobbied for adult-use legalization in Sacramento, which at the time was still a political third rail, even among most Democrats in the state house. I worked with labor unions, medical associations, law enforcement, and others with far more influence than we had to gradually demonstrate mainstream support for reform. Legalization never passed the legislature, but we moved a bill out of the Assembly Public Safety Committee in 2010, which was the first positive legislative committee vote on legalization in U.S. history. I also helped with communications and coalition work on Prop 19 that year, which set the stage for the eventual passage of adult-use legalization in 2016.

Even in California in the late 2000’s, what were some examples of legislative or local authority pushback that you and MPP received from your efforts? How did you and the California MPP team best overcome those challenges?

The biggest fight came from San Diego and San Bernardino counties, which sued to overturn Prop 215. Americans for Safe Access defended patients in court, and I worked to put political pressure on the elected officials who were behind the challenges. The counties ultimately lost, and patients prevailed.

We used similar tactics in Congress. I organized patients to show up at town halls and press California members who opposed the Hinchey-Rohrabacher amendment, which would bar the Justice Department from interfering with state medical cannabis programs. We flipped three or four key votes in California that way. I continued working on that legislation during my time at NCIA until it finally passed in 2014 as Rohrabacher-Farr. Today, that’s an uncontroversial rider in the federal budget every year, but it took years of work from multiple organizations and advocates to get us here. 

After half a decade with MPP in California, what inspired you to co-found the National Cannabis Industry Association? How did you think the then-entirely medical-only industry could benefit from an organization like NCIA?

At MPP, I watched a real medical cannabis industry emerge in California, Colorado, Oregon, Arizona, and Washington. In Colorado, businesses could operate for profit, so real capital was moving in, and it became clear that the industry was going to be the next asset in the reform fight. 

That industry needed a voice, and elected leaders needed to see it as an industry, with jobs, tax revenue, and real economic benefits. NCIA was built to make that case on Capitol Hill and in the media.

I co-founded NCIA in 2010 with the late Steve Fox, who was also at MPP at the time, leading the campaign to tax and regulate in Colorado. We started with about two dozen industry leaders, mostly from California, where I had the relationships, and Colorado, where Steve had them. We pulled that coalition together and essentially cornered the market, so anyone serious about the industry had to join. From there, we grew it into a national organization with a staff of 30 at its peak.

What are some major industry expansions that you and NCIA’s team were instrumental in getting implemented, such as state legalization bills or other major reforms?

At the federal level, Rohrabacher-Farr, which became law in 2014, was the first positive cannabis legislation Congress ever enacted. It seems minor today, but it put the majority of Congress on record as supporting reform when, just a few years before, that would have been unthinkable.

Rescheduling is the other. NCIA was the only pro-cannabis organization granted standing in the DEA’s original rescheduling proceedings, which were the culmination of years of public affairs work to change the narrative about cannabis. Today, the DEA is registering state-licensed medical cannabis businesses under Schedule III, and 280E tax relief is already in place for them. I’m most excited for the prospect of rescheduling for all state-legal cannabis, which I believe is close at hand.

How exactly did NCIA form a federal political action committee (PAC)? What did that all entail, and how was it instrumental for the further normalization and legalization of cannabis?

The NCIA PAC was the first PAC for the cannabis industry. It was small at first, but it changed the game. The simple fact that the industry had a PAC, and was reporting regular contributions to members of Congress who supported the issue, changed how the industry was perceived at the highest levels.

I saw that shift firsthand. At our Lobby Days reception in 2015 or 2016, members of Congress were crashing the party. I spent more than an hour on stage introducing them as they walked in, one after another. Just two or three years earlier, hardly any would meet with us, much less be seen on stage at an NCIA event.

How are you utilizing your vast experience from decades of cannabis and hemp non-profit work with your clients at Third Rail Advisory? At the same time, what are some new lessons and strategies that you’re learning and perfecting along the way?

I spent two decades learning how policy actually moves and how to build the relationships and coalitions that make a controversial business sector credible with lawmakers, regulators, and investors. Now I can apply the work I did on behalf of the industry to the specific goals of a single company or a group of companies that need more political influence or just need help navigating the complexities inherent in an industry operating with unsettled rules. 

One change is that I get to be selective. An association represents a whole industry, and as many members as it can serve. As an independent advisor, I can choose to work with people whose goals fit my values and my skills, which makes for better work on both sides.

What are some common situations/scenarios in which cannabis businesses would reach out to Third Rail Advisory? How would Third Rail Advisory provide expertise and consulting in those situations?

Two situations are a natural fit. The first is businesses that want more influence than they have on their own, whether by forming or strengthening an association or by running a more focused, strategic public affairs effort. Having built a national trade association and the industry’s first national lobbying operation, I can help them structure a coalition, set priorities, and engage policymakers effectively.

The second is companies and investors entering the cannabis market. They need to understand the political landscape, the key players, and the risks. I help them build a market-entry strategy, connect with the right stakeholders, and avoid the mistakes I’ve watched others make. I also offer board advisory and fractional executive support for associations and nonprofits that need senior leadership without a full-time hire.

When it comes to further advocacy for cannabis reforms at both the state and federal levels, what are some effective ways to showcase the bipartisan support behind cannabis reform as a whole? How should advocates best approach representatives who may not always vote the most pro-cannabis?

Polling consistently shows support for cannabis reform across parties, generations, and nearly every other demographic. But lawmakers don’t change their votes because of a national poll. They need to hear it from people they trust at home.

That’s why organizing matters. Bringing together other advocacy groups, community leaders, donors, and business leaders around a common cause is critical to moving legislators. A strong grass tops coalition shows lawmakers that the people they listen to, and their constituents, want them on the right side of this issue.

Approach a legislator who usually votes no with respect. They don’t owe you a yes vote, no matter what. Your job is to understand their concerns and give them the political safety to change their vote.

As someone with decades of experience in cannabis advocacy and policy, how effective do you envision the federal Schedule III registration process being at further normalizing and increasing the overall success of those cannabis businesses? Do you think the 280E-related tax relief alone will put the companies in the green, no pun intended?

280E relief is the single most important economic relief this industry has seen. Registration also matters for normalization, since it treats cannabis businesses like any other legitimate DEA registrant. Right now, though, that relief reaches only registered medical businesses.

Even with full rescheduling, it won’t be enough on its own. Cannabis businesses are overtaxed and overregulated at the state level, which drives up costs and makes it very difficult to compete with the unregulated market. State lawmakers need to understand that driving consumers to an entirely unregulated supply undermines the public health purpose of the regulations in the first place.

At the federal level, descheduling and interstate commerce are the next big moves. No other legal business is confined within state lines like our industry. Some small-business advocates like it that way because it keeps larger operators out, but I believe interstate commerce would help the mom-and-pops. A retailer in a cold-weather state wouldn’t need a multimillion-dollar indoor grow. It could buy high-quality, lower-cost outdoor cannabis from farmers in states like California and Oregon. And small craft growers stuck in oversaturated markets could sell into high-demand states and build national brands.

So, 280E relief will move a lot of operators into the black. Keeping them there will take smarter state policy and an open national market.

Thank you for joining us, Aaron! For more information on Third Rail Advisory, please visit its website.