Cannabis in California

Marijuana store

The process of legalizing marijuana has been a long and arduous way for those who either use it recreationally or medicinally. Namely, the air of stigma surrounding marijuana and those associated with it has long been a subject of negative connotations and until recently seemed like an insurmountable obstacle in the path of legalizing it.

The negative campaign, the war on drugs, the classification of marijuana as Schedule I drug, and various other social and legislative deterrents haven’t been able to stop the popularity growth of marijuana.

Cannabis law over the years

The criminalization of marijuana in California began in 1907 with The Poison Act which was later followed by a few amendments aiming at further restricting the possession and sale. Another devastating blow to marijuana users was the Controlled Substances Act signed into law by then-president Richard Nixon, and as federal law, it clashed with the state’s new laws regarding the decriminalization of marijuana.

The increasing popularization in the 1950s and 1960s even led to the creation of groups for legalizing cannabis. The first steps toward decriminalizing cannabis were made in 1975 with the Moscone Act which treated possession up to one ounce of marijuana as a misdemeanor and not a criminal offense.

Attempts in the 90s to reclassify cannabis a Schedule II drug, and to allow the use of cannabis in treatment for people suffering from AIDS, cancer, and other serious conditions were vetoed by Governor Pete Wilson. In 1996, the Compassionate Use Act was approved, therefore legalizing the use, possession, and cultivation of cannabis for medical conditions

Another step in the form of Proposition 19 was made toward legalizing cannabis; unfortunately, many opposing parties made it an uphill battle and the proposition failed. A final effort in 2016 resulted in the passing of Proposition 64 which made it legal to sell and distribute cannabis. People over 21 were allowed to possess up to one ounce of cannabis for recreational use.

Federal law

In 1969 a survey showed a 12% favored legalization of cannabis. Today, that percentage is much higher – over 60%. The war on drugs was futile, expensive, and it imposed overly harsh penalties which is why it is a good thing that 44 states have some form of marijuana law and 8 states have laws allowing recreational use.

However, marijuana law is a bit conflicting. Cannabis is still illegal under federal law. It is classified as a Schedule I drug. What does that mean exactly? It means cannabis is perceived to have no medical value and a high potential for abuse.

To make things a bit more clear: marijuana is put in the same category as heroin – a more restrictive category than cocaine or meth. This does not, in any case, indicate that the federal government considers cannabis as equally dangerous as heroin, or more dangerous than Schedule II drugs such as cocaine and meth.

It means that the federal government makes a distinction between those two categories in terms of them having any medical value.

Traditionally, in order to prove cannabis has medical value, a large-scale medical trial would have to be conducted. The problem here is that those studies are much harder to conduct since cannabis is strictly regulated by the federal government as a Schedule I drug. Essentially, until reclassified, studies on the medical value of marijuana will be very difficult to complete.

Acting completely under the state law means breaking the federal law

Since federal law is constantly clashing with new state laws, legal marijuana businesses struggle to get bank accounts because, at a federal level, they are still considered as criminal enterprises. This means if the banks took deposits from these companies it would be considered as money laundering, and as a consequence, these businesses have to operate all cash.

Under the federal tax law, you must report all sources of income, even if they are not legal. Basically, all legal marijuana businesses admit to breaking the federal law on marijuana just by paying the taxes. Marijuana businesses have all the tax liabilities of other businesses, but they can’t file for several deductions which means their effective income tax rates can go as high as 90 percent.

It’s not just the enterprises that face difficulties, but also the customers. For example, if you have a prescription for medical marijuana, technically, you are still breaking the federal law. So, your state has given you the right to use marijuana legally for medical purposes but somehow it does not exactly work that way. Pretty frustrating, right?

We can all agree that the medical effectiveness of cannabis needs to be researched more, but federal law is standing in the way, because to study marijuana you need approval from three federal agencies, which could take years.

Finally, we should reconcile federal and state laws concerning marijuana, especially if we consider benefits on several fronts. Leaving aside moral arguments on use of cannabis, the number of job openings in this industry could further reduce unemployment, increase tax revenue, and even serve as a tool in furthering medical research. This could be the new “green economy”.

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