Repeal Day and Cannabis Prohibition

What a week for Cannabis!!

The Marijuana Opportunity Reinvestment and Expungement (MORE) Act, H.R. 3884, had its day today to make history as members of the House of Representatives voted 228–164 in favor of repealing Cannabis prohibition! This is a big deal considering that this vote marks the first time since it was deemed federally illegal that a chamber of Congress has considered ending federal Cannabis prohibition. This vote today comes in after the exciting news of the recent decision at the United Nations, acknowledging that Cannabis has medicinal value.

Repeal day and Cannabis Prohibition

December 5th is the anniversary of the end of alcohol prohibition. We dug deeper into how history may have an impact on how Cannabis being descheduled from the controled substances act will have on a growing industry. We asked an expert for their take on how the past will influence the future going forward, should this bill make it through to the Senate and to the president’s desk for final approval. Cannapolitan asked Brent Williams from Highwater Financial on his take on what steps could possibly be taken for success into this next era. Here’s what he shared with us.

REPEAL DAY: What the Cannabis Industry Can Learn from the Alcohol Prohibition Era

Saturday, December 5, 2020 marks the 87th anniversary of the repeal of alcohol prohibition in the United States.  With the recent developments in the cannabis industry – The United Nations reclassifying cannabis as a less risky narcotic, both the MORE Act and the Safe Banking Act passing the House of Representatives and moving to a Senate vote. The green wave of cannabis legalization on Election Night, it seems inevitable that the United States is progressing towards the repeal of cannabis prohibition.

On this Repeal Day, there are several lessons the cannabis industry can take away from the prohibition as it still faces a staunch path forward for legalization on a Federal Level.

State’s Rights Issue –

After being banned on a Federal level, the end of prohibition moved Alcohol to be classified as a state’s rights issue (similar to same-sex marriage, gun control, and the death penalty) which means there are currently more than 7,000 laws regulating the sale and possession of alcohol in the United States on various government levels. The cannabis industry would be wise to follow suit with anticipation that Federal legalization of cannabis should mirror the 21st amendment with a focus on the regulation of the substance while allowing flexibility from state to state.

There’s Big Money to Be Made –

Since its repeal the alcohol industry has gone from a black-market criminal offense to an industry generating 1.5 trillion dollars per year. This is due to the ability to invest in and financially service alcohol companies, vendors and suppliers that are involved in each aspect of the market – including cultivation, retail, distribution and product creation to name a few.  The cannabis industry can anticipate a similar trajectory, as the MORE Act moves into the next phase of the Federal Legislation process to become law, cannabis companies could hypothetically see their effective tax decline by potentially up to 68 percent creating a significant impact in bottom line income and share price in the market. This will be enhanced by a newfound ability to develop and distribute products across state lines to enhance industry growth.

Advocating and Lobbying is Essential –

The repeal of alcohol prohibition was a result of years of advocacy and legislative progress. In fact, the first step in the repeal of prohibition was the Cullen-Harrison Act signed 10 months prior. While it is too early to tell if the MORE Act will serve in the same role, citizens and politicians must continue to be engaged on every level of government to advocate for change. Just like with alcohol, strategic political lobbying is essential to the future of the cannabis industry. To date this year, the alcohol industry has spent an estimated $22.2 million in lobbying efforts compared to a paltry $3.1 million for the cannabis industry.  The cannabis industry requires a significant increase in lobbying efforts to showcase the magnitude of the effects of legalization.

 Looking Forward

It is true that the long-awaited progress in the cannabis industry from the House of Representatives is encouraging and opens the door for further advancements under a Biden-Harris administration or with a flipped Senate. While it’s too early to say whether the MORE Act will pass, one thing is certain, the industry is experiencing an influx of investment dollars with the flurry of positive activity and Democrat leadership over the past month.