NCIA Public Policy Director Andrew Kline on Descheduling Cannabis, SAFE Banking and Interstate Commerce
Hundreds of cannabis industry stakeholders gathered in Boston this week for the National Cannabis Industry Association’s (NCIA) Northeast Cannabis Business Conference (formerly called Seed to Sale) and CannVest East events.
Leading marijuana investors, entrepreneurs, executives, and suppliers attended the two-day show to discuss the current state of the cannabis sector as well as future market opportunities as lobbyists from the NCIA and other organizations continue to push for federal legalization, access to banking services and the ability to conduct commerce across state lines, among other initiatives.
The event featured dozens of educational seminars and panel discussions, including conversations about how to combat a rampant illicit market that continues to thrive throughout the country.
THCnet sat down with Andrew Kline, the NCIA’s director of public policy, to get his take on a myriad of issues, including the chances of rescheduling cannabis, the timeline for legalization and how the NCIA approaches its lobbying efforts in Washington D.C.
The following exchange has been lightly edited and condensed for clarity.
THCnet: What is the likelihood of any federal cannabis reform moving forward this year, be it the MORE Act, the STATES Act, the SAFE Banking Act or others?
Andrew Kline: If you would have asked me the question two months ago, I would have said there is an 80% chance that SAFE Banking will pass because it passed overwhelmingly in the House and I fully expected that Mitch McConnell (R-KY) would have wanted to give Cory Gardner (R-CO) a win. This was the easiest way to do that. Now, the signals from Mike Crapo (R-ID) are pretty bleak. So I don't know at this point what to project about the SAFE Banking Act. I would say that it is much less than what I thought it was originally -- in the 20% range, maybe -- but we are hopeful. We are still working hard. We have sent two letters -- we had 33 associations sign on to a letter to Crapo and then we got 1,300 signatures on another -- so we are pushing the envelope, but I think it is tough to predict.
I think the MORE Act and STATES Act are both dead. I don't think the Democrats are going to take up the STATES Act and I would be surprised if the Senate would take up the STATES Act knowing it is going to die in the House anyway. The House is much more interested in a descheduling bill that includes social equity provisions -- like the MORE Act -- and that is dead for the Republicans. So unless there is a sea change after the 2020 election, I’m not particularly confident about any of the bills moving.
THCnet: What is the timeline on federal legalization at this point?
Kline: It’s almost entirely dependent on this presidential election. If a democrat wins, and we get the Senate back, I think it’s a year away. If the democrats don't win back the White House, or the Senate, then I think it is two or three years out.
THCnet: Is there a scenario in which, in his bid to be reelected, President Trump pulls the marijuana card and uses it to his advantage?
Kline: That is a rumor that has definitely been going around -- about an executive order and descheduling. I will say a couple of things about it. I don't know, legally, whether or not he can actually deschedule. He can certainly reschedule, which would be terrible public policy for everybody. It would basically be the end of the recreational market. And the medicinal market would look very different, because all of a sudden it would be a prescription drug model. So I don’t know whether he can actually deschedule or not. If he can, on behalf of the industry, I would be glad. Personally, I wouldn’t be thrilled about him getting a big win, but as far as the industry is concerned, certainly that would be great progress. I am dubious that it will actually happen though. I have heard the rumors, but I don’t see him caring enough about this issue to do it.
THCnet: Somewhere between 60% - 70% of the American population believes in legalizing marijuana, and you have broad bipartisan support in the House on the SAFE Banking Act. What, in your opinion, are still the biggest obstacles to moving the SAFE Banking Act forward, or legalizing cannabis, when there is such a groundswell of support behind these issues?
Kline: It’s complete dysfunction on Capitol Hill. I worked on Capitol Hill in the late 90s and I worked for Joe Biden when he was Senator. I used to play softball with Senator [Orrin] Hatch’s staff, Senator [Patrick] Leahy’s staff and Senator [Jeff] Sessions’ staff. We would all play softball together, and the next morning my phone would be ringing and it would be a staffer from Sessions’ staff asking if we would sign onto a bill. And that doesn’t happen anymore. It is completely dysfunctional. The two sides don’t talk to each other. It has a little bit to do with the policies around cannabis, but I think it has more to do with the dysfunction of Congress.
THCnet: You mentioned the letters that have been sent to Sen. Mike Crapo. Those don’t seem to be having much of an effect at this point. Are there other strategies that you can deploy in order to get his attention?
Kline: We have three lobbyists in D.C. who are engaged with his staff. He had a lot of concerns with the House version. Our two letters so far were really focused on the 2% threshold. To us, that is a non-starter. That is banking the hemp industry. For us, that was really the line in the sand. We are in the process of drafting a more robust letter to address each and every question that he has, and we will deliver that within the next couple of weeks. Is that going to move the needle? I don’t know.
THCnet: Does the SAFE Banking Act do enough to consider the possible downsides of allowing regulated banking?
I’m not a banking expert, so I don’t know the intricacies of whether or not those problems will be solved by this particular bill. I will say that whenever you have a public policy problem, and you are trying to solve it, you need to start somewhere. We have a solution. Could the bill be improved in the Senate? I am sure it could. Should we throw the baby out with the bathwater? Absolutely not. If there are legacy cash concerns, for instance, that he has expressed, then we should address those in the Senate. But it doesn't mean we should throw the bill out. The current climate is completely unsustainable where you have businesses operating in an all cash environment. We need to catch up with the industry and banking is a really important first step.
THCnet: There are currently 14 different issues listed as “priority” issues on the NCIA website. Do you think you can sort of walk and chew gum at the same time on so many issues, or would it be better to just pick one that you think you can get done and systematically work through some of these things?
Kline: We need to update our website. Those priorities that are reflected on the website do not accurately reflect our priorities, or the order of our priorities. But I agree with you -- one of the best pieces of professional advice that I ever got from a boss was ‘if you are focused on more than three things, you are focused on nothing.’ And I think that is true. You have to be myopically focused on your goal. So for me, it’s SAFE Banking, and descheduling. It’s the MORE Act. Do I think the STATES Act would be a good incremental stop gap measure? Yes. Would I want to put our time and energy into seeing it pass, given that the Democrats don’t support it? No. It is a waste of time, from my perspective. Some lobbyists would disagree. They would say it is a Republican bill, that it is our best chance, and the Democrats will come around. I don't think the Democrats will pass a bill that doesn't have social equity provisions. And you cant have social equity provisions if all you’re doing is protecting the 33 states that have medicinal marijuana. So you have to start with descheduling, in my view.
THCnet: What about the tax issue? Why not just work on 280E?
Kline: In a vacuum, I would totally agree with you. It is the number one issue for the industry. No question. But the reality is that we tried to attach 280E to the tax package that Trump passed and it didn’t get added. So there is no vehicle for 280E right now. If Trump has another scheme where he gives more tax cuts to the rich, I will be unhappy about that, but I will be happy that we have another try and another bite at the apple. But right now, there is no vehicle to pass the bill.
THCnet: Will Political Action Committees become a bigger focus for the NCIA or other cannabis lobbying groups over the next few years?
Kline: I think money in politics is a big problem -- the influence you can buy -- but it is what it is. We are living in a society right now, like it or not, where members of Congress are dependent upon donations. People that donate get more attention. That is the way our system works right now. It is not right. It shouldn’t be that way, but it is. Yes, I do think that we should have a PAC. I think people should donate to our PAC. And I think we should be trying to influence members (of Congress) anyway we can -- as long as it is legal.
THCnet: Do you have a vision of what interstate commerce could look like for cannabis?
Kline: We are working on an interstate commerce paper right now. I think it is a very important issue, particularly for the environment. You have growers in California and Oregon who are growing great products. You have companies in New York who are spending tens of millions of dollars to build greenhouses with electricity, water, and air ventilation that you don't need when you grow cannabis outside. For the environment alone, I think it is important. But it is also fiscally irresponsible to require people to spend all that money when they could just buy the product from another state and get that product shipped to them. With that said, the likelihood of incremental legislation like that passing is very slim. Once descheduling comes, that problem gets fixed immediately. Much like the STATES Act, I am having a hard time seeing the direct path to passage. It’s possible that Democrats would get behind it, I suppose, but my guess is they would say ‘why are we going to get behind that, why don’t we just get behind a descheduling bill like the MORE Act?’ And for Republicans, their interest is on the business side. If there is a business case to be made, an economic case to be made, then maybe. But, otherwise, I don’t see them getting behind a bill. So I think we need to make an economic case to the Republicans.
THCnet: The ability to go out to a bar and grab a drink with your friends is a quintessential part of the alcohol industry. And that doesn't really exist in cannabis. You can’t go anywhere and use the product in a social environment (with a few exceptions). How do you see social consumption within cannabis developing over the long-term?
Kline: We are about to have social use in Colorado. As a society, you are right. People want community and socialization. Particularly people who smoke weed, they don't want to sit at home by themselves. They want to do it with their friends. There are some challenges with it. Certainly, the drugged driving piece is tough. We don't want people -- particularly people who don't know their consumption levels and their capacity -- to be consuming and driving. That's never good. But separately, I personally think it will be hard for entrepreneurs to make a living at it. Unless you have a license to sell on the premises, and you require people to buy on the premises, it is hard to make money. It is hard to see that business model. People walking in to consume what they are going to consume for the night, might spend $10. So I worry for people who are interested in it and how they are going to make the math work. But I am supportive of it.
THCnet: You could always sell them $10, 2.5 mg THC-infused beers.
Kline: Right. If people are into beverages, that is probably an answer. People do like to have something in their hand. So if you have 2.5 mg or 5 mg drinks, and people are having three of them over the course of the night and they can handle that, I would thank that is a good business model.