Oregon Representative Earl Blumenauer this week introduced legislation in the U.S. House of Representatives that would allow regulated cannabis companies to take tax deductions commonly enjoyed by businesses in other industries. The bill, known as the Small Business Tax Equity Act, was introduced by Blumenauer on Monday, with bipartisan co-sponsorship by fellow Democrat Representative Barbara Lee of California, as well as South Carolina’s Representative Nancy Mace and Representative David Joyce of Ohio, both Republicans.

Under Section 280E of the federal tax code, cannabis businesses are denied most tax deductions offered to companies in other industries. State-legal marijuana companies are permitted to deduct the cost of goods sold, while other expenses including rent, payroll and utilities are not deductible for most cannabis businesses.

“State-legal cannabis businesses are denied equal treatment under 280E. They cannot fully deduct the cost of doing business which means they pay two or three times as much as a similar non-cannabis business,” Blumenauer, the founder of the bipartisan Congressional Cannabis Caucus, said in a statement on Monday. “This grotesquely unfair treatment incentivizes people to cut corners. If Congress wants to get serious about supporting small businesses and ending the illicit cannabis market, it is commonsense that we allow legal cannabis operations to deduct business expenses, just like any other industry.”

The Small Business Tax Equity Act would create an exception to Section 280E to allow marijuana businesses operating in compliance with state law to take deductions associated with the sale of marijuana like any other legal business. 

“Absent this legislation, Section 280E of the federal tax code prevents cannabis businesses from deducting ordinary expenses associated with running a small business, including, rent, utilities, and payroll,” Blumenauer’s office wrote. “They cannot claim the Work Opportunity Tax Credit if they hire a veteran; they cannot depreciate their American made irrigation equipment; and they cannot take any credit or deduction relating to construction or operation costs if they want to revitalize a building for their operations.”

Cannabis businesses and reform groups including the National Organization for the Reform of Marijuana Laws (NORML) are hailing Blumenauer’s bill to grant standard business tax deductions to companies in the regulated marijuana industry, noting that many businesses are struggling under high taxes and regulatory fees, as well as competition from an entrenched underground cannabis market.

“NORML commends the sponsors of this legislation for their efforts to end the unjust federal over-taxation of licensed, state-regulated cannabis businesses throughout the country,” NORML political director Morgan Fox said in a statement from the group. “Allowing them to take the same federal tax deductions that most other businesses enjoy will facilitate new opportunities in the legal cannabis industry and make it more competitive with the unregulated market, which will directly benefit consumer health and public safety.”

“The two greatest challenges cannabis entrepreneurs are currently faced with are the lack of access to capital and unfair tax burdens,” said Saphira Galoob, executive director of the National Cannabis Roundtable. “By eliminating the impact of 280E on state-legal cannabis operations, Congress would be giving these businesses, including small and minority operators, the opportunity to remain financially viable and to reinvest in their companies, communities, and workforce through tax credits and deductions that are routinely offered to other domestic industries. This relief is crucial for an industry that employs hundreds of thousands of American workers and generates billions of dollars in annual state and federal taxes – albeit without access to traditional financial resources.”

The push to eliminate the impact of 280E is also underway in cannabis-legal states, many of which use the federal tax code as the basis for state tax rules. So far, 19 states have decoupled their tax laws from 280E, with moves to continue in other states including Connecticut, where the legislature is currently considering such a measure. Lucas C. McCann, Ph.D., co-founder and chief scientific officer at cannabis business consulting firm CannDelta Inc., welcomed the effort to do away with the Section 280E rule at the state level.

“The decoupling of 280E would allow these cannabis-related businesses to claim fundamental operating expenses,” McCann wrote in an email to High Times. “A failure to do so will inevitably lead to the insolvency of many, which will likely assist the illicit market to continue to thrive as it has prior to legalization.”

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Two House lawmakers on Thursday refiled bipartisan legislation to provide military veterans access to medical marijuana. The bill, the Veterans Equal Access Act, was reintroduced in the House by Representative Earl Blumenauer, a Democrat from Oregon, and Florida Republican Representative Brian Mast, who lost both legs while serving in the Army in Afghanistan.

“I woke up in a situation where I was probably on 20 different narcotics of various kinds. I was, I had Dilaudid drip, I had oral morphines and [oxycodones] and an epidural,” Mast told Spectrum News. “I had anti-inflammatories, heavy sleep sedatives, antidepressant stuff that I never been on or even thought about, or you could even say the names of before in my life.”

If passed by Congress and signed into law by the president, the Veterans Equal Access Act would permit doctors at the U.S. Department of Veterans Affairs (VA) healthcare facilities to issue recommendations for state-legal medical cannabis. Under current regulations, VA doctors are not allowed to complete the paperwork necessary for military veterans to use medical marijuana in states that have legalized the medicinal use of cannabis. 

“We lose almost two dozen veterans a day taking their own life,” said Blumenauer. “We’ve seen a situation where, sadly, the VA, which is not on board, [with] giving access to medical marijuana, was handing out opioids like Tic Tacs. I think there’s some changes that are taking place. I’ve had conversations with the Secretary of Veterans Affairs, but this is a long overdue step.”

The Veterans Equal Access Act has been introduced in Congress with bipartisan support several times over recent years, and the legislation has gained approval at the committee level. But so far, backers of the bill have been unable to get the measure passed. 

“Today was a monumental day for our veterans. We have been working for years to reform this counterproductive policy that forces veterans outside of the VA to receive legal medical cannabis treatment for chronic pain and PTSD,” Blumenauer said when the bill was approved by the House Veterans Affairs Committee in March 2020. “This is the culmination of the tremendous work of our movement, but we will not be finished until this becomes the law of the land. We must reform our federal cannabis policy.”

Bill Has Broad Bipartisan Support

Blumenauer said that the VA does not support the legislation to give veterans access to medical cannabis. But veterans groups including AMVETS and Veterans of Foreign Wars (VFW) are backing the bill.

“Some veterans across the country are hesitant to even use VA health care because they’re concerned about having to discuss the cannabis products they’re legally putting in their bodies with VA doctors,” said Brittany Dymond, an associate director with the VFW.

The Veterans Equal Access Act is also supported by cannabis policy reform groups including the National Organization for the Reform of Marijuana Laws (NORML) and the Drug Policy Alliance, as well as representatives of the regulated cannabis industry. Saphira Galoob, the executive director of the National Cannabis Roundtable, said that the bill will open up new treatment options to veterans in states that have legalized medical marijuana.

“It is unconscionable to deny our veterans equal access to the full array of medical treatments and options that all other adults in the 37 states with medical cannabis programs have available,” Galoob said in a statement from the cannabis industry trade group. “VA doctors must be allowed to discuss medical cannabis and provide recommendations on state-legal programs to the veterans they serve, and we thank Congressman Blumenauer and Congressman Mast for their dedication to moving this important measure forward in the 118th Congress. NCR was honored to be present for today’s announcement, and to support this much-needed, bipartisan bill.”

The Veterans Equal Access Act was referred to the House Committee on Veterans Affairs, where it awaits further consideration. The full text of the bill is available online.

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Today President Joe Biden announced that he will pardon people with federal convictions for simple possession of cannabis. Going further, he announced that he will direct the U.S. Attorney General Merrick B. Garland and Secretary of the Department of Health and Human Services Xavier Becerra to begin the process of reviewing the classification of cannabis at the federal level.

The official White House statement was published October 6, noting that under current federal law, cannabis falls under Schedule I alongside deadly drugs like fentanyl. The White House will  “review expeditiously” the plant’s current classification.

The New York Times reports that the move will affect upwards of around 6,500 people who were convicted on federal charges for simple possession of cannabis during the time period of 1992 to 2021, and thousands more convictions based in the District of Columbia.

“As I’ve said before, no one should be in jail just for using or possessing marijuana,” Biden tweeted. “Today, I’m taking steps to end our failed approach. Allow me to lay them out.”

Biden then provided three key points: pardoning all prior federal offenses of simple marijuana possession; calling on governors to pardon simple state marijuana possession offenses; and finally, asking Secretary of the Department of Health and Human Services Xavier Becerra and the Attorney General Merrick B. Garland to initiate the process of reviewing how cannabis should be scheduled under federal law.

NORML leaders were cautiously optimistic, noting that efforts to get the attention of the White House for real cannabis reform at the federal level have been going on for decades.

“Many of the efforts taken and proposed by the President today are long overdue,” NORML Executive Director Erik Altieri said in a statement provided to High Times. “For nearly two years, NORML has called upon the Administration to fulfill the President’s campaign promise to provide relief to those stigmatized with a low-level cannabis conviction. We are pleased that today President Biden is following through on this pledge and that he is also encouraging governors to take similar steps to ensure that the tens of millions of Americans with state-level convictions for past marijuana crimes can finally move forward with their lives. Since 1965, nearly 29 million Americans have been arrested for marijuana-related violations—for activities that the majority of voters no longer believe ought to be a crime.”

“Moving forward, the Administration must work collaboratively with Congressional leadership to repeal America’s failed marijuana criminalization laws. Nearly half of voters now agree that legalizing marijuana ought to be a priority for Congress, and such action can only be taken by descheduling cannabis and repealing it from the US Controlled Substances Act—thereby regulating it in a manner similar to alcohol. Congress should be inspired by the Administration’s actions today to act quickly and send legislation to the President’s desk that would help close this dark chapter of our history.”

Leaders in Congress—notably members of the Congressional Cannabis Caucus—applauded the move. The office of Congressman Earl Blumenauer, founder and co-chair of the Congressional Cannabis Caucus, also sent High Times his official statement on the matter.

“Today, President Biden took an important step in the fight to end the federal government’s failed and discriminatory prohibition of cannabis,” said Congressman Blumenauer. “No president has stepped forward to pardon low-level marijuana offenders at this scale before. At a time when 99% of Americans live in a state where some form of cannabis use is legal, it is unthinkable that anyone—especially predominantly Black, Latinx, and Indigenous Americans—are imprisoned for simple, nonviolent cannabis possession.”

“This is a critical, important step forward for racial justice in the failed war on drugs that too often targeted people of color, especially Black and Latino men. While this order is welcome and long overdue, it is just the first step of many that this Administration should take,” Congressman Blumenauer continued. “We have pending legislation that deals with medical marijuana research and the ability for cannabis businesses to access banking services—both of which have gained support in the House and Senate. The President should embrace and celebrate. It is critical that we put the full force of the federal government behind them.

“There was a time when this was controversial,” Congressman Blumenauer added. “Yet for several years, the federal government has been left behind by people and states who did not wait. Not only does more than two-thirds of the public support full legalization, even half of American Republicans are also ready to end this chapter of the failed war on drugs. We welcome this action and hope it is the first of several noncontroversial critical steps to promote justice, equity, and rational policy.”

US Cannabis Council (USCC) CEO, Khadijah Tribble also chimed in, saying that Biden’s statement aligns with many of the council’s goals.

“President Biden is right: No one should be in jail just for using or possessing cannabis. This executive action will positively impact countless Americans who have been saddled with criminal histories and the unjust suffering and consequences of cannabis prohibition. This is a particularly cathartic moment for Black and brown communities that have been disproportionately impacted by the criminalization of cannabis.

“We commend the President for making good on his campaign promise to grant pardons to non-violent cannabis offenders. This announcement comes on the heels of the Biden administration appointing the first advisor on cannabis research and regulation at the U.S. Food and Drug Administration (FDA), and further reinforces the fact that it’s just a question of when—not if—cannabis is decriminalized altogether.

“As the nation reckons with the wrongs of the past, it’s also time to look to the future. The Senate should pass the SAFE Banking Act, to help ensure that the communities most impacted by cannabis prohibition can safely and gainfully participate in the burgeoning cannabis industry,” Tribble said.

The Justice Department will begin the process of providing certificates of pardons to people who are eligible, USA Today reports.

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The Tennessee Valley Authority has walked back a threat made earlier this month to deny electricity service to cannabis operations, acknowledging in a statement on Thursday that the agency is required to provide power to all customers in its service area.

“We want to be clear about TVA’s position on the implications to our energy service to Mississippi customers: TVA has an obligation to serve our customers with safe, reliable, low-cost energy and we will continue to do so,” the utility wrote in a statement. “There will be no interruption in service because of this newly signed law.”

The Tennessee Valley Authority (TVA) is a federally-owned electric utility company that provides power to millions of customers in Tennessee and parts of six surrounding southern states. In a statement obtained by reporters, the TVA noted that despite cannabis reform at the state level, marijuana is still a federally illegal substance. The statement was released on February 2, the same day that Mississippi Gov. Tate Reeves signed a bill to legalize medical marijuana in the state. The TVA provides power to local utilities that deliver electricity to customers in three dozen counties in northeastern Mississippi.

“While some states have enacted (or may soon enact) laws permitting the cultivation and distribution of marijuana for either medicinal or recreational purposes, marijuana, regardless of its intended use, remains a Schedule I substance under the federal Controlled Substances Act of 1970,” the TVA wrote in its statement. “Federal resources and funds may not be purposely used to facilitate activity that potentially violates federal law. “Given this important point, TVA will not direct any federal resources or funds to the cultivation and/or distribution of marijuana.” 

The statement also warned that if a TVA employee learns that a local utility is supplying electricity to a customer that “is engaged in activity that may violate federal law governing marijuana, the employee will report the activity to their management, and TVA management will make a determination regarding our reporting obligations to agencies that may have proper jurisdiction to enforce the federal Controlled Substances Act.”

Federal and State Officials Blast TVA Warning

The TVA’s statement drew a swift rebuke from two U.S. congressmen and members of the Congressional Cannabis Caucus, Rep. Earl Blumenauer of Oregon and Rep. Steve Cohen of Tennessee. In a statement on Thursday, the representatives noted that the TVA is required by federal law to provide power to all customers.

“The actions outlined in the February 2 memo, issued on the same day as Mississippi’s enactment of a medical marijuana program, disregard the democratic will of the people of Mississippi,” Cohen and Blumenauer wrote. “Any suggestion of requiring TVA employees to report end-use customers suspected of engaging in activity involving marijuana is an affront to the people who voted in support of a medical cannabis program, to say nothing of the state legislature and governor, who overwhelmingly enacted a medical cannabis program.”

In a separate statement, Cohen said that if the TVA follows through on its warning, the agency “would also be sadly out of step with the American people, even after polls and elections are showing again and again how voters react when given the choice to weigh in on access to cannabis.”

State officials in Mississippi also pushed back on the TVA’s warning to deny power service to cannabis operations. Mississippi Public Service Commissioner Brandon Presley reiterated the TVA’s responsibility to provide power to all customers and noted that the agency does not have authority over local power companies.

“TVA’s statement has already caused some medical marijuana facilities to look at other areas of the state and therefore possibly denying North Mississippians the benefits of the newly passed medical marijuana program,” Presley said in a statement posted to Twitter on Thursday. “It is a long-held principle in state law that electric utilities have an obligation to serve customers without discrimination.”

“A licensed medical marijuana facility under Mississippi law is no different. It is my position that any licensed medical marijuana facility should be served with electricity upon application and request,” Presley added. “Once power is delivered by the TVA to a local utility, TVA’s oversight ends and controlling state law and Public Service Commission statutes ensure that these facilities should be served with electricity like any other licensed business.”

Although the TVA acknowledged it is obligated to provide electricity to all customers in its service area, the utility noted in last week’s statement that it was continuing to seek the advice of federal officials.

“The broader issue is a complex one and represents a conflict between state and federal law. We are looking to the appropriate federal agencies for further clarification and have requested additional guidance,” the TVA said. “Our service to our customers remains unchanged and we will continue to carry out our mission.”

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Congressional Democrats are targeting next year for a major overhaul of the nation’s cannabis laws.

In a memo sent last week, Representatives Earl Blumenauer (D-OR) and Barbara Lee (D-CA), the co-chairs of the Congressional Cannabis Caucus, urged colleagues to build on the successes of 2021 hailed as a “a transformative year for cannabis reform, in which five new states—New Jersey, New Mexico, New York, Virginia, Connecticut—legalized adult-use cannabis, and Alabama became the 37th state to legalize medical cannabis.”

“A wealth of policy ideas targeted at ending cannabis prohibition on the federal level have also been introduced on Capitol Hill,” they wrote in the memo, sent on Thursday of last week. “This growing bipartisan momentum for cannabis reform shows Congress is primed for progress in 2022, and we are closer than ever to bringing our cannabis policies and laws in line with the American people.”

Blumenauer and Lee outlined a series of policy priorities for the party to tackle in 2022, including a bill to legalize pot on the federal level. 

The bill, known as the Marijuana Opportunity Reinvestment and Expungement (MORE) Act, is one of several marijuana proposals offered up by Democrats that has yet to gain passage on Capitol Hill.

Described by Blumenauer and Lee as “the most comprehensive cannabis reform bill to be developed and considered by Congress to date,” the MORE Act would “decriminalize and deschedule cannabis, to provide for reinvestment in certain persons adversely impacted by the War on Drugs, to provide for expungement of certain cannabis offenses and for other purposes.”

The bill, introduced by House Judiciary Committee Chairman Jerry Nadler (D-NY), was most recently reported out of the Judiciary Committee in September, and the memo said that Blumenauer and Lee “are vigorously working to see that it gets a vote in the House soon.”

Blumenauer and Lee also highlighted the SAFE Banking Act, which would eliminate legal barriers that prevent the cannabis industry from accessing certain financial services.

The bill has passed the House of Representatives several times, most recently in April, and the memo from Blumenauer and Lee described it as a way to address “the pressing public safety need caused as result of cannabis businesses being forced to operate in all cash, would allow state and tribal legal cannabis-related businesses to access financial services.”

They noted that “polls show bipartisan public support for rationalizing drug policy is at an all-time high, with Gallup now reporting 68 percent of Americans, and a majority of Republicans, support legalizing marijuana.”

Democrats will be under considerable pressure to get something meaningful done on cannabis reform next year, with the 2022 midterms on the horizon and Republicans in prime position to win back the majority.

The memo from Blumenauer and Lee made it clear that the clock is ticking for a party that appeared eager to embrace legalization after the 2020 election.

As we enter another election year, it’s more important than ever to seize the moment and heed the calls of the American public,” the memo said. “We are poised to take bold action to end the failed War on Drugs once and for all.”

On the other side of the capitol, Senate Democrats appear ready, as well. Senate Majority Leader Chuck Schumer said in an interview earlier this year the party “will move forward” on legalization, pointing to the wave of pot-related reforms implemented at the state level.

“In 2018, I was the first member of the Democratic leadership to come out in support of ending the federal prohibition. I’m sure you ask, “Well what changed?” Well, my thinking evolved. When a few of the early states—Oregon and Colorado—wanted to legalize, all the opponents talked about the parade of horribles: Crime would go up. Drug use would go up. Everything bad would happen,” Schumer said. 

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