Law360 (March 2, 2021, 5:26 PM EST) --
Although marijuana has been federally illegal for 50 years since the administration of President Richard Nixon and the implementation of the Controlled Substances Act, that has not stopped U.S. states and territories from taking things into their own hands.
Marijuana legality across America is more endemic, with graduated levels of permissiveness than the binary state-legal adult recreational and medical marijuana delineations first reveal.
Starting with California, which legalized medical use of marijuana in the state in 1996, there now exist a proliferation of three degrees of state marijuana legalization regimes throughout the U.S. These have turned the overwhelming majority of states and U.S. territories into shades of metaphoric green.
Legalization in Three Degrees
First-degree states and territories are those which have legalized adult recreational use. In first-degree regimes, adults of the state or territory can legally purchase marijuana without the need to show any medical preconditions.
Second-degree states and territories are places that have legalized, implemented or established implementation dates for medical marijuana programs, which provide broad patient access to marijuana for the treatment of multiple medical conditions. Second-degree programs vary enormously but, generally, second-degree states and territories permit patients at a minimum, to possess and smoke medical marijuana.
In America, second-degree regions ultimately evolve into places having coexisting adult use first-degree programs.
For example, when California legalized medical marijuana use, it became a second-degree medical use state. Then, 20 years later, in 2016, when recreational use was legalized by California voters, California became a first-degree adult recreational use state.
Almost all states follow the California model, initially starting out with medical use programs and then, after a period of years, progressing into coexisting first-degree adult use programs.
There are two exceptions: South Dakota, which as a result of the November 2020 election, simultaneously became both a first- and second-degree state legalizing by voter-initiative both medical and adult use marijuana, and the U.S. territory of the Northern Mariana Islands, which in 2018 simultaneously legalized both through legislation.
In states with both first- and second-degree designations, such as Colorado, recreational sales are generally subject to excise taxes, also known as sin taxes, and higher sales taxes than medical marijuana sales.
Rounding off the trifecta are the third-degree states that comprise an even smaller number of places with severely limited access, or SLA, to medical marijuana products. This third category, which includes only states and no territories, typically permits restricted marijuana use to a limited number of universities or research institutions or for limited medical purposes by a patient population comprised primarily of those with incurable diseases, seizure disorders or epilepsy.
Some, but not all, SLA states cap the quantity of THC in any medical use of the marijuana product in that state, or restrict the amount a patient can receive in a set period, and some make it illegal to smoke medically authorized marijuana product.
SLA status, the third-degree designation, is often a precursor to becoming a second-degree medical use state. SLA communities can become accustomed to having restricted programs, with some even referring to their SLAs as medical marijuana programs.
Sometimes by voter initiative or legislation, SLAs blossom into medical use programs shedding their third-degree status. For example, states including Florida, Missouri and Oklahoma have moved from SLA status to having full functioning medical marijuana programs.
Iowa, a third-degree state, is inching toward but has not yet embraced second-degree status. One indication of movement occurred in June 2020 when Iowa's governor ended the state's low-THC restriction for the state's SLA patients but, then hand-in-hand, imposed a quantity restriction, a 4.5 gram per 90-day limit, for Iowans in its program. Still under Iowa's restrictive SLA regime, it remains illegal to smoke marijuana dispensed under the state's program.
The SLA states of Texas and Georgia permit the treatment of medical conditions with low-THC marijuana and are expanding the patient populations covered by their SLAs, readying the states for future second-degree status.
The Marijuana Legalization Numbers Across the States and Territories
The list of first-degree legalized adult use states and territories is comprised of a total of 16 states, plus Washington, D.C., Guam and the Northern Mariana Islands. The number of recreational use regions is less than half the number of the medical use venues. Virginia's legalization legislation, sent to the governor for signature on Feb. 28, makes that state the most recent entrant to the first-degree classification.
There are currently 36 states, plus Washington, D.C., Guam, Puerto Rico and the U.S. Virgin Islands, that have legalized, implemented or established implementation dates for medical use marijuana programs.
Although some third-degree states permit medical use of marijuana, these programs are not the comprehensive medical programs of the second degree. There are currently 11 SLA states: Alabama, Georgia, Iowa, Indiana, Kentucky, North Carolina, South Carolina, Tennessee, Texas, Wisconsin and Wyoming.
All of the SLA states secured their status through legislation, several in bills named after people who suffered from intractable medical conditions. For example, South Carolina's 2014 SLA program is called Julian's Law, named for a brain-damaged infant born in the state who developed epilepsy at age two and moved with his family to Colorado for medical marijuana treatment.
Although South Carolina refers to its SLA participants as medical marijuana patients, the state permits only circumscribed use by people with uncontrolled epilepsy defined by legislation as that which has not responded to traditional medication. South Carolina's patients, like others in similar SLAs, are only permitted access to low-THC product and only in oil form.
These 11 SLAs still criminalize marijuana possession outside their programs. This includes people who are medically authorized to possess in their second-degree home states, but use their product in these SLA states. The exception to this is the SLA state of Iowa, which recognizes out-of-state medically authorized use. However, an out-of-state patient in Iowa cannot legally acquire marijuana product in the state.
The Impact of the November 2020 Election
The November 2020 presidential election recategorized some states on the three-degree scale. Five states had marijuana on the ballot and marijuana won in each of those states.
South Dakota had two marijuana initiatives on the ballot to legalize both medical and recreational use. It not only became a first- and second-degree state with instant dual-degree status — just like the Northern Mariana Islands in 2018 — but the voters in South Dakota did it two ways: by endorsing a state constitutional amendment for adult recreational marijuana use and a separate, not state constitution-based, initiative for the establishment of a South Dakota medical marijuana program.
There are ongoing legal challenges to South Dakota's state constitutional amendment as well as a delayed implementation date for the state's new medical marijuana program. Regardless of the litigation's outcome, South Dakota will, at a minimum, maintain its second-degree status.
New Jersey and Montana, both second-degree states preelection, became first-degree states. Like South Dakota, residents of both states overwhelmingly voted for state constitutional amendments authorizing adult recreational use.
Arizona, formerly a second-degree state, also became a first-degree state as a result of the 2020 election. Arizonans did not vote to amend their constitution. Instead, they voted to authorize Arizona's Department of Health to create and regulate an adult use regime.
Mississippi, which has had SLA status for over 40 years as the U.S. Drug Enforcement Administration's federal research grow site, became a second-degree state with a July medical program implementation date.
Where in America Is Marijuana Use Still Entirely Illegal?
The three-degree designations as applied to America's states and territories help with answering the question: Where is marijuana use still illegal?
There are wildly diverging views about what constitutes full illegality. For example, DISA Global Solutions, a worker-safety, drug screening compliance company, has identified eight fully illegal states: Alabama, Idaho, Kansas, North Carolina, Nebraska, South Carolina, Tennessee and Wyoming.
In fact, Alabama, North Carolina, South Carolina, Tennessee and Wyoming are SLAs, which permit use by very narrowly defined patient populations.
A January Nasdaq.com article titled "14 States Where Marijuana Remains Entirely Illegal" alphabetically lists the 14 as Alabama, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Nebraska, North Carolina, South Carolina, Tennessee, Texas, Wisconsin and Wyoming.
Leafly, a website that provides cannabis information and facilitates sales, tackled the legality question and came up with 12 states having no legalization status, which mirrored Nasdaq's list minus Iowa and Wisconsin.
There is no dispute about the distinctions between first-degree and second-degree states, but the muddled lines between what constitutes second-degree and third-degree regimes cause the variations in the answer to the question: Where is marijuana illegal?
From a visitor's perspective, the bulk of SLA states would reasonably appear to be fully illegal when, in fact, there are narrow legal grounds for some to use or study marijuana in those states.
Applying the three-degree analysis, there are only three states and one U.S. territory where marijuana is entirely illegal, that is, verboten for use in any form. These are Idaho, Nebraska, Kansas and American Samoa. That's fewer than 7 million people in all of America living in places without some degree of marijuana legalization.
But even those entirely illegal places have stirrings of movement to either third-degree or second-degree status.
In Idaho, where in 2015 the governor vetoed a SLA proposal that would have permitted low-THC marijuana for epilepsy treatment, residents are seeking reform. If a 2022 marijuana initiative proposal makes the ballot and passes, this would leap-frog Idaho over SLA status and move it directly into the second-degree column.
Some 190,000 Nebraskans — more than 10% of Nebraska's registered voters — signed on to place a medical use constitutional amendment on the 2020 ballot. However, in September 2020, law enforcement sued to block the Nebraskan ballot initiative.
The Nebraska Supreme Court kept it off the ballot on procedural grounds — holding that it violated Nebraska's single-subject formalities by seeking to legalize medical marijuana possession, distribution and manufacture. Unbowed, Nebraska residents have proposed another medical marijuana initiative for the 2022 election.
In Kansas, where citizens do not have the power to initiate statewide ballot measures, legislators crafted a medical marijuana legalization bill last year, but it died in committee. However, in January, another medical marijuana bill was introduced in the Kansas Legislature; it has the support of Kansas' governor. The governor reasoned that medical-marijuana legalization will permit Kansas to support "COVID-19 recovery efforts and the state's economic health."
And even in American Samoa, comprised of some 55,000 inhabitants, due to budget shortfalls, there is discussion of legalization.
States and territories are in a crescendo of escalating degrees of legalization. Some 97.9% of America's 335 million inhabitants live where marijuana, to some degree, has been legalized.
Contrast this with the federal government's approach to marijuana. To this day, for practically all Americans, it is federally illegal to possess marijuana in any amount. It is illegal to take marijuana on an airplane, to place it in the U.S. mail,  to transport it across state lines, to use marijuana as a federal employee or a member of the armed services.
Marijuana, even if used medically, cannot be deducted as medical expenses on federal tax returns. Marijuana businesses cannot get small business loans or federal COVID-19 relief funds and are shunned by the majority of federally insured banks given the possibility of federal money laundering exposure for financial facilitation of a federally illegal drug.
Marijuana businesses cannot declare bankruptcy. Traditional credit card companies — e.g., Visa, Mastercard and American Express — will not permit the use of credit cards for what appear to be marijuana transactions. For most things federal, marijuana is still toxic.
Crystal Ball: What Does the Future Portend?
At this moment, there is a confluence of factors acting as an accelerant for change to marijuana's federal legal status. Not only is there an ever-increasing number of states transitioning up the degree ladder but there is also a profusion of investor capital in marijuana-related businesses.
Big money is being spent by multistate marijuana operators, which are gobbling up mom and pop dispensaries. Plus, big pharma is putting an international spotlight on marijuana's healing properties and its cash-cow potential.
Of late, billions of dollars of pharmaceutical acquisitions and mergers have occurred in the marijuana space, such as the $7.2 billion acquisition in February of GW Pharmaceuticals PLC — based in the U.K., traded in the U.S. and best known for its 2018 U.S. Food and Drug Administration-approved marijuana-derived anti-epileptic seizure drug, Epidiolex — by Jazz Pharmaceuticals PLC.
Another large deal was the December 2020 $3.8 billion merger of publicly traded marijuana companies, Aphria Inc. and Tilray Inc.
All of this is against the backdrop of COVID-19, which, to date, has killed over 500,000 U.S. residents and tanked many American businesses — but not marijuana businesses.
Marijuana businesses have generally been deemed essential during the pandemic permitting them to operate. Many dispensaries easily adjusted to lockdown orders and switched to curbside pickup or use of delivery services. State-legal retail sales of recreational and medical marijuana for 2020 have dwarfed those of 2019 by more than 71%; 2020 U.S. marijuana sales exceeded $18 billion dollars.
With all this activity on the state and territory level, the marijuana investment bonanza, as well as the advent of a new administration and an ever-so-slight Democratic majority in the U.S. Senate, surely a thawing of the federal prohibition of marijuana is not far behind?
Not so fast and not tomorrow. There will be no early groundhog spring for marijuana in 2021. The life and death consequences of COVID-19 have made it America's top priority; marijuana legalization has taken a backseat. Yet there will likely be incremental actions occurring after COVID-19 fiscal relief and increased vaccination levels and before the 2022 midterms.
With razor-thin margins in the U.S. House of Representatives and Senate, and historical determinism portending congressional losses for the president's party in November 2022, marijuana reform implementation will likely happen in late 2021 to mid-2022, unless Democrats buck tradition and pick up seats in 2022.
Incremental Baby Steps Predicted During the Next 20 Months
Baby steps of both legislative and executive action are predicted before the election of the 118th Congress. Here are three.
New Marijuana Banking Legislation
Likely first up because of the degree of bipartisan support it previously garnered, is some new version of the 116th Congress' Secure and Fair Enforcement Banking Act. It passed the House with 76% of 424 House member votes, but then-Senate Majority Leader Mitch McConnell kept it from a vote in the Senate.
Passage of the SAFE Banking Act's reincarnation would facilitate an increase of bank usage by marijuana businesses, decrease the all-cash aspects of the business, serve to improve marijuana business record-keeping and increase the ability of such businesses to secure commercial loans — something they have been regularly denied. No longer would federally insured banks need to fear penalization by U.S. banking regulators for servicing a federally illegal activity.
A New Single-Subject Version of the MORE Act
Second? A one-concept-at-a-time version of some of the specifics contained in the 87-page, omnibus-type Marijuana Opportunity Reinvestment and Expungement Act. There was not much bipartisan crossover for the MORE Act. It passed the House, in December 2020, with only some 58% of the 392 members voting on the legislation. McConnell also prevented that legislation from reaching the Senate floor.
The MORE Act, the first piece of marijuana legalization legislation voted on in either chamber of Congress, contained provisions to decriminalize and deschedule marijuana, to expunge certain marijuana crime convictions, to tax marijuana and to direct some proceeds to those harmed by America's "war on drugs."
The meaty legislation also cited statistics about the racist nature of America's prosecution of drug offenses. House Republicans on the Judiciary Committee in December 2020 denounced the MORE Act as "bad policy" which would "open the floodgates to marijuana cultivation, distribution, and sale in America — allowing bad actors and transnational criminal organizations to further exploit the nation's addiction crisis."
Given the heated congressional climate and the filibuster power of a minority of U.S. senators — to include those from the entirely illegal less-populated states and SLA states — representing only some 25% of the U.S. population, it is inconceivable that a mirror version of the 2020 MORE Act would survive the Senate with 60 votes.
Since filibuster removal is currently off the table, to have a chance at legislative success, congressional marijuana advocates will have to peel off aspects of the original MORE legislation one piece at a time.
The best bet? A single-subject standing bill to revise the Control Substances Act scheduling table to remove marijuana from Schedule I with the legislation containing a 90-day study implementation timetable for the determination as to whether marijuana should be on the lower rungs of the five-level CSA drug schedule or off it entirely.
Then, ready for an immediate tee-up at day 91, would be the introduction of a tax regime bill. With the right messaging, such discrete pieces of sequential legislation could get to the golden 60 votes.
With those in place — and showing that the sky has not fallen with rescheduling or descheduling by Congress — then revisions to the criminal code could occur followed by expungement legislation and other social justice components.
Executive Branch Action
And let's not forgot executive action. Under the CSA, the attorney general and the U.S. Department of Health and Human Services secretary, or the HHS secretary individually, can move to de-schedule or reschedule marijuana from its Schedule I perch.
Depending on other front-burner issues, this will likely occur before the midterms. And if Democrats pick up seats, then expect more robust social justice aspects of marijuana policy by the executive branch — to include computation of sentences for low-level, mandatory-minimum-prison-term, mule-type offenders and pardons to facilitate reenfranchisement of low-level offenders denied the right to vote because of felony drug convictions.
Conclusion: Marijuana's Moolah Mojo
Mandeep Trivedi, a well-regarded corporate valuator of marijuana businesses has said, where marijuana is concerned "[t]he almighty dollar is an almighty force." It is the dollar that has caused inroads into the once impregnable view that supporting marijuana legalization is political suicide.
All economic indices show that marijuana legalization generates oodles of much-needed cash for governments. The experiences of the legalized states, from the first- through the third-degree, prove this maxim. Federal government coffers depleted by COVID-19 costs, the payment of stimulus relief funds and the 2018 federal tax cuts are in need of replenishment. Marijuana can make this happen.
There are 20 months until the 2022 midterms. The soil is tilled for receptivity to a more mature marijuana industry operating under coexisting federal and state regulation and taxation systems.
Even for the most conservative of political actors, this groundswell will be hard to resist. Marijuana has gone mainstream; its tie-dye stigma has diminished while action from the federal government has been incentivized. Federal marijuana legalization will ultimately have its day.
Julie A. Werner-Simon is an adjunct professor at Drexel University's Thomas R. Kline School of Law, where she teaches Marijuana Law: History, the Constitution & Best Business Practices. She is a former federal prosecutor who served the U.S. Department of Justice in Los Angeles as deputy chief of the Organized Crime Strike Force and senior litigation counsel in Major Frauds.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of the organization, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
 U.S. state population figures are derived from the World Population Review as of February 2021, https://worldpopulationreview.com/states and up-to-date population numbers for the U.S. territories from https://www.cia.gov/the-world-factbook/.
 Id.; see also, Pub. L. No. 91-513, 84 Stat. 1236 (1970).
 https://www.vox.com/policy-and-politics/2018/9/21/17886612/northern-mariana-islands-marijuana-legalization; https://www.forbes.com/sites/tomangell/2018/09/21/governor-signs-marijuana-legalization-bill-making-history-in-us-territory/?sh=3949574f27ea.
 www.cannamd.com/every-florida-medical-marijuana-law-you-need-to-know/; see also, https://www.jdsupra.com/legalnews/florida-governor-signsmedical-39209/; https://norml.org/news/2018/05/31/florida-court-strikesdown-legislative-ban-on-medical-cannabis-smoking.
 Missouri https://medicalmarijuana.procon.org/background-resources/proposed-medical-marijuanalegislation; https://weedmaps.com/learn/laws-and-regulations/missouri/" target="_blank">https://weedmaps.com/learn/laws-and-regulations/missouri/ with the first licensed sales of medical cannabis occurring in October 2020; https://www.marijuanamoment.net/missouri-launches-medical-marijuana-sales-at-states-firstdispensaries.
 Oklahoma marijuana law HB 2154 (2015) see, https://www.ncsl.org/research/health/state-medical-marijuana-laws.aspx http://webserver1.lsb.state.ok.us/cf_pdf/2015-16%20ENR/hB/HB2154%20ENR.PDF; https://www.mpp.org/states/oklahoma/; https://weedmaps.com/learn/laws-and regulations/oklahoma/; https://cannabislawpa.com/oklahoma-says-no-to-thc-limits-on-medical-marijuana/.
 https://www.desmoinesregister.com/story/news/politics/2020/06/29/medical-marijuana-iowa-gov-kim-reynolds-signs-law-changing-thc-cap/3148014001/; https://idph.iowa.gov/omc/For-Patients-and-Caregivers.
 https://www.dps.texas.gov/sites/default/files/documents/rsd/cup/laws/hb3703.pdf https://www.dps.texas.gov/section/compassionate-use-program.
 https://www.texastribune.org/2021/01/04/texas-medical-marijuana-2021/ https://dph.georgia.gov/low-thc-oil-registry-faq/low-thc-oil-faq-general-public.
 https://www.ncsl.org/research/health/state-medical-marijuana-laws.aspx; https://medicalmarijuana.procon.org/legal-medical-marijuana-states-and-dc/.
 https://knowledgecenter.csg.org/kc/system/files/Medical%20Marijuana.pdf (2015, partial publication) re SLAs.
 https://www.ncsl.org/research/health/state-medical-marijuana-laws.aspx. National Conference of State Legislatures: Table Two "Limited Access Marijuana Product Laws" regions.
 https://www.counton2.com/news/the-investigators/medical-cannabis-laws-keeping-summerville-family-apart-at-the-holidays/ (South Carolina).
 https://www.mpp.org/states/south-carolina/south-carolinas-cannabidiol-medical-marijuana-law/; https://www.safeaccessnow.org/south_carolina; https://www.scstatehouse.gov/sess120_2013-2014/bills/1035.htm.
 https://www.ncsl.org/research/health/state-medical-marijuana-laws.aspx. National Conference of State Legislatures: Table Two "Limited Access Marijuana Product Laws" regions.
 https://www.washingtonpost.com/nation/2021/02/09/south-dakota-marijuana-noem-legalize/; https://www.newsweek.com/south-dakota-judge-appointed-trump-ally-kristi-noem-rejects-marijuana-legalization-1567755.
 https://www.politico.com/states/new-jersey/story/2020/11/03/new-jersey-voters-approve-constitutional-amendment-to-legalize-cannabis-1332854; https://www.vox.com/2020/11/4/21514885/montana-marijuana-legalization-ci118-i190-results; https://www.vox.com/2020/11/4/21514899/south-dakota-marijuana-legalization-constitutional-amendment-a-results.
 https://www.clarionledger.com/story/news/2019/07/12/pot-marijuana-research-ole-miss-growing-most-5-years-federal-government-nida-thc-cbd-health/1710259001/; https://cannabistraininginstitute.com/new-cannabinoids-discovered-by-university-of-mississippi/https://cen.acs.org/biological-chemistry/natural-products/Cannabis-research-stalled-federal-inaction/98/i25; https://www.latimes.com/nation/la-na-pot-monopoly-20140529-story.html; https://pharmacy.olemiss.edu/marijuana/ Mississippi as exclusive DEA cultivator.
 https://www.clarionledger.com/story/news/2020/11/05/what-to-know-getmedical-marijuana-in-mississippi-initiative-65/6160281002; https://www.sos.ms.gov/ElectionsVoting/Pages/Initiative-Measure-65.aspxl.
 https://disa.com/map-of-marijuana-legality-by-state (8 illegal states).
 https://www.leafly.com/learn/legalization (12 illegal states).
 https://localnews8.com/news/2020/12/30/idaho-group-to-try-for-recreational-marijuana-in-2022/ .
 https://mailtribune.com/news/top-stories/do-not-ship-pot-in-the-mail (2019); cf. hemp and CBD: https://www.marijuanamoment.net/u-s-postal-services-unveils-new-policy-on-mailing-hemp-derived-cbd-products/.
 https://feltg.com/can-federal-employees-smoke-pot/#:~:text=It%20is%20illegal%20for%20federal%20employees%20to%20use,live%20in%20a%20place%20where% (Federal Employment Law Training Group); https://chcoc.gov/content/federal-laws-and-policies-prohibiting-marijuana-use (Office of Personnel Management, OPM 2015 memorandum) cf. OPM Feb. 2021 memo., https://www.washingtonpost.com/politics/marijuana-federal-employees-hiring-firing/2021/02/26/2da856ba-785e-11eb-8115-9ad5e9c02117_story.html (less emphasis on marijuana use as a disqualifier).
 https://docmj.com/ohio/2020/03/26/can-active-duty-military-have-a-medical-marijuanacard/#:~:text=Active%20duty%20military%20are%20not%20currently%20allowed%20to,where%20marijuana%20is%20legal%20both%20recreationally%20and%20medically. (see Article 112a, Uniform Code of Military Justice)
 https://www.aba.com/advocacy/our-issues/cannabis; https://www.forbes.com/sites/roberthoban/2020/08/18/the-cannabis-industry-needs-banking-now/?sh=78599a403a58 (2020).
 https://www.economist.com/the-economist-explains/2018/01/22/why-marijuana-retailers-cant-use-banks; https://flowhub.com/dispensary-payment-processing-guide (2021).
 https://www.congress.gov/116/bills/hr3884/BILLS-116hr3884rfs.pdf (87 pages in PDF).
 https://www.rollingstone.com/culture/culture-features/more-act-marijuana-legalization-bill-vote-1097723/; https://www.congress.gov/bill/116th-congress/house-bill/388.
https://nymag.com/intelligencer/2020/08/senate-washington-dc-puerto-rico-statehood-filibuster-obama-biden-racist.html, (Aug. 2020); https://www.brookings.edu/policy2020/votervital/what-is-the-senate-filibuster-and-what-would-it-take-to-eliminate-it/.
 21 United States Code §812.
 Mandeep Trivedi statement from presentation to Drexel University LeBow School of Business class entitled "Cannabis as an Emerging Business," February 11, 2021.
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