High Times Ahead in Illinois?

State legislation proposing expanded legalization of marijuana draws consideration.

When enacted in 2014, Public Act 98-0122 created Illinois’ Compassionate Use of Medical Cannabis Pilot Program Act, a four-year program allowing qualified patients with specified illnesses to use up to 2.5 ounces of medicinal marijuana every two weeks. Central to the pilot program is regulatory oversight of growers, dispensers, and patients by the Illinois Department of Agriculture, the Illinois Department of Financial and Professional Regulation (IDFPR), and the Illinois Department of Public Health. In fact, the 60 licensed dispensaries disbursed throughout the state are required by the IDFPR to closely control inventories and submit audits of inventory completed by CPAs. Growers and dispensaries also pay a 7 percent privilege tax, and patients pay a 1 percent tax on purchases.

While the pilot has since been extended to 2020, its infancy began during the Obama Administration. Despite marijuana being an illegal Schedule 1 drug under the Federal Controlled Substance Act of 1970, The U.S. Department of Justice in 2013 issued a non-binding policy memorandum from then Deputy Attorney General James M. Cole, aka the Cole Memo, essentially directing federal authorities to refrain from prosecuting marijuana offenses in states where the drug is legal under state laws. The Obama-era Treasury Department also issued guidance to banks to serve licensed marijuana businesses.

However, on Jan. 4, 2018, U.S. Attorney General Jeff Sessions withdrew the Cole Memo, and directed U.S. attorneys to follow the “well-established principles that govern all federal prosecutions,” including weighing “all relevant considerations of the crime, the deterrent effective of criminal prosecution, and the cumulative impact of particular crimes on the community.” His message is a stark warning that federal law still trumps state law under the supremacy clause as upheld by the U.S. Supreme Court in Gonzales v. Raich (2005), which ruled that the federal government can prosecute marijuana offenses under the commerce clause.

Yet, there’s conflict even at the federal level. U.S. Secretary of the Treasury Steven Mnuchin does not want to withdraw marijuana business guidance previously provided to banks. It also remains uncertain if Congress will lift restrictions on the Drug Enforcement Administration’s marijuana enforcement efforts in states that have legalized marijuana use or take larger steps in reconciling the conflict between federal and state laws by amending the Federal Controlled Substances Act of 1970 to remove marijuana from the Schedule 1 drugs list.

Meanwhile, on the heels of Sessions reversing the U.S. Department of Justice’s “hands-off” policy toward state-legalized marijuana use, legislation has been introduced in the Illinois General Assembly to further expand marijuana legalization.

Senate President Pro Tempore Don Harmon (D-39, Oak Park) introduced Senate Bill 336, which would extend medicinal marijuana usage to opioid users. The impetus is to provide users a safe alternative to highly addictive and often deadly opioids. This bill saw early movement, advancing out of the Senate Executive Committee, as there are strong medical arguments that medicinal marijuana helps curb opioid addiction and abuse.

Two other bills propose legalizing the recreational use of marijuana. House Bill 2353 introduced by Rep. Kelly Cassidy (D-14, Chicago), and Senate Bill 316 introduced by Sen. Heather Steans (D-7, Chicago), would legalize the private possession of 28 grams of marijuana by anyone over age 21. Both bills also would require all cannabis products to be regulated and taxed by the state and tested for potency and contaminants; permit local jurisdictions to opt out; allow employers to not hire marijuana users; and make it illegal to drive under the influence of marijuana. Cassidy and Steans opine that marijuana prohibition has not worked, allowing for the underground market and criminals to thrive. They estimate that recreational marijuana legalization could produce up to $700 million a year in new tax revenue.

A hybrid proposal has also emerged in the introduction of Sen. Bill Cunningham’s (D-18, Chicago) Senate Bill 2275, or the Marijuana Legalization Referendum Act. This bill would pose a statewide advisory referendum question to Illinois voters during the upcoming November election to gauge support for or against marijuana legalization.

State political and legislative dynamics will ultimately determine if these proposals see the light of day. All the Democratic candidates for governor support legalizing recreational marijuana in some form. Gov. Bruce Rauner stands in opposition but has previously signed a marijuana decriminalization bill. Opposition also looms from the Illinois Association of Chiefs of Police and other law enforcement organizations who argue the need for studies on the impact of marijuana legalization in other states.

However, Illinois is not alone in moving forward; more than 30 states have legalized medicinal marijuana use, and eight states allow recreational marijuana use. And, waiting at the busy intersection of conflicting of state and federal laws are CPAs, who are increasingly being called upon to make sense of all of this in order to serve the growing “legal” marijuana industry.

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Author’s Note: This column includes my personal observations of the evolution of the legislative environment and are not necessarily the views of the Illinois CPA Society.