Luminous Botanicals lobbying in Washington, D.C.

In October, Luminous Botanicals’ co-founder Sally Alworth (fourth from right) travelled to Washington D.C. as part of a delegation from the Oregon Cannabis Association to advocate for congressional support on numerous issues impacting all state-legal cannabis businesses in the United States, including:

Internal Revenue Code §280E

Currently, Oregon cannabis businesses are only able to deduct taxes for cost of goods sold, but cannot deduct standard businesses expenses. Section 280E of the Internal Revenue Code prevents businesses “trafficking” in a Schedule I or Schedule II substance from deducting ordinary business expenses. This can result in a tax burden of over 80% for state licensed businesses. In order to resolve this inequitable application of cannabis taxes on business owners, Congress should pass H.R. 1118/S. 422 The Small Business Tax Equity Act or H.R. 1119/S. 421 Responsibly Addressing the Marijuana Policy Gap Act of 2019.

USDA Hemp Regulations

On October 17, before the U.S. Senate Committee on Agriculture, Nutrition, and Forestry, the Deputy Secretary of USDA Stephen Chenksy affirmed that the Agricultural Marketing Service intended to release hemp production rules within “the next couple of weeks.” This timing was further confirmed when the Office of White House Management and Budget confirmed completion of the regulatory review of the Hemp Production Plan Program on 25 October 2019. However, at least nine states have submitted – or plan on submitting – hemp production plans and must wait until the USDA issues a final rule (after a public comment period) before hemp production can begin on the state level pursuant to the 2018 Farm Bill. Congress should continue to put pressure on the USDA to expeditiously issue and approve hemp production plans.

FDA Updates on CBD Regulations

Although it appears regulations for hemp production will emerge in a matter of weeks, the timeline for regulations surrounding cannabidiol (CBD) from the FDA is less clear. FDA has concluded that THC and CBD products are excluded from the dietary supplement definition under section 201(ff)(3)(B) of the FD&C Act [21 U.S.C. § 321(ff)(3)(B)]. According to the FDA, active ingredients in drug products can not appear in food or beverages. Additionally, the FDA prohibits the introduction of CBD and THC into foods because of its restrictions on adulterants and active ingredients. Congress should continue to pressure the FDA to promulgate common-sense CBD regulations. Congress should work on amending the Food, Drugs and Cosmetics Act to allow CBD and THC to be added to food, beverage and dietary supplements.

Equity and Diversity in the Cannabis Industry

It is critical for our industry to have a diverse work force, to provide opportunities for minorities and to those most impacted by the war on drugs. We have an obligation to provide adequate funding for programs to help level a vastly uneven playing field. Whether it’s through the expunging of cannabis arrest records, through small business incubators, or the implementation of no-interest loans and grants, social equity in cannabis needs to be undertaken now, ensuring everyone can participate.

Insurance

Like access to banking, access to other financial services like insurance can be challenging for cannabis businesses. While it is possible to find insurance products that will cover cannabis-related losses, some insurers worry that if they cover a cannabis business, they will be financially supporting a federally illegal activity. Congress should maintain the language that protects insurers as passed by the House as part of H.R. 1595, the SAFE Banking Act or should pass H.R. 4074/S. 2201, the Clarifying Law Around Insurance of Marijuana Act (CLAIM) independently.

Interstate Commerce – State Cannabis Commerce Act

Oregon has one of the largest stockpiles of cannabis in the Untied States, but cannot ship this product to consumers in other states. A 2019 report from Oregon’s Liquor and Cannabis Commission revealed that adult use producers in Oregon harvested more than 2,000 metric tons of cannabis in 2018. This means Oregon has approximately enough adult-use market cannabis to last six and a half years. For states with surpluses like Oregon, they could help prevent shortages in new markets. Congress should pass H.R. 3546/S. 2030 the State Cannabis Commerce Act to allow interstate commerce for cannabis. This legislation is the first at a national level to deal with the supply and demand of cannabis – problems that will only amplify as new states legalize cannabis around the country.