Reason Magazine is a publication that promotes libertarian solutions and they are an ally for all kinds of legalization efforts, including when it comes to CBD and marijuana. In the video below, Reason’s Todd Krainin interviews Erik Altieri, the executive director of the National Organization for the Reform of Marijuana Laws (NORML), and they discuss Congressional marijuana legalization efforts in 2019.
From Wikipedia: ” The [STATES Act] would amend the Controlled Substances Act of 1970 to exempt from federal enforcement individuals or corporations in states who are in compliance with U.S. state, U.S. territory and the District of Columbia, or tribal law on cannabis, with certain additional provisions such as minimum ages.
While this act, according to Mr. Altieri, doesn’t change the fact that marijuana will still be listed as a controlled substance nor does it give a pathway towards more research or open up banking services to marijuana businesses, it would create a hands off approach when it comes to marijuana for states that have legalized it. Mr. Altieri described this as the least ambitious of the bills that are being considered by Congress at the moment but, what it does do in CBD Up Close’s opinion, is continue to move the conversation towards eventual legalization at the federal level.
From Wikipedia: “The bills propose to legalize and end the prohibition of marijuana at the federal level by amending the United States Code (removing Marijuana from the Controlled Substances Act). The bills eliminate criminal penalties for an individual who imports, exports, manufactures, distributes, or possesses with intent to distribute marijuana. Unless in violation of the laws of the jurisdiction thereof: they would allow the shipment and transportation of marijuana between states and territories of the United States, and exportation and importation to and from foreign states. They would transfer the authority to regulate marijuana from the Drug Enforcement Administration to the Bureau of Alcohol, Tobacco, Firearms, and Explosives.
This bill, actually a group of similar bills, would go much further than the STATES Act and make it so that marijuana businesses can come out of the darkness and join all other legal businesses. Marijuana businesses would get full access to banks and be taxed like all other businesses. Research can be done and, in effect, end prohibition at the federal level. States that want to continue prohibition of marijuana will still have that right, as they do with other substances.
Mr. Altiere described this bill as a way to “both deschedule marijuana but also begin to pursue reparative justice for communities that were most harmed by marijuana prohibition.” As Mr. Altiere went on to describe, minority communities, despite using marijuana products at the same rate as all other communities, suffer from higher incarceration rates than other communities. This bill would invest funds in these communities to help them recover from this injustice.
Marijuana and CBD Banking Issues
One of the topics that the general public may not be aware of is the fact that banks, especially large banks, will not do business with companies that sell or have anything to do with CBD and definitely marijuana products. This is because there is so much regulatory uncertainty in this industry with conflicting laws between states and the federal government that banks do not want to open themselves up to any kind of legal action. CBD and marijuana are big businesses already but the risks are just too great for most banks currently to get into this industry.
CBD Up Close projects that this will change in the coming years as laws are enacted at the federal and states, ten and counting, move towards total legalization of marijuana. The business opportunities are just too great to pass up. One of the more important ancillary benefits of enabling marijuana businesses to operate legitimately is that safety will be increased in the industry. Since marijuana companies do not currently have access to the banking industry in a meaningful way, marijuana companies are largely cash businesses. Criminals know this and have taken advantage of this horrible situation.
How Will Marijuana Legalization Affect CBD Products?
CBD Up Close does not believe that marijuana legalization will happen within the next couple of years. This gives CBD companies some breathing room to grow and gain market share. For CBD companies, the business imperative is to build brands that are trusted by consumers. We have discussed this in previous posts such as CBD and Chill where we argue the point that perhaps the most compelling value proposition that CBD companies have is that people using CBD products do so to relax and relieve stress and anxiety. And these consumers have reported that the CBD products they consume do a remarkably good job at helping people relax.
When legalization does happen, those CBD companies that have been able to establish a defensible market position will be able to expand their product offerings with cannabis-based products. What proactive CBD companies can do is establish relationships with companies that are already in the cannabis industry if they haven’t done so already.
Due to the quasi-prohibition that hangs over the CBD and cannabis industries right now it has created a situation where the market is severely fractured along many different lines. Companies are reducing their risks by only operating in certain states, there is little vertical integration in the industry, partnerships with existing retailers are in an embryonic stage, and, as discussed above, these industries cannot tap into the banking system as any legitimate business should be able to.
As you no doubt noticed, I separated the CBD from the cannabis industry. At the moment, this is certainly the case as hemp-based CBD products are treated differently than cannabis products. Once prohibition ends for all of these products, which we believe will happen within the next decade, these industries will merge. You may see that as a quibble but, for the time being, in our estimation at least, that is the best way to describe the situation.