On Tuesday, April 7, 2015, Sen. Rand Paul officially announced, to no one’s surprise, that he is running for president. Like many contenders, Paul has created a muddy trail on marijuana legalization, but investors would do well to parse through his statements even if only to come up with an agenda that better suits the needs of the legal industry. Candidates may catch up, but they will have to be asked to do so.
What Has Been Said, So Far
We have become more sophisticated in the ways that we discuss marijuana legalization since former Texas Rep. Ron Paul last ran for President in 2012. The conversation now distinguishes among several different ideas:
- reform of sentencing guidelines,
- non-enforcement of federal policies in conflict with state medical marijuana laws,
- non-enforcement of federal policies in conflict with state recreational marijuana laws,
- de-scheduling or re-scheduling marijuana under the Controlled Substances Act,
- establishment of state tax and regulatory schemes and
- full protection of marijuana commerce under federal tax, intellectual property and trade laws.
“Legalization” is not a one-dimensional concept.
Rand Paul has recognized a racial bias in enforcement of drug laws, but he has said that smoking marijuana makes people lazy and stupid; he has come out against legalization, but advocated that penalties for drug use and possession should be reduced. He has suggested that Congress should not interfere with marijuana laws passed in Washington, D.C. With Sens. Cory Booker and Kirsten Gillibrand, he co-sponsored the CARERS Act that would reduce the federal government’s ability to crack down on state-run legal medical marijuana programs.
Rand Paul’s support for marijuana is consistent with a state’s rights view of government. Broadly speaking, he ticks off the first four items on the list above, which is to say that he supports the status quo as it exists in the waning days of the Obama administration. CARERS goes a little further because it calls for re-scheduling marijuana as a Schedule II drug and de-scheduling some low-THC/high-CBD strains, but the bill is thought to have no chance of becoming law.
Paul’s approach does no harm to the legal industry, but that is not why anyone actually goes to the doctor. Beyond co-sponsorship of CARERS, Paul has not lent his support to the reform of federal law, upon which so much modern commerce depends. These measures include:
- The repeal of Section 280E of the Internal Revenue Code, which denies vital tax benefits to fledgling cannabusinesses,
- Reform of federal patent and trademark laws to protect the intellectual property rights of marijuana entrepreneurs,
- Reform of the federal franchising law to permit oversight of marijuana franchising operations,
- Reform of federal banking laws in ways that could bring legal marijuana businesses out of the dark ages of a cash economy, and
- Assuming that CARERS fails to advance, the amendment of the schedules to the Controlled Substances Act in ways that will permit more research and FDA-approved clinical trials to explore the therapeutic potential of cannabis.
These are the hot-button issues that are important for growth, and a federal “hands-off” stance does not produce any of them. These changes require a proactive national “hands-on” approach more frequently associated with liberal and progressive candidates.
No one has embraced the challenge so far, and no one may until prodded by organized interests and blocs of voters. (Of course, it would give another likely candidate a chance to reintroduce herself to voters.) Investors and marijuana entrepreneurs cannot sit out the early stages of the election, especially when agendas are being formed.