In 2012, Washington state and Colorado became the first states to legalize recreational use of cannabis by adults. Over the past decade, 16 more states, the District of Columbia and Guam have passed similar laws. What’s more, medical marijuana has been approved in 37 states as of spring 2022. Indeed, cannabis has become big business. According to Euromonitor, the U.S. market banked $22 billion in 2021 with a 30% increase in sales over the previous year.
However, cannabis remains a “scheduled” drug at the federal level under the Controlled Substances Act (CSA). This conflicting status complicates the financial and banking functions for businesses operating the emerging field. The Marijuana Opportunity Reinvestment and Expungement (MORE) Act seeks to rectify the discrepancy between states and the federal government.
Originally introduced and passed in the U.S. House of Representatives in 2020, the MORE Act was reintroduced again this year. It once again passed primarily along party lines. In its current form, the bill identifies three key objectives: Cannabis would be removed from the list of drugs regulated by the Controlled Substances Act; criminal penalties for federal cannabis offenses would be eliminated; and past federal cannabis convictions would be expunged. Out of the three changes, eliminating cannabis from the CSA, or decriminalizing it, would affect the convenience store industry the most. That would essentially end the federal ban on cannabis, but it would not technically legalize it nationally. Rather, that step still falls at the feet of state legislators.
Additionally, the MORE Act establishes a 5% retail sales tax that will increase to 8% over the first three years. Taxes will be directed to an Opportunity Trust Fund, and will be divvied up among various programs. In fact, lawmakers have delegated 40% of the collected funds to the Small Business Administration to support new cannabis retailers.
The MORE Act also enables retailers and cannabis companies to promote products via various channels, including Google ads and SMS messaging.
Now, the bill waits for the U.S. Senate to vote on its companion bill, the Cannabis Administrative and Opportunity Act (CAOA). This is the juncture where the previous version stalled. If the Senate bills passes with at least 60 votes, the two pieces of legislation will be reconciled before landing on the president’s desk for signature or veto. The White House has not specifically backed either package, but has expressed support for initiatives to readdress current marijuana laws.
Until then, c-stores in states with legalized cannabis can participate in the market by stocking accessories, such as pipes, lighters and other items, that may end up bonus basket items.