As both medical and recreational legalization sweeps the nation, with red states like Alaska and Ohio getting into the game, patients and advocates are cheering their entry into the 21st century. Unfortunately, a slew of ancillary laws that dramatically affect cannabis consumers and businesses have yet to catch up.
In July, an Arizona Court of Appeals ruled that the smell of marijuana alone cannot serve as probable cause for police to search one’s home or vehicle. In 2010, the state legalized a medical program in the form of the Arizona Medical Marijuana Act.
The court based its decision on the fact that searches of legitimate medical marijuana patients based on smell alone would deem them “second-class citizens,” “losing their rights to privacy and security, including privacy within their own homes.” The judge decided that a warrant cannot be justified by behavior that might be legal.
In late August, an Oregon Court of Appeals refused to declare the smell of burning cannabis “unpleasant.” The court ruled that cannabis smoke isn’t necessary offensive to all people (like, say, rotten food or feces).
Also in late August, the city of Washington, D.C., where recreational possession and consumption is legal, made it illegal for employers to test job candidates or employees for marijuana. It would certainly be illogical for a legal activity like smoking or vaping cannabis to result in a punitive action like loss of a job opportunity or dismissal from a current position.
As a greater number of states embrace legalized cannabis, related laws regarding everything from drug testing and impaired driving to banking services and insurance are in desperate need of revision. Make no doubt, prohibitionist forces are doing everything within their power to slow the acceptance and destigmatization of cannabis in the United States.
Drug Testing and Banking Services
Drug testing and banking services are probably the two greatest issues facing patients, consumers, and business owners in states where the herb is legal. Despite progress, such as the court decisions above, patients and entrepreneurs still face many hurdles in pursuit of a society that truly allows — and even encourages — the capitalization of medical and recreational marijuana.
In June, the Colorado Supreme Court ruled, in a 6-0 decision, that it is legal in the state for a company to fire any employee that tests positive for marijuana. The irony of the situation is obviously that Colorado has had legal medical cannabis since 2000 and has allowed recreational cultivation, possession, and consumption since January of 2014.
The Court justified its decision with the definition of the term “lawful” under Colorado’s Lawful Off-Duty Activities Statute. According to the justices, the existing state law refers to activities lawful under both state and federal law. In his opinion, Justice Allison H. Eid wrote:
“Therefore, employees who engage in an activity, such as medical marijuana use, that is permitted by state law but unlawful under federal law are not protected by the statute.”
Most merchant banking companies have refused to provide their services to cultivation facilities, dispensaries, and retail stores because they are afraid that the federal government will nullify their FDIC insurance. A prominent feature of most dispensaries is an ATM; unfortunately, it’s an all cash business. Because banking regulations haven’t caught up with the progressive cannabis laws of states like Colorado and Oregon, patients, customers, and business owners suffer under the security burden of piles of cash.
Of course, this hoard of cash is ironic, given that dispensaries and pot shops are intended to rid communities of the influence of cartels and the black market. Bundles of Benjamins obviously serve only to attract crime.
The Pressure is On
Short of establishing their own banking services, cannabis-related companies in states like Colorado and California are hard pressed to operate like a normal business. Even the IRS is behind the times, with laws that prohibit certain major tax writeoffs for businesses that trade in a federally illegal substance. Because of this, some dispensaries are effectively paying 60-70 percent tax rates. This lack of financial incentive, if it pervades, may drive entrepreneurs and vendors out of the cannabis business, serving the ends of prohibitionists like New Jersey governor Chris Christie.
Drug testing and banking services are, without a doubt, the most pressing issues facing the burgeoning cannabis industry at this time. Reasonable citizens who would otherwise consume marijuana in a legal environment may avoid the activity due to the risk of losing their jobs — unfairly hurting small businesses who might depend on their patronage. Small businesses and investors may pass on opening a cannabis-related business simply due to arcane tax regulations and an inability to utilize merchant banking systems.
One unlikely solution to all of these headaches is federal legalization, or at least a reclassification of cannabis out of Schedule I. Banking regulations, tax rules, and employer drug testing must be reconsidered, with a recognition that tens of millions of Americans can legally — at a state level — grow, possess, and consume cannabis. Until this happens, the greenrush of the twenty-teens will be at least partially paralyzed.