Legalization at Last? How to Interpret the Latest US Senate Legalization Effort

This Wednesday, Senate Majority Leader Chuck Schumer introduced the Cannabis Administration and Opportunity Act (CAOA) alongside co-sponsors Ron Wyden (D-OR) and Cory Booker (D-NJ). The bill covers many bases explicitly, such as social equity, banking issues, record expungement and more. While it does extend states’ rights to keep the plant and its attendant products illegal, even those states cannot prevent the transport over state lines. If passed (and that’s a big if), it would represent a sea change in federal policy, which to date has failed to keep up with the pace of legalization in individual states.

As we know, the Obama Administration began this slow march to legalization in 2012 after Colorado and Washington state voted to legalize. The Cole Memo, released months into Obama’s second term, opted for guidance towards newly legal states on staying out of trouble. To date, President Biden’s Attorney General Merrick Garland has kept the status quo. Yet the industry continues to struggle under several onerous restrictions due to federal illegality, notably its inability to access banking or deduct business expenses due to restrictions found under 280E.

So, what does the proposed legislation cover?

Immediate Effects

• The bill instructs the Attorney General to remove cannabis altogether from the Controlled Substances Act Schedule within 60 days of its enactment. Cannabis currently languishes in Schedule I, the most restrictive of the schedules, alongside heroin, LSD and mescaline (two of which are also being explored for possible applications in mental health)
• The word “cannabis” will replace the words “marijuana” and “marihuana” in Federal law
• States can continue to choose to set their own laws on cannabis, including an outright ban on recreational or medical uses.
• Cannabis, like alcohol or tobacco, would still be illegal for those under 21
• Jurisdiction would shift from the DEA to three federal bureaus
  • the FDA (manufacturing/marketing)
  • TTA (tax/trade)
  • ATF (enforcement)
• All businesses in the field must still be licensed by federal and state authorities
• Medical research would benefit from improved quality of testing material. Researchers have often complained of the inferior quality of federally grown research cannabis and inability to legally access the products currently sold in legal states.

In addition, CAOA proposes some category-specific reforms...

Finance / Taxes

• CAOA would establish a new Cannabis Justice Office within the Department of Justice that would fund non-profits helping those affected from the War on Drugs rebuild their lives
• SBA Grants would assist small businesses who want to get a leg up in the new industry
• New federal taxes would be levied upon cannabis products, starting at 10% and raising every year thereafter to 25%. After the fifth year, the tax rate would be based on THC content

Social Equity

• All federal districts will be required to expunge cannabis convictions within one year
• Currently imprisoned cannabis convicts can immediately request a re-sentencing hearing
• Establishes the Equitable Licensing Grant Program, which pledges money for states that remove barriers for participation in the cannabis industry by those adversely affected by the War on Drugs

It should be noted that the current bill is a “discussion draft.” All stakeholders (including readers of this article) may provide written comment on the draft by September 1st to Cannabis_Reform@finance.senate.gov. They request information on outstanding topics such as the legal definition of cannabis and how it intersects/differs from hemp, best practices for enforcing minimum age requirements, long-term funding needs for the various grant projects proposed by CAOA and more. Those searching for more info on the blanks that need to be filled in can read the CAOA booklet here.

This comes at a time when support for legalization is higher than ever. A Pew Research poll in April found that only 8% of the American population feels cannabis should not be legal for adults under any circumstances. However, as Schumer admitted, some of them happen to be in his caucus.

Biden is a long-haul supporter in the War on Drugs and author of the RAVE Act, which extended the Crackhouse Law to any business that knowingly allowed drug use within its environs and hangs heavy over the social use sector of the industry. Not too soon after Schumer held his press conference, Biden Administration Press Secretary reiterated the President’s refusal to endorse any but the most incremental of changes. And even GOP Senators in legal states such as Montana and South Dakota seem to have not been converted by the voices of their voters.

That said, this bill gets the ball rolling. Regardless of the headwinds, it shows the might of drug reform amongst many sectors of the population. With Rhode Island legalizing drug consumption centers, the decriminalization of all drugs in Oregon and decriminalization of plant-based psychedelics discussed in city councils and state legislatures throughout the country, the era of Just Say No is officially behind us, while a new era struggles to be born.