Creating a Fair Cannabis Market: Policy Changes at the State and Federal Level

As the cannabis industry continues to grow across the United States, the conversation around creating a fair and equitable market for all players—ranging from small businesses and marginalized communities to larger enterprises—has intensified. To achieve this balance, both state and federal policies must evolve to address issues of access, equity, taxation, regulation, and interstate commerce. Here are several key policy changes that could help create a fair cannabis market:

1. Implementing Equitable Licensing Systems

One of the most pressing issues in the cannabis industry is ensuring equitable access to licenses. Many states have structured their cannabis licensing in a way that inadvertently favors well-capitalized companies, leaving small businesses and marginalized communities behind. 

Policy Change: States should implement social equity programs that prioritize licenses for individuals from communities disproportionately affected by past cannabis prohibition. This could include offering reduced fees, providing grants and loans, and creating incubation programs to help these businesses thrive. For instance, Massachusetts and Illinois have incorporated social equity programs that allocate a portion of licenses specifically to disadvantaged groups.

2. Reforming Tax Policies

Excessive taxation on cannabis businesses has been a significant barrier, particularly for small businesses trying to enter the market. High tax rates often lead to higher consumer prices, which can inadvertently drive customers to the unregulated market.

Policy Change: States should consider tax structures that provide relief to smaller operators, such as tiered tax rates based on business size and revenue. Additionally, at the federal level, there needs to be a reconsideration of the Internal Revenue Code Section 280E, which prevents cannabis businesses from deducting regular business expenses. Reforming 280E would allow legal cannabis businesses to compete more fairly and reinvest in growth and community development.

3. Facilitating Access to Banking and Financial Services

Due to the federal prohibition of cannabis, many financial institutions are reluctant to offer banking services to cannabis businesses, forcing many to operate on a cash-only basis. This situation not only creates security risks but also limits access to loans and other financial services crucial for small businesses.

Policy Change: The federal government should pass comprehensive banking reform, such as the SAFE Banking Act, to provide cannabis businesses with access to traditional banking services. Allowing these businesses to open bank accounts, secure loans, and process credit card payments would level the playing field and help foster a safer and more competitive market environment.

4. Promoting Interstate Commerce

Currently, cannabis businesses operate in silos due to state-specific regulations that prohibit interstate commerce. This fragmentation leads to inefficiencies and market imbalances.

Policy Change: Federal legalization or interstate compacts could facilitate interstate commerce in cannabis products. Allowing states to enter agreements for the movement of cannabis across state lines could create a more cohesive national market, reduce supply chain inefficiencies, and foster competition that benefits consumers and businesses alike.

5. Ensuring Inclusive Workforce Development and Education

A fair cannabis market requires not only equitable business opportunities but also diverse and inclusive employment prospects. Many people from marginalized communities face barriers in accessing jobs within the cannabis industry due to a lack of training and education.

Policy Change: State governments can fund job training programs and cannabis education courses targeted at communities most affected by past drug laws. Federal support could come in the form of grants and incentives for businesses that hire and train from these communities, thereby promoting diversity within the workforce.

6. Establishing Clear, Consistent, and Sensible Regulations

Regulatory complexity and inconsistency across states create significant barriers for new entrants and small businesses. Overregulation or conflicting regulations often require costly compliance measures that only large companies can afford.

Policy Change: Both state and federal governments should work toward creating uniform standards that streamline regulatory requirements, such as labeling, testing, and packaging. This consistency would make it easier for small businesses to navigate the market, reduce costs, and encourage fair competition.

Conclusion

Creating a fair cannabis market in the United States requires thoughtful policy changes at both state and federal levels. These changes must focus on equity, access, taxation, banking, interstate commerce, workforce development, and sensible regulations. By prioritizing these areas, policymakers can help ensure that the cannabis market is inclusive, competitive, and just—providing opportunities for all players involved.