Passing the STATES Act

How Cannabis Trade Federation (CTF) supports cannabis businesses

Join CTF

The Cannabis Trade Federation (CTF) is a national coalition comprised of cannabis-related businesses including cultivators, dispensaries, wholesalers, distributors, and ancillary businesses. Representing the creation of a professional and credible organization within the cannabis industry, CTF’s mission is to promote sensible cannabis policy and social responsibility.

The leadership team at CTF has been instrumental in passing the majority of cannabis legislation at the state level, and now they’re working on passing the STATES Act at the federal level. In fact, the passing of the STATES Act is now CTF’s primary federal lobbying focus.

With the cannabis industry now employing over 100,000 Americans and with 2 in 3 Americans now in favor of federal legalization, the time is right for ending the conflict between federal and state cannabis law.

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What the STATES Act proposes

An acronym for "Strengthening the Tenth Amendment Through Entrusting States," the STATES Act is a bipartisan bill that would exempt legal cannabis states like California and Washington from federal law enforcement.

Simply put, the STATES Act amends the Controlled Substances Act (CSA) to say that if you are not in violation of state cannabis law, you are not in violation of federal cannabis law.

The bill would allow each state to create their own policy on marijuana, and it would mean the end of the federal ban. According to CTF, the STATES Act “harmonizes federal law with state cannabis laws and addresses the cannabis industry’s banking and tax issues.”

Recreational and medical marijuana businesses who are compliant with their state’s marijuana laws:

  • Shall not be unlawful at the federal level, and any proceeds/profits are not deemed unlawful
  • Shall not constitute trafficking a controlled substance under section 401 of the Controlled Substances Act
  • Shall not constitute the basis for forfeiture of property under section 511 of the Controlled Substances Act or section 981 of title 18, United States Code

Of course, there will still be issues with any goods or substances crossing state lines, but when in adherence with the laws of each state, there would be no federal retribution.

Tax repercussions

As fully law-abiding citizens, cannabis business owners would be able to claim all of their income on their taxes and pay income tax, self-employment tax, etc., as well as qualify for tax deductions. Today, Section 280E of the federal tax code states that businesses involved in the trafficking of controlled substances are not able to get tax credits or write-off business deductions.

By passing the STATES Act, we would reform the way the federal government looks at states that have legalized adult-use and medical cannabis. We would also eliminate unfair tax practices by the IRS, like Code 280E, which prevents plant-touching companies from writing off business expenses—raising the effective tax rate to 80% or more.

Kyle Sherman, CEO at Flowhub and Founding Director and Treasurer at CTF

Banking repercussions

In addition to protecting cannabis business owners from federal violation, the STATES Act would make it possible for the financial industry to serve cannabis clients. Currently, most cannabis businesses can’t access banks or loans. The financial industry refuses to serve these potential customers because of the risk of federal condemnation due to money laundering laws.

The federal prohibition of marijuana is wrong, plain and simple. Too many lives have been wasted, and too many economic opportunities have been missed,” said Senator Ron Wyden (Democrat, Oregon), a member of the Senate Finance Committee who introduced the Marijuana Revenue and Regulation Act S. 420.

The STATES Act serves two purposes: first, it allows federally chartered banks to participate, and secondly, it will enable compliant digital payments to minimize business risk of dealing only in cash.

Kyle Sherman
CEO at Flowhub and Founding Director and Treasurer at CTF

kyle sherman dave joyce

How Flowhub is pushing CTF and the STATES Act forward

As a company, we believe that the STATES Act is a vital next step forward in the cannabis industry. That’s why we’re happy to have announced on July 25, 2018 that Flowhub CEO, Kyle Sherman, is a founding board member of CTF and is actively serving as Treasurer.

Neal Levine, the CEO of CTF, has said, “The individuals and businesses that comprise the founding board members of CTF represent a diverse and broad segment of the growing and vibrant cannabis industry.” We’re thrilled to do our part!

"Politicians on both sides are finally looking at our industry as responsible and professional. Organizations like CTF are making it efficient to lobby by combining our efforts across businesses and verticals to bring the cannabis industry into a more normalized environment like other established industries. All of this leads to more investment in the space, which produces positive business growth without the restrictions we faced in the early days.

Kyle Sherman, CEO at Flowhub and Founding Director and Treasurer at CTF

Where the STATES Act stands today

Sparked by former Attorney General Jeff Sessions' nullification of the Cole Memo in January 2018, the STATES Act was introduced to the Senate on June 7, 2018 by Senator Cory Gardner (Republican, Colorado) and Elizabeth Warren (Democrat, Massachusetts).

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Flowhub CEO Kyle Sherman with Senator Cory Gardner

Across congress, the marijuana bill is currently supported by 11 senators, 46 representatives and 12 governors. President Donald Trump has given noncommittal support as well. Because of the financial implications that will positively benefit the industry as well as the government, it is considered a bipartisan issue. With a focus on states' rights, additional support from Republican senators and representatives is on the horizon.

For detailed information on the Act, please review the detailed summary put together by the CTF here. We will also be updating this section of the page with news as it arises, so please check back.

How you can help with the STATES Act

Let’s pull our collective power together to pass this bill.

Join CTF and donate

If you can imagine a world where cannabis businesses can operate above-board, itemize expenses and use FDIC insured banks, then you’ll want to be a part of CTF in any way you can. This moment is growing closer and we need your help! Please become a member and donate.

Work with businesses who support CTF and the STATES Act

When there’s a cause you care about, it’s always wise to spend your dollars with businesses who support it. View the list of CTF Founding Board Members here.


Support federal cannabis reform and help us pass the STATES Act

Join CTF today