How Trump’s Fiscal 2021 Budget Could Affect CBD Regulation

Trump’s fiscal year 2021 federal budget provisions

The United States is one of the many countries with liberal views on cannabis and cannabis-derived products. Just as in Canada and Israel, the United States has different provisions and guidelines on cannabis production, sale, use, and marketing. Different bills granting permission for state-controlled cannabis programs and institutional cannabis research have since been passed. However, the provisions guiding cannabis funding and the protective legal framework on state-controlled cannabis programs have generated various controversies lately.

In 2014, a provision was included in the congressional spending bill as a budget rider—a provision specifying spending limitations on allocated funds. Originally inserted and signed by President Barack Obama, the budget rider primarily shields state-controlled cannabis programs from state interference. In further detail, this rider unequivocally specified that the Department of Justice is not allowed to utilize its allocated funds in preventing states from implementing state laws decriminalizing the cultivation, use, distribution, and possession of cannabis for medical purposes. Since its inclusion into the fiscal year plan of the country, Congress has renewed this rider every year through annual spending bills.

The rider ultimately provides a legal blanket protecting state legislation on medical cannabis systems from federal interference. Judging from the level of success state cannabis programs enjoyed from this rider, there are different speculations that state officials were secretly lobbying for more variation of this provision. On June 20, 2019, Marijuana Business Daily published a report on a historic vote in the U.S. House of Representatives concerning state-legal cannabis programs. Apparently, the House had approved a bipartisan amendment of the fiscal year 2020 Commerce-Justice-Science Appropriations Bill following a 267-165 vote session. Provisions of this new amendment seek to protect all state-legal cannabis programs—and not just medical cannabis programs, from federal interference. Proposed as an unconditional expansion to the rider, this amendment generated much controversy with different analysts commenting that federal checks are necessary for state laws on cannabis regulation. 

Eventually, the amendment was denied passage by the Republican-controlled Senate. In its stead, the rider’s original provisions were approved to run through the next fiscal year. Trump also signed major legislation in 2019 involving a $1 trillion spending bill for September. As contained in a signing statement accompanying the bill, Trump stated that he reserved the right to ignore certain provisions of the bill. This opened up different speculations about the possibilities of federal interference with state-controlled cannabis programs. At different quarters across the country, stakeholders in the U.S. cannabis market expressed concerns and subtle resentment over the president’s new stance. Inevitably, a showdown looms. 

How the budget proposal affects state-controlled cannabis programs

Issued in February 2020, the budget of the United States Government for the fiscal year 2021 is poised to affect state laws on medical cannabis significantly, if eventually passed. For three straight years, Trump has proposed the removal of the budget rider on cannabis programs. In simple terms, the President is seeking approval to empower the Department of Justice in prosecuting states with medical cannabis laws should the need arise. If approved, this proposal will put an end to state medical marijuana protection. In addition, Trump also proposed a plan to block Washington, D.C. from decriminalizing adult-use cannabis. The plan also requested a new funding line for the Food and Drug Administration (FDA) to be invested in priority activities, including the regulation of cannabis and cannabis-derived products. 

If enacted, the Office of National Drug Control Policy (ONDCP) is set to take a significant budget cut to the tune of a few hundred million dollars. In the 2020 budget, the ONDCP was allotted $425 million in operational funds. For the 2021 fiscal year, Trump is proposing an operational fund of $29 million. This has been the case for a few years, however, the Senate rejected the previous proposals on ONDCP’s budget cut. On the bright side for cannabis investors, the fiscal plan proposed $17 million for the domestic hemp program, which provides a national regulatory network for commercial production of industrial hemp in the United States through regulation and guidance. 

Consequences of the FY 2021 budget proposal for CBD

• Legal limitations on state-controlled cannabis programs

A pronounced legal limitation on the framework of the state-controlled cannabis programs is perhaps the primary consequence of Trump’s fiscal 2021 budget proposal. If enacted, state policies and existing guidelines regulating domestic cannabis production might become stricter. This will eventually affect the number of farmers registered under this program and, by extension, the cannabis production output and valuation expected for 2021. The Department of Justice might come down hard on states not complying with federal directives on cannabis production.

• Increased funding for drug control and cannabis research

Cannabis has long been considered a worthy replacement for conventional medication in the treatment of neurodegenerative disease and other chronic conditions in humans. The fiscal 2021 federal budget proposal increased funding for the FDA’s investment in priority activities concerning cannabis and cannabis-derived products. With the 2018 approval of Epidolex—a cannabis-derived medication for the management of seizures—increased supplementary funding to the FDA is expected to support cannabis research and the development of novel drugs derived from the cannabis plant. Pharmaceutical industries and research institutes with interest in cannabis products are set to gain from this provision.  

• Setback for DC’s plan on cannabis sale regulation

In May 2019, a bill proposing the decriminalization of adult-use cannabis was unveiled by Washington, D.C. Mayor Muriel Bowser. However, the provisions of this bill hinge delicately on a federal appropriation bill amendment implemented by the House in 2014, which aims to collapse the illegal cannabis market in the region and grant D.C. residents a choice to purchase medical cannabis. As contained in the 2021 budget proposal, Trump is seeking to prohibit the regulation of cannabis sales in the District. This action supports the illegal cannabis market in Washington, D.C., and limits federal power in cannabis control. 

In essence, the fiscal 2021 federal budget proposal is miles away from Congress’s approval, which is expected to be driven largely by public opinion.

REFERENCES

• https://mjbizdaily.com/in-historic-vote-us-house-protects-state-legal-cannabis-programs/
• https://www.govinfo.gov/app/details/BUDGET-2021-APP/contex/summary
• https://www.marijuanamoment.net/trump-proposes-ending-state-medical-marijuana-protections-and-blocking-dc-from-legalizing/
• https://www.bostonglobe.com/2020/02/10/marijuana/trump-budget-proposes-ending-state-medical-marijuana-protections/?outputType=amp