What the MORE Act would mean for the cannabis industry
What Is the MORE Act?
The Marijuana Opportunity Reinvestment and Expungement Act (MORE Act) is a proposed piece of U.S. federal legislation that would deschedule cannabis from the Controlled Substances Act. The legislation also includes various criminal and social justice reforms, including expungement for prior cannabis convictions. The House of Representatives recently passed the bill on December 4th, 2020, a major milestone and the first time any part of the U.S. Legislative Branch has voted in favor of ending federal cannabis prohibition. However, the bill now goes to the U.S. Senate where it faces an uphill battle, at least in the current Senate environment.
Key Components of the MORE Act
The following are the key aspects of the bill as it currently stands:
- Removes cannabis from the list of controlled substances in the Controlled Substances Act.
- Establishes a prescribed 5% excise tax on cannabis and cannabis products then channels funds into various reinvestment programs.
- Creates a Community Reinvestment Grant Program aimed at individuals and communities most adversely impacted by the War on Drugs.
- Establishes a Cannabis Opportunity Program providing state funds for small business loans in the cannabis industry targeted at social equity candidates.
- Creates an Equitable Licensing Grant Program providing funds for states to implement equitable cannabis licensing programs.
Financial Impacts of the MORE Act
Perhaps the single greatest change the MORE Act would have on today’s cannabis industry is the impact on financial services and taxes. Removing cannabis from the Controlled Substances Act would end many of the current financial obstacles created by federal illegality including access to traditional banking and financial products and services. As any plant-touching cannabis operator knows, limited access to these products not only makes day-to-day operations more difficult, but dramatically raises the cost of capital to fund growth.
Another huge change would be the end of negative tax consequences such as the 280E tax code, which greatly restricts cannabis operators’ ability to deduct expenses on their federal taxes. This item alone will have a major impact on cannabis companies and their ability to invest more heavily in sales and marketing, among other areas.
Removing cannabis from the Controlled Substances Act would also shift the investment environment within the cannabis industry, and dramatically open up new funding possibilities. Currently, the market for plant-touching cannabis investors is extremely limited with many large,traditional funders opting to stay away due to the perceived risks associated with federal illegality.
The potential impacts of the MORE Act on cannabis businesses can’t be understated. It would completely change the way we operate, and make us much more competitive both as a business and as an industry.
- Alex Rowland
The MORE Act as it stands has several components aimed towards social justice, and would provide opportunities for communities most impacted by the War on Drugs. If passed, the bill would help expunge past cannabis convictions, and prohibit the denial of any federal public benefits, like housing, on the basis of cannabis use.
Additionally, the bill prescribes a 5% cannabis tax to fund criminal and social reform projects, which could have a major impact on providing increased opportunities for communities negatively impacted by cannabis prohibition. These programs will encompass support services like job training, legal services, small business loans, and access to cannabis licenses. While critics of the bill have argued that it doesn’t go far enough, this would still represent a significant shift in resources being directed towards social justice initiatives.
The bill was passed by the House on December 4th, 2020, and now moves on to the Senate for a vote. While most believe the bill has no real chance of passing in the near-term, it’s symbolic of what might come in the future. Regardless, it may serve as a signal to an incoming administration that Congress is serious about cannabis reform and lay out an initial path towards getting there.