The three most important reasons why cannabis will not be legalized at federal level in 2019
Despite all the goals obtained, cannabis continues being a Schedule I drug. In other words: it is illegal at federal level. The truth is that it is a phenomenon that is impossible for Europeans to understand. How can something be legal in so many states and illegal at the federal level?
Of course, the question is when will this absurd situation change? We think it will not happen in 2019.
Last October a survey from Gallup found that three quarters of American adults now want legalizing cannabis at federal level. State-level legalizations have created the foundations for a pleasant transition between an illegal and legal status. Many states, such as Washington and Colorado have legalized recreational cannabis without problems and medical cannabis is legal in many other states. Therefore, reform at the federal level will not require much effort from most states to amend their infrastructure.
According to online publication Marijuana Moment, the chair of the House Judiciary Committee, Rep. Jerry Nadler (D-N.Y.), believes that the reform will come sooner than later.
Congress doesn’t want reform
To begin with, we must consider the current composition of the government. Even though Democrats have recently recovered a majority in the House after eight years, the Senate and presidency continue being controlled by Republicans. The Republicans have always had a derogatory point of view of cannabis. Much more than citizens who identify as Democrats or independents.
Even though a Gallup survey from last October showed that 53% of self-identified Republicans want legalizing cannabis, the number continues being inferior that those citizens who identify as Democrat (75%) or independent (71%) and support legalization. This means that Republicans can avoid any attempt at federal level to reform the law even if a Democratic reform bill passes the House. With the government trying to deal with so many border problems, the legalization of cannabis is an issue that has to wait.
Cannabis legalization at federal level is not relevant enough right now
It is true that the issue has received a lot of support over the last two decades, but it is not important enough compared to other matters.
The University of Quinnipiac showed the results of a poll celebrated in April 2018. They asked the respondents that if they liked the program of a politician but that he did not want the legalization of cannabis, they would still vote for him. Of course the question was addressed to people who were in favor of legalization. Only 13% of respondents said “no” to the question, with 82% saying “yes.”
This means cannabis doesn’t yet have enough “punch” on Capitol Hill to cause anti-legalization politicians from losing their elected seats in the House or Senate. If this doesn’t change, the legalization at federal level must wait.
It is a question of money
Being cannabis a Schedule I substance, all kind of businesses selling cannabis in the country are subject to Section 280E of the U.S. tax code. The essence of the code is that doesn’t allow companies that sell a illegal substance to take advantages from income tax deductions, save for costs of goods sold. The expenses of goods sold represent a little percentage of revenue. This exposes the profitable marijuana businesses to efficient effective corporate rates that could be as high as 90%.
If cannabis were removed from the controlled-substances list, cannabis companies wouldn’t be exposed to Section 280E. That would be great for investors and the companies. However, this would mean less tax revenue for the federal government; about $5 billion reduction over a 10-year period. Adding a federal consumption tax is not a solution either.
For example, Californians are paying up to a 45% in-state tax on retail marijuana sales, and a federal consumption tax on top of it, could lead the consumers to the black market.
In short, the legalization of cannabis at the federal level will not be possible this year. But experts are optimistic about the year 2020. Who knows?