Business is confusing. I remember starting my first business and attempting to comply with the maze of laws and regulations that could have stopped me in my tracks before even starting. I spent weeks attempting to work through these problems only to find out that, at my size of business, most of the regulations didn’t apply. Those several weeks cost me time and money — and although my business venture turned out all right, I had to clear out my bank account several times and those weeks of cushion could have been useful.
With larger-scale businesses, the time frame is extended and knowledge needed is even greater (and therefore often more costly). And when we start talking about cutting-edge businesses like ride-sharing startups, cryptocurrency, blockchain, or marijuana, it turns out that some of the barriers to entry almost can’t be overcome because of confusing, unclear, and even contradictory regulations.
These contradictions and confusions cost the economy and consumers dearly.
Marijuana, for instance, has been legalized or decriminalized in 46 states, but the federal government has been unclear and inconsistent in its enforcement of contradictory federal laws. The Obama administration attempted to clear things up by issuing a guidance that supported the efforts of states by clarifying and limiting the times that law enforcement would be used. But Attorney General Jeff Sessions withdrew that guidance, re-inserting confusion and legal liabilities back into the growing the market.
In 2017, the “legal” marijuana market was nearly $8 billion and that is projected to grow to $10.82 billion in 2018 and then more than double to $19.89 billion by 2022. Because of federal laws, all of those transactions could be considered criminal or proceeds from that an unlawful transaction. That designation has caused issues not just for the businesses selling marijuana (medical and recreational) but for the state treasurers that these businesses are attempting to pay their taxes to.
For instance, West Virginia State Treasurer John Perdue is actively seeking solutions so that they can be in compliance with current banking rules.
I support the rights of my fellow West Virginians, and I recognize the need for medical marijuana as an option for people who are suffering. I want to do everything in my power to move our state toward a lawful solution; however, I want to be clear that there are real banking challenges at the federal level that my office may not be able to resolve alone.
This is a real problem of an overly large government and needs to be dealt with now.
Fortunately, Congress is working on several fronts to allow the states on the forefront of these markets to continue developing their own solutions. One of these is the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act, which was just introduced last week. It doesn’t do a lot, but it is a great first step, and hopefully acceptable to some of the more conservative members of Congress. It clarifies that certain transactions are not unlawful, removes industrial hemp from the Controlled Substance Act, and continues other provisions of the CSA like prohibiting endangering human life while manufacturing marijuana and prohibiting employment of people under 18 in the marijuana industry.
These are good first steps, and steps that are supported by the public. In poll after poll, the public supports the legalization of marijuana. In a 2017 Quinnipiac University Poll 94 percent (and 90 percent of Republicans) support the use of medical marijuana. In October 2017, a Gallup poll found that 64 percent of Americans supported legalization, including 51 percent of the Republicans polled. More recent polls have largely showed the same.
This is a time to see what “limited government” really means.
A bill like the STATES Act helps further move a market from out of the shadows and into the light. By reducing the overreach of a few burdensome regulations the public is better off, safer, and the economy can grow faster. This is the type of win-win solution that we should always be fighting for.
Charles Sauer (@CharlesSauer) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is president of the Market Institute and previously worked on Capitol Hill, for a governor, and for an academic think tank.
