Some U.S. Cannabis Companies Call Federal Structure ‘Unconstitutional’

Pot companies could potentially gain access to the banking system if the lawsuit is successful.

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Several cannabis operators in several states are reportedly considering teaming up to take on the US federal government and marijuana-related policies that put up barriers for their legal activities.

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Trying to sue the US government may not be entirely new, says Marijuana Timebut the fact that multi-state operators (MSOs) band together to express common concerns seems to be.

A tweet doing the rounds notes that Abner Kurtin, founder of Ascend Wellness Holdings, which currently operates in Illinois, Michigan, Massachusetts, New Jersey and Ohio, and other MSOs have hired a lawyer to representing them in two separate trials.

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The first lawsuit would challenge the federal government on the constitutionality of the Controlled Substances Act for intrastate cannabis. If successful, Kurtin said Marijuana Time in an interview that victory could ultimately give cannabis companies access to the banking system and major stock exchanges.

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Democratic Senator Jeff Merkley tweeted earlier this month that he and Senator Jacky Rosen “led a bipartisan group of 22 colleagues in calling on House and Senate leaders to protect legal cannabis businesses and push the Safe Banks Act in the competitiveness legislation currently being negotiated in Congress.

Although more than three dozen U.S. states have legalized cannabis use to some degree, “the possession, distribution, or sale of marijuana remains illegal under federal law, which means any contact with money that could be attributed to state marijuana operations could be considered money laundering”. and expose a bank to significant legal, operational and regulatory risks,” notes the American Bankers Association (ABA).

“The divide between federal and state law has left banks trapped between their mission to meet the financial needs of their local communities and the threat of federal enforcement action,” the statement read. position of the ABA.

The second trial would seek to attack the constitutionality of 280E of the Internal recipe codewhich “prohibits taxpayers who traffic in certain controlled substances (including, but not limited to, marijuana) from deducting typical business expenses associated with such activities,” according to information from JD Supra.

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In June 2021, Supreme Court Justice Clarence Thomas wrote in a statement that “federal laws against the sale and cultivation of marijuana are inconsistent, rendering a nationwide ban unnecessary,” according to CNBC.

“When complete, the federal government’s current approach is a half-in, half-out regime that simultaneously condones and prohibits the local use of marijuana. This contradictory and unstable situation strains the basic principles of federalism and harbors pitfalls for the unwary,” argued Judge Thomas.

He further wrote that due to a public policy provision in the tax code, “businesses that sell controlled substances prohibited by federal law may only subtract the cost of goods sold, not other ordinary and necessary business expenses”.

The tweet notes that cannabis industry players “will apparently be represented by Boies Schiller Flexner LLP.”

By Marijuana TimeKurtin told the publication that at least six major cannabis operators appear to be “favorably disposed” to joining the two lawsuits.

As it stands, the plan appears to be to file the lawsuits in federal district court within the next two months.

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Ida M. Morgan