STATES Reform Act 2.0: Everything You Need to Know (May 2024)

On December 8, 2023, Rep. David Joyce (R-Ohio), co-chair of the Congressional Cannabis Caucus, introduced the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act 2.0. This legislation builds upon the foundation laid by its predecessor, the 2018 STATES Act, and aims to address crucial issues surrounding the federal stance on marijuana. The STATES Act 2.0 introduces notable changes that signify a significant step toward a more comprehensive approach to marijuana regulation in the United States.

Key Differences from the Original STATES Act

The original STATES Act focused primarily on protecting marijuana businesses operating in compliance with state law from federal prosecution. STATES Act 2.0 retains these protections but goes further by addressing the issue of interstate commerce in marijuana. Section 3 provides a framework for safe passage of marijuana products in transit between states that permit such activities. This provision aims to prevent local law enforcement from impounding trucks carrying legal marijuana products, even if marijuana is illegal in the state where the vehicle was stopped.

Additionally, Section 6 clarifies federal rulemaking authority and designates the Food and Drug Administration (FDA) as the primary regulator of marijuana products. This move signifies a more detailed approach to oversight, ensuring product safety and consistency at the federal level.

Federal Licensing and Taxation

While STATES Act 2.0 does not explicitly outline federal licensing parameters for marijuana companies, its findings section signals an intention to establish a federal regulatory program. The Alcohol Tobacco Tax and Trade Bureau (TTB), a division of the Treasury Department, is identified as an agency that could play a leading role in regulating cannabis businesses. The Act also acknowledges the need for a federal excise tax to fund the regulatory program but refrains from specifying the rate or mechanism, emphasizing simplicity and low impact.

FDA's Authority Over Marijuana Products

The FDA already possesses authority over cannabis products, and STATES Act 2.0 guides the agency on how to exercise this authority. The legislation instructs the FDA to regulate products making medical claims as drugs, while food, dietary supplements, and cosmetics containing marijuana would be regulated similarly to their counterparts containing other substances. For other product types, the FDA commissioner is given 180 days to propose rules covering contaminant testing, manufacturing processes, marketing practices, and post-market reporting.

Interstate Commerce and Banking Restrictions

While STATES Act 2.0 protects the right to transport marijuana products in interstate commerce, it does not expressly permit the sale of marijuana across state lines. The legislation acknowledges the importance of federal regulation in tracking and preventing illicit interstate trade, referencing the dormant Commerce Clause.

Regarding banking restrictions, the Act technically removes marijuana produced in compliance with state law from the Controlled Substances Act. However, challenges remain for financial institutions in verifying full compliance with state laws, potentially hindering the relaxation of conservative account policies.

Expungement of Prior Convictions

Unlike the more comprehensive States Reform Act, STATES Act 2.0 does not include provisions for expunging prior cannabis convictions or address social equity programs. It focuses primarily on the regulatory framework and protections for marijuana businesses operating within state laws.

Conclusion

The STATES Act 2.0 represents a noteworthy step toward reforming federal marijuana laws, building on the bipartisan sponsorship of its predecessor. While it does not provide a comprehensive solution to all marijuana-related issues, it signals key intentions for future legislation in its findings section. This incremental change is poised to garner bipartisan support, offering a potential pathway for marijuana-related bills through a divided Congress. As discussions continue, the STATES Act 2.0 sets the stage for further progress in the evolving landscape of federal marijuana regulation.