2020 has already deserved itself a rightful place in history textbooks. And it has something more to offer. This fall may become a turning point in a long-lasting controversial history of Cannabis in the US. The so-called MORE Act aka Marijuana Opportunity Reinvestment and Expungement Act might become the most significant legal development taken on the Federal level towards Cannabis in the past 50 years. While the Cannabidiol-related market has been developing for a while already, becoming a promising entrepreneurial opportunity, its legal aspect remains quite shady. Naturally, this has been preventing entrepreneurial activity in this field, depriving the American economy of a huge multi-billion-market segment. Considering the cultural formation around Cannabis combined with a long-lasting legal controversial history and financial perspectives for the economy, it is safe to say that Sept. 21st might be a historic day for America. That is the day when the vote for this Act is announced in the House of Representatives. Of course, the MORE Act is not the first initiative aimed to legalize Marijuana and Cannabis-related industry in the US, but what we already witness this Fall is that such a bill is being considered for a full House floor vote. The cat might have been sitting in the bag for too long. While at least 66% of Americans claim to support Marijuana legalization, more than 80% fully approve of medical Marijuana. Also, high-end perspectives of this bill are much wider than being able to sit on a pouch with a joint. MORE Act may start a chain reaction of events that may change the face of American criminal statues, taxation, and consuming market on many levels.
Mary Jay will work and pay taxes
The MORE Act holds several crucial statements that aimed to change the way the government sees most Cannabis-related activities – from recreational use to building an enterprise around it. It is supposed to
- De-schedule Marijuana
- Expunge prior Cannabis-related convictions
- Allocate revenue to those who were affected by previous drug enforcement acts
- Provide financing access to small Marijuana-related businesses
- Apply federal excise tax on Marijuana and Cannabis products
Legalization will have a national-scale impact on the American market and economy. The situation around Cannabis-related business right now remains unstable and quite shady. There still no homogeneous legal regulation of this field all over the country. The MORE Act provides the possibility for interstate Cannabis bilateral trade, which automatically leads to the creation of a massive powerful market. Cannabis products must be grown, produced, sold – all those automatically leads to the creation of thousands of businesses within the industry. Eventually, those are not only millions of new workplaces but also billions in taxation. This might be taken as optimistic speculation, but Marijuana has already been legalized in 11 states and the growth of the local economy in those regions is undeniable. Even during the Pandemic – the period, when small businesses were brutally slaughtered by the quarantine restrictions, those states show the lowest level of recession.
The MORE Act implies a federal excise tax on Marijuana of 5%. Generally, excise application puts it on the same level as cigarettes, gas, alcohol, etc. It means that taxation does not depend that much on the sales price of Marijuana products. This might be one more prove that the government understands that the industry will boom after the bill passes, and the sales prices are quite likely to go down. This is a natural and inevitable aspect of a healthy competitive market.
The de-scheduling of Marijuana is an opportunity for businesses operating in the industry to get access to comprehensive banking services. This literary means stimulating national bank activity by introducing a new business segment that is announced to become a legit player on the national market.
All said above – building a new industry that creates workplaces and revenue, excise taxation, and introducing it to the legal banking accommodation, in the light of 2020 post-Coronavirus crisis looks like a solid economy restoration measure. This might explain, why the Marijuana legalization bill is suddenly breaking the ceiling this fall. MORE Act is an ultimately unique case in this field, as it has been sponsored by 50 lawmakers, already passed the House Judiciary Committee, and is scheduled to vote this month already. On the background of several months of stagnation in the small-business world and an unprecedented level of unemployment, the MORE Act obtains a whole new meaning. It is not another progressive initiative anymore but may be considered as a fundamental anti-crisis initiative.
Some are more equal than others
So the MORE Act is aimed to turn Marijuana-related businesses into an interstate industry. That means that the shady years might be over for such companies like CBD businesses that until now had now homogeneous national legal coverage. Being able to operate in one state they appeared to be outlaws in another. The legalization of interstate sales means like a bright perspective, but here come some complications imposed by the taxation principles. Although a 5% excise tax does not look like a big deal, some states might find themselves more vulnerable due to this initiative. For example in Alaska and California taxes are applied to the cultivating process. It means that as soon as interstate sales are allowed, those states may fall off the competition due to inevitably higher cultivation prices. Also, there are a number of states that practice pre-retail taxation. In this case, Marijuana businesses may simply face the so-called tax pyramid – a situation when a product is taxed multiple times during its lifecycle. So eventually instead of leveling the market, the legalization process may cause serious destabilization of the whole taxation system and require further adjustments.