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What You Need to Know About the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act

While 46 states have instituted laws permitting or decriminalizing cannabis or cannabis-based products in some way, prior events this year created an environment of legal uncertainty.

Since 2013, cannabis companies have relied on guidance contained within a trio of memos from former deputy U.S. Attorney General James Cole, which detailed the federal government’s concerns with preventing marijuana distribution to minors, gangs, or into states where the drug’s sale remains illegal, as well as preventing the use of the drug as a pretext to traffic other illegal drugs, in use with violent firearms, driving under the influence, and growing marijuana on public lands or on federal property.

Those companies who were compliant with state cannabis laws and did not run afoul of any of these concerns basically considered themselves as being safe from federal prosecution.

But that security diminished earlier this year when U.S. Attorney General Jeff Sessions rescinded the guidance in the Cole memos. The new Sessions guidance essentially shifted the discretion to decide if a marijuana company was aiding and abetting in criminal activity from the Department of Justice to individual states’ U.S. Attorneys.

In response to this new decision and the increasing state-level support for legalizing cannabis in some way, Democratic Senator Elizabeth Warren and Republican Senator Cory Gardner introduced the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act bill. The Act’s intended purpose is to uphold each state’s right to determine their own approach to marijuana within their borders and applies to Washington D.C., U.S. territories, and federally recognized tribes.

The proposed legislation purports to amend the Controlled Substances Act (CSA) so that as long as states and tribes comply with its provisions, the CSA no longer applies to any person complying with the relevant State or tribal laws regarding the manufacturing, production, possession, distribution, etc. of marijuana.

This essentially means that compliant transactions would not constitute drug trafficking or result in forfeiture or seizure of assets used in or received from legal cannabis operations. The Act does not alter the prohibition on employing anyone under eighteen in marijuana operations and additionally prohibits the distribution of marijuana at transportation safety facilities like rest areas and truck stops. It also prohibits the sale of marijuana to persons under the age of 21.

It is significant that the bill does not change or alter the Controlled Substances Act or re-schedule or decriminalize marijuana—it would only remove industrial hemp from the CSA. The Act does give each state the freedom to decide how to handle cannabis within its own borders, and more importantly, it would make it unlawful for the Department of Justice to enforce the CSA again state-legal marijuana users or medical or creational cannabis businesses.

The implications of this new bill are vast; it would be a stepping stone in the road to nationwide legalization of marijuana and would bring renewed comfort to wary banks and other institutions who are interested in investing in the cannabis industry but have held off given the potential legal consequences. And in a win for intellectual property holders, the Act would allow state-legal cannabis businesses to secure federally registration of their trademarks.

While the bill has not gained much traction since it was unveiled earlier in the summer of 2018, the results of the 2018 midterm elections may give it some needed momentum.



About this Author

Gene Markin Attorney Stark & Stark Law Firm

Gene Markin is a Shareholder in Stark & Stark’s Complex Commercial, Intellectual Property, and Cannabis Litigation Groups where he concentrates his practice on complex litigation matters involving copyright protection and infringement, trademark and trade dress infringement and enforcement, trade secret litigation, false advertising, domain name disputes, unfair competition, class actions, fraud and consumer fraud, shareholder and partner disputes, breach of contract, cannabis business disputes, cannabis intellectual property matters, cannabis insurance coverage...