States Act 2.0

Strategic Overview: STATES Act 2.0 – Advancing Federal Cannabis Policy Through Bipartisan Incrementalism

Representative David Joyce (R-Ohio), co-chair of the Congressional Cannabis Caucus, introduced the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act 2.0. Joyce, along with Max Miller (R-OH) and Dina Titus (D-NV) propose legislation aimed to reconcile federal and state cannabis laws by exempting marijuana activities compliant with state law from the federal Controlled Substances Act (CSA). All other marijuana activities would remain federally prohibited.

Key Differentiators from the Original STATES Act

While the original 2018 STATES Act provided limited protections for state-legal cannabis activities, the 2.0 version expands upon this foundation:

• Interstate Commerce Framework: Section 3 introduces provisions for the legal transport of cannabis products between states that have legalized marijuana, ensuring that products can move without interference from states where cannabis remains illegal.
• Federal Regulatory Clarification: Section 6 designates the Food and Drug Administration (FDA) as the primary federal regulator for cannabis products, outlining its role in overseeing product safety and standards.

Federal Licensing and Taxation Considerations

The STATES Act 2.0 does not establish a federal licensing regime for cannabis businesses. However, it signals congressional intent for the Alcohol and Tobacco Tax and Trade Bureau (TTB) to play a leading role in regulating and taxing cannabis at the federal level. The Act emphasizes the importance of a tax structure that avoids excessive rates, which could perpetuate the illicit market by making legal products less competitive.

FDA’s Role in Cannabis Regulation

Under the STATES Act 2.0, the FDA’s authority over cannabis products would be delineated as follows:

• Medical Claims: Products making medical claims would be regulated as drugs, requiring approval through the FDA’s new drug application process.
• Food and Dietary Supplements: Cannabis-infused foods and supplements would be regulated similarly to those containing alcohol.
• Cosmetics: Cannabis-containing cosmetics would follow existing cosmetic regulations.
• Other Products: The FDA would have 180 days post-enactment to propose regulations for other cannabis products, focusing on contaminant testing, manufacturing practices, marketing, and post-market reporting, without requiring premarket approval.

Interstate Commerce Implications

While the Act permits the transport of cannabis products between states that have legalized marijuana, it does not explicitly authorize interstate sales. However, the legislative findings acknowledge the federal government’s role in regulating interstate commerce, suggesting a framework for future oversight to prevent illicit distribution.

Banking and Financial Services

By removing state-legal cannabis activities from the CSA’s purview, the STATES Act 2.0 aims to alleviate banking restrictions faced by cannabis businesses. Nevertheless, financial institutions may remain cautious due to the complexities of ensuring compliance across varying state laws and the potential risks associated with federal regulations.

Criminal Justice and Social Equity

The STATES Act 2.0 does not include provisions for expunging prior cannabis convictions or implementing social equity programs. It focuses primarily on aligning federal law with state-legal cannabis activities, leaving broader criminal justice reforms to be addressed in separate legislation.

Strategic Assessment

The STATES Act 2.0 represents a pragmatic, incremental approach to federal cannabis reform. By focusing on state compliance and clarifying federal regulatory roles, it seeks to build bipartisan support in a divided Congress. While not a comprehensive solution, it lays the groundwork for future reforms by addressing key legal and regulatory challenges faced by the cannabis industry.

Wisconsin Assessment

Despite some Wisconsin Republicans expressing support for cannabis policy as a states’ rights issue, many simultaneously oppose any efforts to reform state law—an inconsistency that has contributed to legislative paralysis within the GOP on this front. Republican leadership in Madison continues to actively resist change, even pressuring pro-reform colleagues to avoid bipartisan cooperation. While the STATES Act 2.0 includes meaningful steps toward federal-state alignment, it lacks a federal trigger or enforcement mechanism compelling Wisconsin to act. As such, this legislation—though symbolically significant—is unlikely to be the catalyst for reform in Wisconsin under current Republican leadership.

Sources: https://taxfoundation.org/blog/states-act-2-0-federal-cannabis-reform; https://reason.org/backgrounder/frequently-asked-questions-about-states-act-2-0