Marijuana: A 420 state of the union

Marijuana, Rights

Though the origin of the tradition is hazy at best, the celebration of April 20, or 420, has become a fixture of American culture. The day offers an appropriate time to reflect on the state of marijuana in the U.S.

America saw unprecedented changes to its relationship with marijuana when the first legal recreational marijuana stores opened in 2014. Twenty-three states have adopted medical marijuana laws since California passed Proposition 215 in 1996, but the national conversation has recently been dominated by legal recreational marijuana use since Washington and Colorado passed legalization legislation in 2012. These states’ experiments have been largely considered successful, but there are still some legislative kinks to work out.

Ever-changing edibles

After stores opened in Colorado, and before they opened in Washington, a widely publicized opinion piece about edibles appeared in The New York Times. The article described in great detail the unpleasant experience of the author, Maureen Dowd, who accidentally overindulged on edibles in Colorado.

After the article received national attention, the Washington State Liquor Control Board adopted emergency rules designed to avoid similar problems. Under those rules, edible marijuana product packaging is required to list marijuana as an ingredient and specify the serving size in terms of THC, the active ingredient of cannabis. If the product is a solid, like a chocolate bar, the new rules require that it be scored to indicate individual servings. Most difficult for producers, however, is the rule requiring that labels be approved by the state liquor board before entering the market, which can result in a many-months delay until products hit the shelves.

Related: Edibles finally hit shelves in Washington, with lessons learned from Colorado

Since those new rules were adopted, the Washington State Liquor Control Board has again changed and streamlined the requirements. Currently:

  • Edible solids must have each individual serving enclosed inside childproof packaging within the outer package.
  • Marijuana-infused liquids with more than one serving of THC are required to include a measuring device.
  • As of April 30, brightly colored edibles are prohibited, since those could be considered “especially appealing to children.”

Colorado also adopted rules this year requiring that labels state THC content and warn about delayed effects. The state also encourages manufacturers to produce smaller-dose edibles — those with less than 10 milligrams of THC — by placing an increased burden on products containing between 10 and 100 milligrams of THC.

Troubles with taxation

A major selling point of legalization is the associated tax revenue. Marijuana products are heavily taxed, and revenue is intended for popular programs such as healthcare, social services and education. However, the specifics of how the taxes are collected and used have not been free of controversy.

In Colorado, the current issue involves an anti-spending provision in the state constitution. Because the revenue generated was significantly higher than the original estimate included in the approved law, the state may now be required to return almost $60 million in marijuana tax money to taxpayers. How that would work is unclear, and there is a proposed bill that asks taxpayers to vote to allow the state to keep the money.

Washington’s current system taxes 25 percent at each of three stages: production, processing and sale. Along with criticism of the heavy financial and administrative burden, there have also been issues with how taxes are distributed, including allegations that local governments are not getting their fair share of the new revenue stream.

The Washington legislature is discussing changes to the governing tax law. Senate Bill 6062, which would only tax marijuana products 37 percent at the retail level and distribute $6 million to local governments, has already passed the state senate. Questions still remain as to how the bill would affect the state as a whole if signed into law.

Brutal banking

Marijuana industry banking has ranged from very difficult to completely impossible. Under the Controlled Substances Act, marijuana is still illegal at the federal level. Since banks are Federal Deposit Insurance Corp. (FDIC) insured and must operate according to federal law, they cannot simply open a business account for marijuana ventures the same way they might for another business.

On Feb. 14, 2014, FinCen, the U.S. Treasury’s Financial Crimes Enforcement Network, issued a memo to financial institutions. Although the memo did not legally change anything, it did provide guidelines detailing how banking could serve the marijuana industry. According to the memo, banks must:

  • Review potential clients’ business licenses and application documents
  • Gather information about the client from state licensing and enforcement authorities
  • Stay aware of industry norms and trends by monitoring publicly available information
  • File suspicious activity reports for clients when necessary

Whatever FinCen’s intentions, these guidelines do not offer any legal protections to banks worried about risk. Don Childers, CEO of the Colorado Bankers Association, has stated,

“An act of Congress is the only way to solve this problem.”

Credit unions, on the other hand, are insured by the National Credit Union Administration, which has accepted institutions openly doing business with the marijuana industry. A recent NPR profile of Salal Credit Union in Washington, for example, describes the great lengths the organization goes to to ensure its clients are fully compliant with state law. However, the demand for services like those offered by Salal Credit Union far exceed the supply, and the scarcity has created huge challenges for the cash-based industry. Stepping in to fill the need, companies offering security and transportation of cash are flourishing.

The end of prohibition in sight

The sky has not fallen in Colorado or Washington, and many other states are following suit with the legalization of recreational marijuana. Recreational marijuana use became or will become legal this year in Alaska, Oregon, and Washington, D.C. Five more states may have legalization measures on ballots in 2016, and House bills to end the prohibition of marijuana on a federal level have been introduced.

Related: New marijuana survey shows changing attitudes towards pot

Most recently, the federally funded National Institute on Drug Abuse released a publication stating that marijuana may shrink certain tumors. This report has potentially huge ramifications because federal law currently classifies marijuana as a Schedule 1 controlled substance, a category reserved for substances without any currently accepted medical use.

All things considered, this year’s 420 will be the most marijuanafriendly this country has seen, and I look forward to seeing what next year’s 420 has in store.

The views and opinions expressed here are those of the author and do not necessarily represent those of Avvo.