November 24, 2019

US Congressional Committee Approves Cannabis Legalisation Bill in Historic Vote

4min read

On Wednesday, 20 November, the Marijuana Opportunity Reinvestment and Expungement (MORE) Act was passed through the House Judiciary Committee in the US, marking the first time that a congressional committee has approved legislation to end federal cannabis prohibition.

Conor O’Brien – Industry Analyst

The bill, put forward by committee chairman Jerrold Nadler (D-NY), passed by a vote of 24-to-10 after two Republicans — Reps. Matt Gaetz (R-FL) and Tom McClintock (R-CA) — joined their Democratic colleagues in support of the bill.

‘These steps are long overdue,’ said Nadler in his opening remarks.

‘For far too long, we have treated marijuana as a criminal justice problem instead of a matter of personal choice and public health. Whatever one’s views on the use of marijuana for recreational or medicinal purposes, arresting, prosecuting, and incarcerating users at the federal level is unwise and unjust.’

What would the MORE Act mean for American cannabis?

cannabis legalisation bill

In addition to federally de-scheduling cannabis, the MORE Act would expunge the criminal records of persons with prior convictions for minor cannabis-related offences, and introduce a 5% tax on legal cannabis sales. Some of this revenue would be used to support communities that have been most impacted by cannabis prohibition enforcement.

The implications this bill could have for the American cannabis industry cannot be understated. Firstly, cannabis businesses and consumers in legalised states would be protected by state laws and immune to federal intervention. The federal prohibition of cannabis has created a strong deterrent for states that might wish to legalise cannabis but are fearful of the legal implications at a federal level.

If the MORE Act were to pass and become law, it would remove a number of barriers to growth for the existing cannabis industry. A prime example of this is the current ban on the interstate transport of cannabis and cannabis products. Being unable to transport products across state lines, even between legalised states, has contributed to a glut of production in states such as California and Oregon, while the likes of Illinois are bracing for widespread product shortages once their new recreational cannabis laws come into effect.

Under the current legislative framework, if a cannabis business wanted to expand and sell its products in another state, the interstate transport ban would require that they produce cannabis within that other state. This then requires the building of new, costly physical infrastructure and the understanding of a new legal landscape. Under the MORE Act, these companies could transport product across borders, opening up new markets and making business expansion possible for smaller companies that do not have the capital to set up operations in multiple states.

Additionally, if the Secure and Fair Enforcement (SAFE) Banking Act does not pass through Congress by the time that the MORE Act reaches the Senate floor, the MORE Act would represent a chance for cannabis companies to avail of the banking services so desperately needed by cannabis businesses.

What has the vote meant for business?

Already, the news of the bill’s passing through the House Judiciary Committee has helped to spark a major rebound for cannabis stocks. With a global slump in cannabis stocks being seen over the year-to-date, this news has provided a welcome return to the growth that the industry enjoyed in 2018. Major cannabis stocks saw huge jumps in share price over the course of Wednesday as investors reacted to the vote:

Canopy Growth (NYSE:CGC): +15.1%
Aurora Cannabis (NYSE:ACB): +12.8%
Green Organic Dutchman (TOR:TGOD.TO): +21.9%
Curaleaf (CEQ:CURA.CN): +15.1%

Other factors have also contributed to this rebound. On Wednesday, Bank of America analyst Christopher Carey declared that ‘the worst looks over’ for cannabis firm Canopy Growth, as he upgraded the status of Canopy Growth stock from ‘Neutral’ to ‘Buy’. Canadian medical cannabis firm Aurora Cannabis also added to the good news, in announcing that CA$216 million in debentures have been converted into company stock.

Will the cannabis legalisation bill pass?

For the first time, more than two thirds of Americans support cannabis legalisation, including an unprecedented majority of Republican voters, who have traditionally been more resistant to these kinds of drug reform measures.

In order to pass, the MORE Act has to make it through seven other congressional committees, who may either approve or block the bill or forgo their vote in order to speed up the passage of the legislation. If it makes it through the committee stages, it will then have to survive debate and a full floor vote in the majority-Democrat House of Representatives, and the Republican-controlled Senate, before being ultimately rubber-stamped by the President.

While this vote by the House Judiciary Committee is very positive for supporters of the legislation, it must be noted that the cannabis legalisation bill has had a relatively easy path so far. It was introduced by the chairman (a Democrat) of the committee,  which itself has a strong Democrat majority.

The biggest challenge faced by the cannabis legalisation bill — if it can get there — will be in the Senate, where it will face a Republican majority under the leadership of Sen. Mitch McConnell (R-KY), who has been a staunch opponent of recreational cannabis legalisation measures. However, after a highly publicised meeting with cannabis industry leaders last month, there are signs that the senator might be willing to engage with debate on cannabis law reform.

Several Republican congresspeople have offered support instead to the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act, a more conservative measure introduced by their Democratic colleagues in the House and Senate that does not include provisions for reparations or restorative justice, but would allow each state to control its own cannabis laws without fear of federal intervention. Reference to the STATES Act was made throughout the House Judiciary Committee discussion by Republican representatives who feel that there is still not enough bipartisan support in Congress for the MORE Act to pass. To them, the passage of the STATES Act with its narrower scope would be a more achievable prospect for federal cannabis reform.

Prohibition Partners’ consultancy team advises clients on licensing, regulation and market entry strategy across the globe. For more information, contact

US Congressional Committee Approves Cannabis Legalisation Bill in Historic Vote

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