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US Senators Seeking Input on Comprehensive Federal Cannabis Reform Legislation

The majority of states in the US have either decriminalized cannabis or enacted laws authorizing its use for medical or non-medical (aka “recreational” or “adult”) use. However, in the absence of federal guidance beyond the Cole Memorandum and nascent policy discussions and enforcement actions by the Food and Drug Administration (FDA), dramatic differences have developed among the states.
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In response to this and other challenges resulting from the current state of federal cannabis policy, Senate Majority Leader Chuck Schumer (D-NY) has partnered with Senate Finance Committee Chairman Ron Wyden (D-OR) and Senator Cory Booker (D-NJ) to draft comprehensive federal cannabis reform legislation, which the sponsors plan to introduce this fall.

The Cannabis Administration and Opportunity Act (the CAOA) addresses many issues raised by cannabis industry participants, advocates, elected officials, and other stakeholders over the past decade. If enacted, it would deschedule cannabis, expunge certain prior criminal convictions, set 21 years of age as the minimum age to purchase cannabis, establish a federal tax, and allow states to take the lead on creating their own cannabis policies, among other things. The CAOA takes into consideration the Marijuana Opportunity Reinvestment and Expungement Act, which was previously introduced in the House. The official summary of the draft CAOA is available here, and some important highlights are summarized below.

  1. State Rights: States would have control over how or when they want to legalize cannabis. The CAOA reserves the right of states to either legalize cannabis or continue to restrict or prohibit it. The only major change would be that no state could prohibit cannabis from passing through it to travel from one legalized state to another.
     
  2. New Taxes: Because the CAOA would remove cannabis from the federal list of controlled substances, it would also eliminate Section 280E of the Internal Revenue Code. The CAOA would also phase in a federal tax on cannabis products starting at 10% for the first year after enactment and gradually increasing on an annual basis up to 25%.
  1. Opportunity Trust Funds: A significant portion of the federal tax revenue raised through the cannabis sales tax would be spent on robust grant programs. The CAOA would create the following three grant programs to support residents of communities most impacted by the War on Drugs who now want to participate in the legal cannabis industry:
  1. The Community Reinvestment Grant Program would fund nonprofits that provide services to individuals adversely impacted by the War on Drugs. These programs could include at a minimum job training, reentry services, and legal aid.
  2. The Cannabis Opportunity Program would provide funding to states and localities to make loans to assist small businesses in the cannabis industry owned by socially and economically disadvantaged individuals.
  3. The Equitable Licensing Grant Program would provide funding to states and localities to implement cannabis licensing programs that minimize barriers for individuals adversely affected by the War on Drugs.
  1. Resentencing and Expungement: Within one year of enactment, the federal government would be required to expunge any arrest or conviction, as well as adjudications of juvenile delinquency, for a non-violent federal cannabis offense. Courts would also be required to seal the records related to such conviction or adjudication. Additionally, the CAOA would allow any person who is serving a criminal justice sentence for a non-violent federal cannabis offense to get a sentencing review hearing. After the hearing, the court would be required to expunge each arrest, conviction, or adjudication for a non-violent federal cannabis offense.
  1. Regulatory Oversight: The CAOA would transfer regulatory authority over cannabis from the Drug Enforcement Administration (“DEA”) to the FDA; the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”); and the Alcohol and Tobacco Tax and Trade Bureau (“TTB”).

The bill is in a very early draft form and can be expected to evolve as it undergoes debates and conforming amendments that are part of the regular legislative process. A unique aspect of this particular bill’s process is that the sponsors have deliberately reached out to the public for input and are actively soliciting comments prior to introduction from a broad spectrum of stakeholders. Comments may be submitted through September 1, 2021 at Cannabis_Reform@finance.senate.gov.

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