By: David Wenger
In the United States, we are seeing unprecedented momentum toward legalization of cannabis. 2019 has been a historic year for reform at the federal and state levels. As the US moves closer to legalizing cannabis, the rest of the world watches. And as the US reconciles federal cannabis legalization with international drug treaty obligations, a transformational precedent will be set.
After summarizing recent progress in the US, this article discusses how the US may harmonize federal legalization with international treaty obligations and the likely resulting impact abroad.
Unprecedented Progress Towards US Federal Cannabis Reform
At the federal level in the US, historic progress is being made in the 116th Congress toward legalizing cannabis. For the first time in more than three years, on June 20 the full US House of Representatives voted on a cannabis measure. The House passed by a large majority (267-165) the Blumenauer-McClintock-Norton Amendment (1) which would protect the legal cannabis industry from DOJ action. (2) A Senate vote is expected after the August summer recess.
Prospects are high for near-term passage of the SAFE Banking Act of 2019, which would protect banks, related entities, and insurers servicing cannabis companies from federal interference. The House version (3) has 206 co-sponsors, (4) just short of the 218 total votes required. The House Financial Services Committee voted 45-15 on March 28 to advance the banking bill to the full House for a vote. (5) The Senate version (6) has 31 co-sponsors, (7) nearly one-third of the Senate.
The Senate Committee on Banking, Housing, and Urban Affairs held a public hearing on the SAFE Banking Act on July 23. (8) After the hearing, Senator Cory Gardner (R-CO) said he was confident of sufficient support in the Senate: “[I]t would pass with majority support and I think it would have a majority of Republicans voting for it as well.” (9) On July 31, the Republican Chair of the Senate Banking Committee, Sen. Mike Crapo (ID), called for ending banking restrictions on cannabis companies. (10) Through the SAFE Banking Act, Congress has an opportunity to not only protect banks and insurers that would serve the industry but also protect US stock exchanges that would list US cannabis companies. (11)
This Congress has been described as the “most marijuana-friendly Congress in history.” (Tom Angell). (12) Justin Strekal, NORML’s political director, said: “Congress has never moved this far, this fast on marijuana policy, period.” (13) Only seven months into this Congress, there have already been seven cannabis hearings. (14)
Previously-introduced federal bills are gaining support, as new federal legislation is introduced. (15) Bills such as the STATES Act (16) and the Marijuana Freedom Opportunity Act (17) are joined by recent bills such as one filed on July 31 by the second-highest ranking Democratic senator, Dick Durban (IL). (18) Democratic presidential contenders Sen. Kamala Harris (D-CA), Sen. Cory Booker (D-NJ), and Sen. Elizabeth Warren (D-MA), and House Judiciary Committee chair Rep. Jerrold Nadler (D-NY) have all sponsored legislation to legalize cannabis. (19)
Republican Senate Majority leader Mitch McConnell has not publicly supported federal cannabis reform (he remains an unknown for passage of the SAFE Banking Act). However, an interesting dynamic has developed. Senator McConnell has expended significant political capital to pass the Farm Bill legalizing hemp in December 2018, for some of his staunchest supporters in the Kentucky hemp industry. (20) But the FDA has not yet acted to provide regulatory pathways for many hemp-derived products. (21) Senate Democrats, such as Senators Ron Wyden and Jeff Merkley (both OR), and representatives on the House Small Business Committee, have already publicly urged the FDA to move forward. (22) Democrats in Congress focused on legalizing cannabis could join forces with McConnell and his Republican counterparts to urge the FDA to move forward, in exchange for McConnell and his allies agreeing to tacitly support or at least stand down from opposing federal cannabis legalization.
While Democratic presidential candidates challenge each other over cannabis reform credibility and who will most strongly support legalization, (23) President Trump waits for an opportune moment to indicate his support, for maximum political advantage. He will not go unchallenged on cannabis reform in the election runup. And he has given every indication in public and in known private conversations of his views on States’ rights with regard to cannabis reform. (24)
Significant Progress At The US States Level
At the state level, across the country there is also significant progress toward reform of medical and adult-use legislation. While there have been setbacks where legislators failed to implement the public will—including in New York where Governor Cuomo did not timely and adequately support adult-use legalization (25) and in New Jersey with opposition from some legislators whose constituents suffer the most from the war on drugs (26) —states such as Illinois and Michigan have seized an opportunity to implement pragmatic, corrective, inclusive adult-use legislation.
In 2020, Illinois (the first state to legalize adult-use through the legislature) and Michigan will have two large urban areas (metro Chicago and Detroit, combined population of 14 million) with legalized adult-use marketplaces. They will garner enormous tax revenues, and in time eclipse Colorado which has already collected more than $1 billion in cannabis tax revenues. (27) In Massachusetts, the marketplace is expanding, reaching more than $140 million in the first six months and expected to reach up to $500 million this year, (28) joining states like California, Nevada, Washington, and Oregon selling billions of dollars of legal cannabis. In states like Maine and Vermont, where adult-use cannabis is legal but not sold in regulated, state-revenue-generating stores, officials are seriously discussing a legalized, regulated marketplace. (29) States such as Florida and Oklahoma are seeing rapid expansion of their medical cannabis programs. (30) Opposition to sensible cannabis reform is largely based on ignorance or is financially motivated – in addition to the enormous tax revenues regulated markets are realizing, social impacts in legalized adult-use states have been at worst neutral and generally positive, with reports of
falling crime rates, (31) reduced youth usage, (32) reduced alcohol intake, (33) and significant reductions in prescription medication usage especially opioids. (34)
Adult-Use Cannabis Is Strictly Prohibited Under The UN Single Convention
As the US progresses towards legalization on the federal level, with growing state marketplaces, examination is warranted of the US’ international obligations under the 1961 UN Single Convention on Narcotic Drugs (the “Single Convention,” as amended by the 1972 Protocol). (35) Under Article 4 of the Single Convention, (36) the production, manufacture, export, import, distribution of, trade in, use and possession of cannabis is expressly limited “exclusively to medical and scientific purposes.” (37) Adult-use cannabis is strictly prohibited. Cannabis is placed under the strictest of the control schedules; it is considered among the most dangerous of all psychoactive substances under international control. (38)
Advances in global cannabis legislative reform contrary to the Single Convention have not gone unnoticed by the International Narcotics Control Board (“INCB,” an independent body that monitors Governments’ compliance with international drug control treaties). (39) INCB has proclaimed that Canada’s legalization of adult-use cannabis is “inconsistent” with the Convention. (40) The INCB has also said that existing drug treaties provide zero “wiggle room,” such that the strict prohibition against non-medical use applies fully to states within federal structures of government: namely, US states legalizing adult-use is inconsistent with Convention obligations. (41) In response, US officials have argued that since the cultivation, trade, and possession of cannabis remain criminal offenses under US federal law, the federal government as a State party is not in breach. (42)
Reconciling US Federal Legalization With The Single Convention: Inter Se Modification
While a federalism-grounded distinction may be acceptable for now, the US is unlikely to legalize cannabis federally for adult-use, as Canada has, without addressing its Single
Convention obligations. The US was the chief architect of the Convention, including placing cannabis under the strictest control measures. (43) The US government has long been the most ardent champion of the drug treaties, and the foremost proponent of full and vigorous implementation. (44) When Congress revises federal law to formally accommodate regulated cannabis, the federal versus states legislative distinction will no longer be possible. (45)
Revision of the UN Single Convention to accommodate an updated federal regulatory regime in the US allowing for adult-use cannabis would be difficult. Although formal mechanisms for revision exist, the reality is no substantive changes would likely be made on anything other than non-controversial issues. An amendment of the schedules to remove cannabis would require a recommendation by the WHO’s Expert Committee on Drug Dependence followed by a majority vote by 53 member States (46) of the UN Commission on Narcotic Drugs. (47)
A more likely alternative through which the US may reconcile its Convention obligations is by inter se modification permitted under Article 41 of the Vienna Convention on the Law of Treaties (“VCLT”). (48) Under the inter se modification option, like-minded parties may enter into inter se agreements permitting the production, trade and consumption of cannabis for non- medical and non-scientific purposes while remaining compliant with the Convention. A Swansea University report titled “Balancing Treaty Stability and Change: Inter se modification of the UN drug control conventions to facilitate cannabis regulation” (March 2018) explores the rationale, legitimacy, and feasibility of the inter se option for modification of Convention obligations. (49)
Under Article 41 of the VCLT, inter se modification is permissible if: (a) ‘the possibility of such a modification is provided for by the treaty’ or (b) when ‘the modification is question is not prohibited by the treaty and (i) does not affect the enjoyment by the other parties of their rights under the treaty or the performance of their obligations; or (ii) does not relate to a provision, derogation from which is incompatible with the effective execution of the object and purpose of the treaty as a whole.’ (50) In other words, because inter se modification is not provided for by the Convention, it would be available under VCLT Article 41 if enjoyment by the other parties of their rights and performance of their obligations is not affected, or if the effective execution of the object and purpose of the treaty as a whole would not be immediately compromised if one or more parties decide to regulate the sale and supply of cannabis for adult-use purposes.
An inter se agreement would need to be based on domestic markets that are isolated from non-parties to the inter se agreement. (51) A strictly controlled legal regulated market in some jurisdictions is likely to prove more effective in preventing the illicit export of cannabis from those regulated jurisdictions in comparison to the current situation because state controls over the substance are likely to be tighter and more widely respected than is currently the case. (52) Thus, a legally regulated market existing in states that are parties to the inter se agreement would not only not adversely affect non-parties to that agreement, but may well benefit non-parties.
The Swansea University report posits that the option of inter se modification holds enormous promise and merits careful consideration for application by like-minded States. (53) The report concludes that the possibility of inter se modification was specifically designed to find a balance between the stability of treaty regimes and the necessity of change in absence of consensus in order to respond to the changing social conditions in member States. (54) The report argues that the circumstances in which the UN drug control treaty regime finds itself today—systemic challenges and inconsistencies, increasing tensions with State practices, huge political and procedural obstacles to amendments, and unilateral escape attempts—merit careful consideration of the inter se modification option. (55)
Modification Of Convention Obligations Will Spark A Wave Of Legalization
When the US Congress is seriously considering legalizing cannabis federally, perhaps within 12 to 18 months, the entire North America will be close to having legal adult-use cannabis. As early as September 2019, the Mexico Senate will be discussing legalizing cannabis and the Senate has set a deadline of October 25, 2019 to approve new cannabis legislation. (56) Thus, a distinct possibility emerges of an inter se agreement negotiated amongst the North American nations that allows for regulated cannabis commerce within and between them, but also consistent with Single Convention obligations.
Should North American nations work toward entering an inter se agreement regulating cannabis commerce amongst themselves, that would spark a wave of cannabis legalization across Europe and elsewhere. Countries such as Germany, Switzerland, Spain, Portugal, the Czech Republic, and other EU nations, along with Colombia, Israel, Thailand, and many others, could very likely want to join such an agreement, laying the foundation for a global cannabis industry. The US started and fueled the global war on marijuana; when the US stands down, much of the rest of the world led by Europe will follow suit. The EU market for cannabis will be enormous – forecasted at €123B by 2028, including a €65 billion adult-use market. (57) Progress is already being seen in Europe toward legalization, including advances in medical cannabis legislation throughout the continent, (58) Swiss and French government advisory commissions calling for adult-use legalization, (59) support for legalization among rising German political parties, (60) and Luxembourg poised to enact adult-use legalization. (61) But in Europe, major progress awaits what will happen across the Atlantic.
***The trajectory is clear, even if the timing is uncertain. As legalization advances, and the cannabis industry spreads from the Americas to Europe and beyond, the future of global cannabis commerce will present formidable challenges but also incredible opportunities for those with the foresight and ability to execute on a generational opportunity.
Citations
1 H. Amdnt. 398. https://www.congress.gov/amendment/116th-congress/house-amendment/398/text.
2 http://clerk.house.gov/evs/2019/roll370.xml; https://www.forbes.com/sites/tomangell/2019/06/20/congress-votes-to-block-feds-from-enforcing-marijuana-laws-in-legal-states/#74018cf84b62. Aaron Smith, executive director of the National Cannabis Industry Association, called the vote “without a doubt the biggest victory for federal cannabis
policy reform to date, and a hopeful sign that the harmful policies of marijuana prohibition will soon be a relic of the past.” Id.
3 https://www.congress.gov/bill/116th-congress/house-bill/1595/text.
4 https://www.congress.gov/bill/116th-congress/house-bill/1595/cosponsors.
5 https://www.covfinancialservices.com/2019/04/house-financial-services-committee-passes-cannabis-banking-bill/.
6 https://www.congress.gov/bill/116th-congress/senate-bill/1200/text.
7 https://www.congress.gov/bill/116th-congress/senate-bill/1200/cosponsors.
8 https://www.natlawreview.com/article/senate-holds-public-hearing-banking-access-cannabis-industry.
9 https://www.marijuanamoment.net/watch-live-senate-committee-holds-hearing-on-resolving-marijuana-banking-issues/
10 https://www.wikileaf.com/thestash/gop-chair-end-marijuana-banking-restrictions. He said: “I think all the issues got well vetted. We now need to, I think, move forward and see if there’s some way we can draft legislation that will deal with the issue.” Id. Senator Crapo repeated this sentiment again on August 8: “There are serious questions that I
have recognized need to get resolved. I am looking at that issue on a federal level.” https://www.postregister.com/star/ news/crapo-talks-marijuana-health-care-in-grant-park/article_ecd0364d-d620-5024-b521-647e0d0e449c.html.
11 The situation now is that US cannabis companies paying millions of dollars in federal taxes, with thousands of employees in the US, and building infrastructure across the country cannot access our capital markets, but Canadian cannabis companies with no operations here and paying no federal taxes have raised billions of dollars on the US capital markets. See https://www.newcannabisventures.com/proposed-federal-legislation-could-open-major-exchanges-to-american-cannabis-companies/.
12 https://www.forbes.com/sites/tomangell/2019/07/31/this-is-the-most-marijuana-friendly-congress-in-history/#778ea5bd672f.
13 Id.
14 Id. On June 19 the House Small Business Committee held a hearing on challenges for small business. https://www.marijuanamoment.net/watch-live-congressional-committee-discusses-challenges-for-small-marijuana-businesses/. On July 10 the House Judiciary Subcommittee on Crime, Terrorism, and Homeland Security held a hearing on ending prohibition and the racial impacts of marijuana laws. https://www.marijuanamoment.net/watch-live-congress-holds-historic-hearing-on-ending-federal-marijuana-prohibition/.
15 On August 12, the American Bar Association issued a resolution urging Congress to remove cannabis from Schedule 1 of the Controlled Substances Act to address the “regulatory quagmire” resulting from conflicting federal and state cannabis laws. https://www.marijuanamoment.net/american-bar-association-urges-congress-to-let-states-set-their-own-marijuana-policies/.
16 https://www.congress.gov/bill/116th-congress/house-bill/2093.
17 https://www.congress.gov/bill/116th-congress/senate-bill/1028.
18 https://www.marijuanamoment.net/top-democratic-senator-files-bill-to-reschedule-and-research-marijuana/; He had previously called Illinois’ medical cannabis program “almost a laughing matter.” Id.
19 https://www.harris.senate.gov/news/press-releases/harris-nadler-introduce-comprehensive-marijuana-reform-legislation; https://www.booker.senate.gov/?=press_release&id=892;
https://www.warren.senate.gov/newsroom/press-releases/senators-warren-and-gardner-reintroduce-bipartisan-bicameral-legislation-to-protect-states-marijuana-policies.
20 On August 14, Senator McConnell wrote an Op-Ed stating: “Whatever obstacles Kentucky hemp farmers, processors and manufacturers might encounter as they try to take full advantage of this hemp revolution, I’ll be there to help in any way I can. https://www.marijuanamoment.net/mitch-mcconnell-checks-in-on-hemp-legalizations-progress-op-ed/.
21 As compared to other products the FDA regulates and are widely available such as pharmaceuticals, alcohol, and high-sugar food, which lead to deaths every day through overuse, there is not a single known case of a CBD- or cannabis-caused death.
22 https://www.lexology.com/library/detail.aspx?g=048bd5f8-3704-4583-811d-ab6fa4d251d4; https://www.marijuanamoment.net/lawmakers-push-federal-agencies-to-free-up-the-cbd-industry/
23 https://www.bostonglobe.com/news/marijuana/2019/08/01/democratic-presidential-candidates-clash-marijuana-during-second-night-debate/41o10H9gUhTS8m6NEScm2H/story.html
24 See “The Green Regulatory Arbitrage,” available at https://www.newcannabisventures.com/wp-content/uploads/2018/09/The-Green-Regulatory-Arbitrage-Wenger-2018.pdf, pgs. 30-32.
25 Now, New Yorkers are spending millions of dollars buying cannabis in Massachusetts. https://www.leafly.com/news/industry/the-massachusetts-cannabis-market-is-booming-thanks-to-new-york
26 https://patch.com/new-jersey/bloomfield/new-jersey-senator-has-worries-legal-weed-do-you-agree
27 https://www.cnbc.com/2019/06/12/colorado-passes-1-billion-in-marijuana-state-revenue.html
28 https://mjbizdaily.com/massachusetts-recreational-marijuana-sales-approach-140-million/
29 https://www.pressherald.com/2019/06/27/mills-signs-marijuana-regulations-into-law/; https://mjbizdaily.com/vermont-house-committee-moves-commercial-adult-use-marijuana-bill-forward/.
30 https://mjbizdaily.com/medical-marijuana-market-growth-with-oklahoma-and-florida-leading/.
31 https://www.forbes.com/sites/janetwburns/2018/01/16/violent-crime-has-fallen-in-border-states-with-legal-cannabis-study/.
32 https://www.marijuanamoment.net/federal-data-shows-youth-marijuana-use-isnt-increasing-under-legalization/,
33 https://www.forbes.com/sites/thomaspellechia/2018/01/22/alcohol-sales-dropped-15-percent-in-states-with-medical-marijuana-laws/.
34 https://harmreductionjournal.biomedcentral.com/articles/10.1186/s12954-019-0278-6; https://drugabuse.com/study-medical-marijuana-cuts-use-of-prescription-drugs/; Tom Adams, managing director of preeminent cannabis industry intelligence data firm, BDS Analytics, told me that the most eye-opening statistic in his years of analyzing the cannabis industry is the degree of the use of cannabis as a replacement for traditional medication.
35 https://www.unodc.org/documents/commissions/CND/Int_Drug_Control_Conventions/Ebook/The_International Drug_Control_Conventions_E.pdf. Two additional other international treaties prohibit commerce in cannabis for recreational purposes by virtue of the scheduling of cannabis under the Single Convention – the Convention on Psychotropic Substances (1971) and the Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (1998). Id.
36 Signed by 186 member states, https://treaties.un.org/Pages/ViewDetails.aspx?src=TREATY&mtdsg_no=VI-18&chapter=6&lang=en.
37 Id. at pg. 30.
38 http://fileserver.idpc.net/library/stability_change-inter_se_mofication_gdpo-tni-wola_march_2018.pdf at pg. 3. The double-listing of cannabis in the Single Convention is reflective of how strictly it is treated. Cannabis, cannabis resin, and extracts and tincture of cannabis are in Schedule I among substances that present a serious risk of abuse
and are subject to all control measures envisaged by the Convention. Cannabis and cannabis resin are also listed in Schedule IV, along with another fifteen substances that are already listed in Schedule I and are deemed particularly dangerous by virtue of what are regarded to be their harmful characteristics, risk of abuse and extremely limited
therapeutic value. Id. at pg. 36, n. 9.
39 https://www.incb.org/incb/en/about.html.
40 http://fileserver.idpc.net/library/stability_change-inter_se_mofication_gdpo-tni-wola_march_2018.pdf at 3.
41 Id. at pg. 4.
42 Id. at pg. 8.
43 Id.
44 Id.
45 Id. at pg. 9.
46 https://www.unodc.org/unodc/en/commissions/CND/Membership/Membership.html.
47 http://fileserver.idpc.net/library/stability_change-inter_se_mofication_gdpo-tni-wola_march_2018.pdf at pgs. 14, 33.
48 https://treaties.un.org/doc/Publication/UNTS/Volume%201155/volume-1155-I-18232-English.pdf at pg. 342.
49 http://fileserver.idpc.net/library/stability_change-inter_se_mofication_gdpo-tni-wola_march_2018.pdf
50 https://treaties.un.org/doc/Publication/UNTS/Volume%201155/volume-1155-I-18232-English.pdf at pg. 342.
51 http://fileserver.idpc.net/library/stability_change-inter_se_mofication_gdpo-tni-wola_march_2018.pdf at 28.
52 Id.
53 Id. at pg. 34.
54 Id.
55 Id.
56 https://themazatlanpost.com/2019/07/26/mexico-recreational-use-of-marijuana-will-be-addressed-in-september-in-the-senate/; https://themazatlanpost.com/2019/08/09/mexico-senate-october-25-deadline-to-approve-marijuana-regulation/.
57 https://www.amp-eu.com/eurozone-cannabis-market-highlights-2018-and-beyond/; https://prohibitionpartners.com/wp-content/uploads/2019/07/The-European-Cannabis-Report-4th-Edition.pdf.
58 https://labiotech.eu/sponsored/medical-cannabis-europe-brexit/.
59 https://www.swissinfo.ch/eng/drug-debate-_swiss-health-commission-calls-for-legalisation-of-cannabis–/44930586; https://internationalcbc.com/french-government-tasked-commission-urges-cannabis-legalization/.
60 https://www.spiegel.de/international/germany/german-green-party-leads-in-public-opinion-polls-a-1272530.html; https://fortune.com/2019/07/19/europe-cannabis-canada/.
61 https://www.analyticalcannabis.com/articles/luxembourg-set-to-become-europes-first-recreational-cannabis-country-311735.
