Marijuana legalization bill passes House; Senate vote unlikely

Laura Davison
Bloomberg
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The House voted Friday for the first time to legalize marijuana at the federal level, but the bill has little chance of being considered in the Republican-controlled Senate.

The Marijuana Opportunity Reinvestment and Expungement Act would remove marijuana from federal drug schedules under the Controlled Substances Act and expunge convictions for marijuana offenses. The bill would also put a 5% excise tax on cannabis and use the funds to help individuals who have been punished for drug offenses. The bill passed the House 228-164.

House Judiciary Committee Chairman Jerry Nadler, D-N.Y., questions Attorney General William Barr during a House Judiciary Committee hearing on the oversight of the Department of Justice on Capitol Hill, Tuesday, July 28, 2020 in Washington.

“This long overdue legislation would reverse the failed policy of criminalizing marijuana on the federal level and would take steps to address the heavy toll this policy has taken across the country, particularly on communities of color,” House Judiciary Committee Chairman Jerrold Nadler, who introduced the bill, said in a statement.

If the legislation were become law, it could be a boon to marijuana companies, including Aurora Cannabis Inc., Tilray Inc., Harvest Health & Recreation Inc., and Cronos Group Inc., which all gained on the announcement of the vote last month. U.S. companies would all see improved margins from a lower tax burden that would come with decriminalizing marijuana, and could more readily access debt markets and institutional investors, helping them grow faster and keep their heads above water in tough times.

Friday’s House vote comes after five more states, including some led by Republicans, approved marijuana programs in the November election. About 70% of Americans now live in states that permit recreational or medical marijuana. Legal cannabis sales are estimated at approximately $19.1 billion this year, according to New Frontier Data.

About 68% of Americans say they support legalizing marijuana, according to a Gallup poll published in November. Despite strong public support and a nod of approval from some GOP states, Senate Majority Leader Mitch McConnell has said he has no plans to bring up the legislation.

That could change if Democrats are able to secure both Senate seats in the January runoff election in Georgia. President-elect Joe Biden, along with a Democratic House and Senate, could revisit previous Democratic proposals and take steps to establish the industry’s legitimacy, including expanding cannabis businesses’ access to banks and eliminating barriers to medical research.

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