Cannabis Business Executive
Alabama surprised the cannabis world last May when the state legislature very nearly passed medical marijuana legislation. Although the legislation ultimately did not receive the requisite support in the House of Representatives, the legislature did establish a Medical Cannabis Study Commission. The commission met several times during the latter half of 2019 and proposed a bill for the legislature to consider when the session begins later today. In this article, we examine the specifics of the bill proposed by the commission and offer our thoughts on the likelihood of passage and the potential sources of support and opposition.
What’s in the Bill?
The bill proposed by the commission seeks to create an 11-member Medical Cannabis Commission. The Medical Cannabis Commission would oversee a statewide “seed-to-sale” tracking and licensing system which would permit the medical use of smokeless marijuana products for a select number of patients with qualifying conditions and a doctor’s prescription. The “seed-to-sale” system would require that any marijuana sold in Alabama would also need to be cultivated and processed within the state. The Medical Cannabis Commission would establish packaging and labeling standards for medical cannabis products, as well as marketing and advertising restrictions. There is a specific prohibition on advertising, marketing, and packaging material that appeals to minors. The Medical Marijuana Commission will also be responsible for developing a universal state symbol that would be placed on all packages of medical marijuana.
The bill includes key protections for employers by including language that protects an employer’s right to terminate employees who use marijuana even for medical purposes. Employers would not be required to allow the use of medical marijuana in the workplace and would not be prohibited from refusing to hire employees because they use medical marijuana (although such provisions are likely to be challenged as violating federal disability laws). Additionally, the bill contains a provision that would prevent employees who use medical marijuana from collecting workers’ compensation benefits in certain situations. Insurance plans and healthcare plans would also not be required to cover the use of medical marijuana.
The proposed bill calls for a 9% state tax on the gross proceeds of the medical cannabis products sold at retail stores, as well as an annual privilege tax on every person doing business under the new law. The imposition of a 9% state sales tax is notable, as Alabama does not subject other prescribed medications to a sales tax. Alabama’s decision not to tax prescription drugs was a policy decision regarding, in part, the need to provide better financial access to prescription drugs. The decision to tax medical marijuana suggests that marijuana is on different footing than other prescription drugs.
The list of qualifying conditions in the proposed bill includes agitation associated with dementia; Autism Spectrum Disorder; cancer-related weight loss; Crohn’s disease or irritable bowel syndrome; epilepsy or a condition causing seizures; fibromyalgia; HIV/AIDs-related nausea or weight loss; post-traumatic stress disorder; sleep disorders; spasticity from diseases such as ALS and multiple sclerosis or from spinal cord injuries; and any terminal illness in which the life expectancy is six months or less. It is notable that chronic pain was not included as a qualifying condition, as it was discussed during the study commission’s hearings and is a common qualifying condition in other states that have legalized medical marijuana. The current line-up of qualifying conditions represents a small fraction of medical marijuana users across the country, and chronic pain is often the most common qualifying condition. Denying chronic pain as a qualifying condition may disincentivize businesses to go through the licensing process to reap smaller returns.
So, What Will Happen?
It is difficult to make predictions, especially about the future. And the challenge is particularly exacting when the issue, like medical marijuana, is in the news and cuts across a variety of political fault lines. But information is emerging that allows us to begin to read the tea leaves.
The fact that a medical marijuana bill was nearly passed during the 2019 legislative session is one of the best indications that there is a chance Alabama will see medical marijuana legalized in 2020. The political will that pushed the bill successfully through the state Senate last year remains in place. State Sen. Tim Melson, who proposed the 2019 medical marijuana bill and chaired the Medical Cannabis Study Commission, remains a staunch supporter of medical marijuana in the Senate. Between the state House and Senate, the Senate can likely be counted on to pass a medical marijuana bill again. While there have been some indications in the Senate that some members may attempt to filibuster a medical marijuana bill, the fact that the 2019 medical marijuana bill originated in the Senate and was passed in the Senate, is a strong indication that another medical marijuana bill would fare well in that chamber.
The state House is more difficult to call one way or the other and could be a road block to the passage of a medical marijuana bill. There is little to suggest that the state legislators in the House who opposed medical marijuana last year have changed their general stance on medical marijuana. The Medical Cannabis Commission’s favorable findings, however, may provide reluctant members of the House sufficient evidence to vote for medical marijuana. What remains to be seen is whether organized opposition will emerge to push against legalization. Given that some state politicians have already publicly come out against medical marijuana, opposition may be organizing. This is not to say that there are not supporters of the bill in the state House, as state Reps. Mike Ball (R-Madison) and Chris England (D-Tuscaloosa) have both publicly come out in support of medical marijuana. In addition to the vocal support of a select number of state lawmakers, there is a grass roots movement supporting the bill and a large base of support from the public.
Law enforcement is always an important constituency in these debates, and Alabama is proving no exception. Attorney General Steve Marshall recently announced his opposition to medical marijuana in a January 6th letter addressed to state lawmakers. Marshall’s letter cited: (1) the direct conflict Alabama’s medical marijuana law would create with federal law (marijuana is still illegal at the federal level); (2) his concern that marijuana is an addictive substance that will not help the state’s opioid crisis; and (3) that the state is not prepared to properly regulate medical marijuana in a responsible way. It is rather unusual for the attorney general to announce a position on pending resolution, and Marshall is joined in opposition by other law enforcement officials throughout the state.
In addition to those individuals and groups who oppose or support a medical marijuana bill, there are also notable groups who have chosen to remain neutral on the issue. Principal among those is the Alabama Farmers Federation (ALFA), the largest interest group for the state’s agriculture industry. While ALFA is considered a generally conservative group, many farmers would benefit financially from the medical cannabis industry the proposed bill would create. This financial opportunity has likely led the group to abstain from saying one way or another whether they support the bill.
Questions remain about the legal viability of the bill proposed by the commission. For instance, the proposed bill would require licensed medical marijuana companies to be majority owned by an Alabama state resident who has lived in the state for 15 years or longer. In addition to being unprecedented and virtually absent from every other state medical marijuana regulatory scheme, this durational-residency requirement for a marijuana business license could conflict with the dormant Commerce Clause of the U.S. Constitution. Recently the U.S. Supreme Court decided Tennessee Wine and Spirits Retailers Association v. Thomas and declared Tennessee’s durational-residency requirement for a liquor license unconstitutional. The court found overall that “it would be hard to avoid the conclusion that [the] overall purpose and effect is protectionist,” and that the state’s two-year residency requirement to obtain a liquor permit is not needed to “enable the State to maintain oversight over liquor store operations” or to “promote responsible alcohol consumption.” It is possible that a court would likewise find Alabama’s durational-residency requirement impermissible.
We will continue to monitor this issue throughout the 2020 Alabama legislative session. If you have questions about the status of this legislation or the rapidly changing legal landscape for marijuana in the United States, you should contact an attorney with experience in this emerging area of law.
This article first appeared on the Cannabis Business Executive on February 3, 2020.