Legislation Surrounding The Cannabis Administration and Opportunity Act
Updated: Jan 13
While various jurisdictions across the United States have legalized medical and recreational use of marijuana, there has yet to be federal legislation doing the same. In fact, marijuana currently remains classified as a Schedule I drug (meaning there are no acceptable medical usages) under the Controlled Substance Act.
The conflicts in federal and state laws have resulted in quite a bit of justified confusion, with individuals legally using cannabis under state law, yet risking federal prosecution for the same usage. Along those same lines, some states have legalized the sale and distribution of cannabis, however individuals in those jurisdictions are impeded from starting businesses because of the unavailability of banking and insurance because of existing federal laws.
However, changes may soon be on the horizon. On July 14, 2021, U.S. Senators Cory Booker (D-N.J.), Ron Wyden (D-Ore) and Chuck Schumer (D-N.Y.) introduced legislation that would federally legalize and regulate the cannabis industry. The legislation, known as the Cannabis Administration and Opportunity Act, was open for public comment until September 1, 2021.m Significant comments were received from various special interest groups. While not required, it is likely that the bill will be revised to address these comments and then filed. As currently written, the Act would:
Remove marijuana and THC from the Controlled Substances Act.
Transfer agency jurisdiction over cannabis from the Drug Enforcement Administration to the Food and Drug Administration, Alcohol and Tobacco Tax and Trade Bureau, and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
Allow movement of cannabis products through the channels of interstate commerce, regardless of whether the channels are located in a state where cannabis is illegal.
Impose federal excise tax on the sale of cultivated marijuana – 10% of the removal price for the first year followed by annual increases up to 25% over the next three years. (Removal price is the price of the sale from cultivator to any third party.)
Establish a trust fund and transfer the greater of either $10 million or 10% of the annual excise tax collected on cannabis. The fund will be managed by the Small Business Administration to be used for loans to women and historically socially and economically disadvantaged individuals to be used in connection with the recipient’s cannabis business.
Establish and conduct a study into the impacts of driving under the influence of marijuana.
Establish and conduct a study into the impacts of cannabis use on the human brain and the efficacy of cannabis use for medical purposes.
Notably, nothing in the bill forces states to legalize cannabis. It will remain illegal in each state where it currently is illegal unless legalized pursuant to that state’s legislative process.
While the proposed Act is a positive step in the direction of federally legal cannabis, there are still several hurdles to its enactment, including votes from Congress, and approval from the White House. To date, however, Press Secretary Jen Psaki has indicated that President Biden’s position supports decriminalization and state regulation but opposes federal legalization. Only time will tell whether he would hold this position if the Act passes all other hurdles.