A Proposal for Federal Cannabis Policy

MAKE AMERICA HEMP AGAIN™

“Make America Hemp Again: End 70 Years of Cannabis Misunderstanding and Prohibition for
the Betterment of the American Economy.” ©

Table of Contents
A. Introduction
B. Author Background
C. Discussion
1. Status Quo
a. Status of Marijuana
b. Status of Industrial Hemp
c. Policy Problem
2. The Proposed Policy Plan
a. Nutraceutical
i. Summary
ii. Necessary policy action
b. Pharmaceutical
i. Summary
ii. Necessary Policy Action
c. Industrial
i. Summary
ii. Necessary Policy Action
3. Why Do This?

*************

A. Introduction:

The following outline sets forth the broad tenets of an achievable federal cannabis policy that
presents an opportunity for the Trump Administration to be leaders on this issue for the
betterment of the American economy. At the outset, it is important to note that the term
“cannabis” encompasses both industrial hemp and (adult use and medicinal) marijuana. This
policy adheres strictly to business principles, and the fundamental tenets of the Republican Party
(states’ rights, individual freedoms, job creation, improved economy, private sector innovation,
and preclusion of wasteful government spending); and strikes a balance between the competing
interests of the federal government and large corporate interests, on the one hand, and
small/medium size businesses and state/local governments, on the other. More than 123,000
U.S. jobs and the future of our agricultural economy depend on this.1

The legal cannabis market is expected to exceed $44 billion by the year 2020 -- up from
approximately a $7 billion dollar industry currently.2 To put that into perspective, this is no
small industry considering that the National Football League is expected to generate a mere
$13.6 billion dollars in 2016. This is bigger than the dot-com boom.3 The related tax revenue
and fiscal impact will now be positively felt in 28 states that represent the overwhelming
majority of the population of the United States. The United States government can avail itself of
exponential additional tax revenues from this industry under the adoption of the following
policies due to the elimination of the IRS 280 problems, and the vast impact that will have on
income tax revenues to the U.S. Treasury. And the momentum has taken hold internationally,4
with the development of the international cannabis industry outside of the U.S. (Europe, Latin
America, Asia).

Enactment of these policies will allow the United States to recoup jobs lost overseas as a result
of NAFTA and will serve to revitalize rural and underserved urban areas with quality forms of
employment. This will serve to reinvigorate an ailing aspect of the U.S. economy associated
with clothing, fiber, and domestic fuel production. The industrial hemp policies referenced
herein can produce an immediate impact on the American economy by generating thousands of
jobs while allowing the medicinal and drug markets to evolve more slowly, as it pertains to this
plant.

1
Read more here from Leafly
2
Executive Summary from Marijuana Business Daily
3
ABC News: Legal Marijuana Sales
4
CNN: Global Cannabis Laws
2

The following policy outline is an achievable federal plan, with specific action items.

B. Author Background:

By way of background, Robert Hoban, the author of this proposed policy is: a libertarian-minded
commercial legal practitioner and cannabis industry/policy expert; Managing Partner of the
nation’s leading cannabis industry law firm; and a public policy professor at the University of
Denver. Since 2009, Mr. Hoban and his firm have advised countless clients and state, local and
international governments on this topic, and have consequently created government policy,
accordingly. More here.

C. Discussion:

1. Legal/Policy Status Quo.

a. Status of Marijuana.

Marijuana has been a Schedule I narcotic since 1970. However, 28 states plus the District of
Columbia have enacted laws aimed at creating a regulated marijuana marketplace (eight states
offer adult-use/recreational cannabis; the remainder offer some form of “medicinal” cannabis).
That said, this enormous regulated commercial cannabis industry in the U.S. has been authorized
to exist under a variety of policy memoranda issued by the U.S. Department of Justice (USDOJ).

On February 14, 2014, the USDOJ issued what is commonly referred to as the Cole Memo 2.0,
which provides a listing of factors and objectives that must be met for states (and their private
business operators) to go forth without federal government interference in regulating their
respective commercial cannabis marketplaces.

The tenets of the Cole Memo 2.0 are bolstered by virtue of the Rohrabacher–Farr medical
marijuana amendment first passed on May 30, 2014, as an attachment to the CJS Appropriations
bill for fiscal year 2015, and subsequently renewed (presently through April, 2017).

There have been a large number of studies examining the effectiveness of the prevailing cannabis
regulations in many states, including but not limited to, “Sprung From Night Into The Sun: An
Examination of Colorado's Marijuana Regulatory Framework Since Legalization," Kentucky
Journal for Equine, Agricultural and Natural Resources, Volume 8, Issue No. 2. The bottom
line is that regulation is working (and working very well) to achieve the goals set forth in the

Cole Memo 2.0, and teenage use numbers are not increasing. Peter Thiel can speak to the success
of state and international cannabis regulatory structures firsthand.

b. Status of Industrial Hemp.

The industrial hemp industry has been extremely profitable worldwide for over 70 years (since
the U.S. passed the Marijuana Tax Act of 1937, which effectively prohibited the cultivation,
processing, and manufacturing of industrial hemp). This non-psychoactive plant has over 50,000
uses, and is currently a substantial factor in the growing U.S. economy. Thus, it is a burgeoning
industry in the U.S. (currently in excess of $1 Billion U.S.) due to a variety of policy factors.

The industrial hemp industry exists because not all parts of the Cannabis sativa L plant are
considered “marihuana” under the CSA’s federal definition. To be clear, the federal definition of
marihuana expressly excludes various portions of this plant, and these portions are being used in
this burgeoning industry. Moreover, when it comes to industrial hemp, as set forth in the
Agriculture Act of 2014 (commonly known as the Farm Bill), the entire industrial hemp plant is
lawful. These factors have created an industrial hemp industry that goes far beyond soap and
rope. Industrial hemp has reinvigorated long-abandoned farmland and processing facilities in the
U.S., which largely resulted from NAFTA, and has created an economy that can service the food
and wellness industry, as well as the industrial complex with durable goods and consumer
products that can be utilized on a trillion dollar scale.

c. Policy Problem.

The laws surrounding marijuana and industrial hemp are patchwork, and create more confusion
to the industry, industry investors, the relevant government actors, and to law enforcement.
Thus, there needs to be a detailed plan for a policy based on clarity and minimal government
interference. The following outlines this plan.

2. The Proposed Policy.

Federal cannabis policy can be organized into three categories: a. nutraceutical, b.

pharmaceutical, and c. industrial.

a. Nutraceutical.

i. Summary.

Fundamentally, this category addresses marijuana and industrial hemp in its natural state
intended for human consumption. This encompasses over-the-counter marijuana,5 which is
currently regulated by state and local governments. As stated above, these intra-state marijuana
industries are presently authorized by the Cole Memo 2.0. As it pertains to industrial hemp,
there are countless non-psychoactive wellness products and food items [containing or derived
from cannabinoids in hemp?] that have been proven to be safe and effective for human
consumption and are being sold extensively in the marketplace. [maybe add “at health food
stores, etc.”?]

ii. Necessary Policy Action.

In order to allow these state-limited marijuana industries to exist and flourish economically, with
appropriate consumer safeguards and effective regulation, the following items need to be
accomplished:

• The tenets of the Cole Memo 2.0 need to be legislated. In other words, state-
regulated, over-the-counter, naturally occurring marijuana and its compounds
need to be de-scheduled. The simplest manner by which to achieve this is to
adopt legislation similar to that proposed by the Harmonious Code Council. This
will solve commerce and banking problems and ensure that marijuana is relegated
to only those states that choose to adopt such a regulatory program.
• The Industrial Hemp Farming Act, or something similar, needs to be passed to
completely and unequivocally exempt non-psychoactive industrial hemp from the
CSA, to allow farmers and agricultural processors to compete internationally.
• The FDA needs to discontinue its classification of hemp-derived foods and
supplements as a “deleterious” substance. This is a C.F.R./regulatory action.

b. Pharmaceutical.

i. Summary.

5
The author makes no distinction between state-run medical marijuana programs, and state-run adult-
use/recreational programs because this is effectively a distinction without a difference. These are both state and
local regulated, over-the-counter naturally occurring marijuana products. The intention is to merge these state-
regulated markets into one, and to simultaneously create true cannabis-based medicine under the pharmaceutical
model set forth herein.
5

This category includes cannabis-based medicine, which is truly “medicine,” as understood by the
FDA and the health care industry. This will assist in moving the industry, society, and policy
makers away from referring to naturally occurring cannabis as medicine. It may be a food or
wellness product, but the term “medicine” carries with it substantial legal significance; this needs
to be corrected.

The presence of cannabinoids in cannabis presents a great deal of opportunity for large
corporations to develop medicines and a variety of FDA-grade products. Typically, these will be
synthetic mimics of the naturally occurring cannabinoids; hence the distinction between the
nutraceutical category, and the pharmaceutical category, described herein. Under this model,
pharmaceutical companies, such as GW Pharmaceuticals, are expressly authorized to develop
cannabis-based medicines regulated at the federal level (by the FDA and the DEA), subject to
FDA standards and approval processes.

ii. Necessary Policy Action.

Here, the necessary policy action is somewhat simple. Because nutraceutical cannabis will have
been de-scheduled, as set forth above, the pharmaceutical model would require a rescheduling of
cannabis for the development of such cannabis-based medicines.

• Reschedule marijuana to be used in cannabis-based medicine from Schedule I

(completely illegal) to Schedule III (legal for medical purposes, allowed only
by prescription). Rescheduling would legalize marijuana testing and patient
studies for universities. This would be a boon for the pharmaceutical industry.

c. Industrial.

i. Summary.

The title of this category speaks for itself. This would allow industrial hemp plants to be
processed and manufactured to create durable goods, building materials, chemical components,
plastics, fuels, super conductors, and the like.

ii. Necessary Policy Action.

The Industrial Hemp Farming Act, or something similar, needs to be passed to completely and
unequivocally exempt non-psychoactive industrial hemp from the CSA, to allow farmers and
agricultural processors to compete internationally.
6

3. Why Do This?

Without clear leadership and simple, definitive policy surrounding the cannabis industry,
hundreds of thousands of jobs will be lost, and millions of dollars in U.S. government funds will
be wasted in uncoordinated and directionless bureaucratic agency action. It is critical to
understand that these three categories above need to exist on parallel tracks, simultaneously, as
this presents the best path for our national economy.

Moreover, it is a mistake to believe that the nutraceutical category can be merged into the
pharmaceutical category. This was the position that the Clinton campaign embraced, and it
would have been tremendously adverse to the U.S economy, as Clinton was clear in her effort to
hand the industry over to pharmaceutical companies. This path would have been very bad for
the economy, and would have fostered more government waste. Most importantly, this would
have only emboldened and increased the presently shrinking black market surrounding cannabis.
Why would the government send billions of dollars in revenue, tens of thousands of industry
employees, and mainstream economic development back to the black market? It cannot.

This policy presents an opportunity for the Trump Administration to be leaders on this issue for
the betterment of the American economy.

Make America Hemp Again.