The first sentence of the latest federal cannabis law reform proposal in Congress begins, “The War on Drugs has been a war on people—particularly people of color.”
The Cannabis Administration and Opportunity Act, the proposal continues, “aims to end the decades of harm inflicted on communities of color by removing cannabis from the federal list of controlled substances and empowering states to implement their own cannabis laws.”
On Wednesday, Senate Majority Leader Chuck Schumer and Sens. Cory Booker and Ron Wyden released their long-awaited federal cannabis reform proposal in the form of a “discussion draft,” which is a “detailed legislative proposal meant to spur a robust discussion among stakeholders” and inform the sponsors as they write the final bill. Now, they want to collect public feedback through September 1.
The summary of the proposed legislation points out that federal cannabis reforms are “especially urgent as more and more states legalize the adult and medical use of cannabis.” Today, 18 states and D.C. have legalized for adult use, and dozens of states have legalized for medical use. Public support for adult use legalization polls at about 60%, with roughly 90% supporting legalization for medical use.
“Cannabis prohibition, a key pillar of the failed War on Drugs, has caused substantial harm to our communities and small businesses, and especially for communities of color,” Wyden said Wednesday. “It’s as simple as this: Senators Booker, Schumer and I want to bring common sense to the federal government, end prohibition and restore the lives of those hurt most and set them up for opportunity.”
Booker echoed Wyden’s sentiments, adding, “While red and blue states across the country continue to legalize marijuana, the federal government continues to lag woefully behind. It is time for Congress to end the federal marijuana prohibition and reinvest in communities most impacted by the failed War on Drugs.”
As Cannabis Wire reported on Tuesday, the Senators’ proposal is expected to substantially change the cannabis conversation in Congress by meaningfully engaging stakeholders on the “hows” of cannabis reform. No bill that has been introduced to-date has gone into the details of legalization in such depth, nor has any lawmaker conducted a public comment period ahead of drafting.
Cannabis Wire reviewed the discussion draft released this morning, and broke down the major proposals:
De-scheduling cannabis
First and foremost, the Cannabis Administration and Opportunity Act would remove cannabis from the Controlled Substances Act, where it has remained in Schedule I, the most restrictive category, since the Act’s passage in the 1970s.
While the Act allows states to decide what happens with cannabis within their borders, it is clear that this right would not extend to getting in the way of interstate transport: “The provision clarifies that a state may not prohibit the interstate commerce of cannabis transported through its borders for lawful delivery into another state.”
The name of the Act is no mistake: one of its proposals is “a study on replacing the term ‘marijuana’ and ‘marihuana’ with ‘cannabis’ through the U.S. Code and regulations.”
It would also create, within the Federal Food Drug and Cosmetic Act (FFDCA), which sets rules related to food, dietary supplements, cosmetics, “and other substances such as tobacco” a new definition of “cannabis.” This would “retain the existing exception for hemp,” which is defined as cannabis with .3% THC or less.
New regulators
The discussion draft suggests a cannabis enforcement overhaul. The bill would remove the US Drug Enforcement Administration (Department of Justice) as the entity with “primary agency jurisdiction.” Instead, oversight would go to the US Food and Drug Administration (Department of Health and Human Services), the Alcohol and Tobacco Tax and Trade Bureau (Treasury Department), and Bureau of Alcohol, Tobacco, Firearms and Explosives (Department of Justice).
The Alcohol and Tobacco Tax and Trade Bureau (TTB) would mainly oversee “the taxation of cannabis products and trade practices of cannabis enterprises,” which range from the “tracking and tracing of cannabis products” to “prohibitions on unfair competition and commercial bribery.”
Though, on the tax front, one other entity enters the mix, and that’s the Treasury Department. The bill would “require any person selling cannabis products at wholesale to obtain a permit from the Treasury Department. In addition, any person producing taxable cannabis products must obtain a Treasury Department permit and register for tax purposes. A producer of cannabis products would also be required to register with the FDA.”
The FDA is key
The FDA, though, “would be recognized as the primary federal regulatory authority with respect to the manufacture and marketing of cannabis products,” and would develop “good manufacturing practice” rules for everything from planting to harvesting, as well as rules around labeling.
The FDA has already gotten its feet wet in this realm, as it has been at work on rules for products containing cannabidiol, or CBD, ever since the 2018 Farm Bill legalized cannabis plants with .3% THC or less, also known as hemp. As Cannabis Wire has reported, CBD products can be seen on shelves from vitamin shops to grocery stores, even though the FDA has not yet released rules for these products, and pressure has been mounting for guidance. (On that note, the Senators’ bill would “create a legal pathway for cannabidiol (CBD) in dietary supplements.”)
The bill would also create, within the FDA, a “Center for Cannabis Products,” which would be in charge of non-pharma cannabis products, and it would establish a “Cannabis Products Regulatory Advisory Committee” to work with the FDA as it considers regulations.
Though, when it comes to cannabis products, two things are already clear: the bill would “prevent the sale of cannabis products that contain alcohol, caffeine, or nicotine,” and it would “prohibit electronic cannabis product delivery systems from containing natural or artificial flavors.”
Taxes
The bill borrows lessons learned from alcohol and tobacco when looking at how to tax cannabis. The excise tax, or, in other words, a cannabis-specific tax, on sales would start at 10% on the year the Act is enacted, and then increase to 25% by year five.
As of year five, the tax would then be determined per ounce for flower and per-milligram of THC for extracts, and would be “equal to 25 percent of the prevailing price of cannabis sold in the United States in the prior year.”
But in an effort “to remove barriers to entry,” cannabis producers who have less than $20 million in sales each year would “be eligible for a 50 percent reduction in their tax rate, via a tax credit,” and those with higher sales would only be eligible for the first $20 million.
Expungement, equity, and grants
By removing cannabis from Schedule I, the bill would somewhat automatically lift myriad hurdles and restrictions that come into play with a controlled substance. A cannabis arrest, for example, could cause a person to lose federal student financial aid, or to be deported, and even state-legal medical use could still lead to the loss of housing. Veterans, too, cannot obtain a medical cannabis recommendation from their VA doctors, who are bound by federal law. And, of course, there is the inconsistent and uncertain access to banking and other financial services for cannabis business owners.
The bill would put an end to this. But it also goes further, offering expungement and resentencing. It says that “within one year of enactment, each federal district shall expunge any arrests and convictions, as well as adjudications of juvenile delinquency, for a non-violent federal cannabis offense.” And, it “allows any individual who is under a criminal justice sentence for a non- violent federal cannabis offense to obtain a sentencing review hearing.”
The aforementioned federal cannabis tax would direct its revenue into establishing an “Opportunity Trust Fund,” which would then support “three grant programs aimed at creating opportunity for those harmed by the War on Drugs”: the Community Reinvestment Grant Program, the Cannabis Opportunity Program, and the Equitable Licensing Grant Program.
A new Cannabis Justice Office within the Department of Justice would oversee the first program, which would award grants to nonprofit organizations that provide “job training, reentry services, and legal aid, among other services.”
The Small Business Administration (SBA) would oversee the remaining two programs, which would award grants to jurisdictions that assist “socially and economically disadvantaged individuals” and “minimize barriers for individuals adversely affected by the War on Drugs.”
Research and data collection
The aforementioned removal of barriers applies to research, too, as there are extra hoops researchers must jump through in order to deal with a federally prohibited substance. So, beyond simply lifting those, the bill specifically calls for research and data collection in certain areas.
Broadly, the Department of Health and Human Services (HHS), along with the National Institutes of Health, would be directed “to conduct or support research on the impacts of cannabis,” from therapeutic uses to potential harms, and to “submit an annual report to Congress regarding an overview of the research conducted or supported.”
The bill also crucially focuses on cannabis-impaired driving, for which there is still no national standard, in large part because the effects of cannabis on drivers are poorly understood. The bill would require the Department of Transportation and HHS to “collect data on cannabis-impaired driving and continue research to enable the development of an impairment standard for driving under the influence of cannabis.” In the meantime, it calls for HHS, along with the Centers for Disease Control and Prevention, to work on public education and prevention, and to award grants, around cannabis-impaired driving.
The data collection efforts focus on both the industry, and on justice. The Bureau of Labor Statistics, for example, would be required to “regularly compile and publicize data on the demographics (e.g., age, race, educational attainment) of business owners and employees in the cannabis industry.” The Comptroller General of the United States would be required to “conduct a demographic study of individuals convicted of a federal cannabis offense,” and share the results with Congress two years after the bill is enacted.
The Comptroller General would also be required, within that time frame, to “conduct an evaluation of the societal impact of legalization by states with adult-use of cannabis,” from rates of use to crime to employment.
