Schumer, Booker, Wyden File First Cannabis Legalization Bill In Senate History

The highly-anticipated Senate bill to legalize cannabis at the federal level was officially filed on Thursday, July 21. Known as the Cannabis Administration and Opportunity Act (CAOA), the legislation was announced last year in a plan organized by Senate Majority Leader Chuck Schumer (D-NY) and Senators Cory Booker (D-NJ) and Ron Wyden (D-OR). It is the first Senate bill of its kind to focus not only on cannabis legalization, but also on creating social equity pathways to success within the regulated industry.

What’s The Cannabis Administration And Opportunity Act (CAOA)?

When the CAOA was initially introduced in July 2021, it included goals for establishing grant programs and wide-ranging opportunities for communities disproportionately harmed by the War on Drugs. The Community Reinvestment Grant Program, as named in the bill’s original announcement, would fund nonprofits to provide services such as job training and reentry resources to adversely affected individuals.

Other proposals in the CAOA purported to transform the national approach to cannabis. First, cannabis would be removed from the Controlled Substances Act and direct that a new definition be created under the Federal Food Drug and Cosmetic Act. The legislation would also impose taxes on cannabis products similar to tobacco and alcohol, meaning that primary jurisdiction for regulating cannabis would be transferred from the Drug Enforcement Agency to the Food and Drug Administration. These changes would allow cannabis companies more leeway to work with ancillary businesses and increase mainstream access to cannabinoid products, while at the same time removing the threat of major penalties to those in the industry.

Cory Booker, Chuck Schumer and Ron Wyden announcing the Cannabis Administration and Opportunity Act in 2021. Courtesy of Cannabis Industry Journal.

How Is The Final Version Of The CAOA Different?

According to reports, the new version of the CAOA at 296 pages closely resembles the earlier draft, but has incorporated suggestions based on the more than 1,800 comments submitted upon the draft’s release. Among the revisions are clauses concerning cannabis workers’ rights, a federal responsibility to set an impaired driving standard, banking access, expungements and penalties for possessing or distributing large quantities of marijuana without a federal permit. Under the bill, a new federal definition for hemp will be established, increasing the permissible THC to 0.7 percent from the current 0.3 percent. That’s not the 1.0 percent that most industry cultivators have been pushing for, but it does widen the possibility of what will pass as usable hemp. Additionally, this new definition would include all THC isomers in that 0.7 percent total, meaning that Delta-9, Delta-8 and any other forms would be allowed.

“For far too long, the federal prohibition on cannabis and the War on Drugs has been a war on people, and particularly people of color,” Schumer said in a press release, adding that CAOA “will be a catalyst for change by removing cannabis from the federal list of controlled substances, protecting public health and safety, and expunging the criminal records of those with low-level cannabis offenses, providing millions with a new lease on life.”

Will The CAOA Pass The Senate?

Will the CAOA make it to a vote in the Senate before the government’s August recess? There’s no telling yet, but a Senate Judiciary subcommittee chaired by Booker has scheduled a hearing for Tuesday July 26 called “Decriminalizing Cannabis at the Federal Level: Necessary Steps to Address Past Harms.” Few details about the hearing have been released, but it’s likely that the CAOA will be a focal point of the discussion.

“As more states legalize cannabis and work towards reversing the many injustices the failed War on Drugs levied against Black, Brown, and low-income people, the federal government continues to lag woefully behind,” Booker said, as reported by Marijuana Moment. “With strong restorative justice provisions for communities impacted by the drug war, support for small cannabis businesses, and expungement of federal cannabis offenses, this bill reflects long overdue, common sense drug policy.”

Even if the CAOA reaches the voting stage, how likely is it that such a bill will pass? It’s unclear if the legislation will achieve the 60 votes needed to clear the Senate. All previous cannabis bills that have passed in the House of Representatives have failed to secure the needed Senate majority.

Republican Senators are generally expected to oppose a bill that removes cannabis from the Controlled Substances Act, particularly a piece of legislation so focused on social equity plans such as automatic expungement for people with prior cannabis convictions. Democratic Senators are also not reliable for votes, as several members have either been noncommittal or seemed opposed to the original version of the CAOA.

Wyden said that he’d ask his Senate colleagues to “think long and hard about what keeping the federal government stuck in yesteryear means for public health and safety… By failing to act, the federal government is empowering the illicit cannabis market, it’s ruining lives and propping up deeply rooted racism in our criminal justice system, it’s holding back small cannabis businesses from growing and creating jobs in their communities. Cannabis legalization is here, and Congress needs to get with the program.”

Chuck Schumer at the NYC Cannabis Parade and Rally, May 2022 (C) Sam C. Long / Honeysuckle Media, Inc.

What Are The Key Provisions Of The CAOA Now?

The key provisions of the CAOA as it now stands include:

Removal From The Controlled Substances Act

Require the attorney general to finalize a rule removing marijuana from the CSA within 180 days of enactment.

Excise Tax On Cannabis

Impose a 5 percent federal excise tax on small- to mid-sized cannabis producers, which would gradually increase to 12.5 percent after five years. For large businesses, the tax would start at 10 percent and increase to a maximum of 25 percent.

Adult Use Only

Only those 21 and older would be allowed to purchase recreational marijuana products, as is already the policy in states that have legalized for adult use. There would be targeted public education campaigns meant to deter youth consumption. States would also receive funding for initiatives to prevent youth use and impaired driving, which would include money for education and enforcement.

Expungement For Cannabis Convictions

Expunge the records of people with low-level, federal cannabis convictions within one year of enactment, while allowing those currently incarcerated over marijuana to petition the courts for relief.

Federal Regulatory Framework For Cannabis

Create a federal regulatory framework for the cannabis industry, with the Food and Drug Administration (FDA), the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and the Alcohol and Tobacco Tax and Trade Bureau (TTB) all playing key roles. Within FDA, there would be a Center for Cannabis Products responsible for regulating “the production, labeling, distribution, sales and other manufacturing and retail elements of the cannabis industry,” according to a summary.

Banking For Cannabis Businesses

The Financial Crimes Enforcement Network (FinCEN) would need to update or issue new guidance clarifying to banks and credit unions that the policy change means that they can lawfully service legitimate cannabis businesses.

Interstate Cannabis Transportation And Prohibitions

States could choose to continue prohibiting marijuana production and sales, but they could not prevent transportation of cannabis products between legal states through their jurisdictions. Federal laws would still prohibit trafficking in states that ban cannabis and in legal states that impose laws for trafficking.

Cannabis Grant Programs

Establish a grant program to fund nonprofit organizations that provide job training, reentry services and legal aid. The program would be managed by a new Cannabis Justice Office under the Justice Department. DOJ grants would also go toward law enforcement hiring and community outreach to combat the illicit market. Separate Equitable Licensing Grant and Equitable Licensing Grant Programs would provide funding for states and localities to promote participation in the industry by minority and low-income people.

Small Business Administration Loans

Further, there would be a 10-year pilot program through the federal Small Business Administration “for intermediary lending” to provide “direct loans to eligible intermediaries that in turn make small business loans to startups, businesses owned by individuals adversely impacted by the War on Drugs, and socially and economically disadvantaged small businesses.” Federal law would be amended to explicitly state that SBA programs and services are available to cannabis businesses and companies that work with them.

Protection Of Federal Benefits

People could not be denied federal benefits due to the use or possession of marijuana or for a conviction for a cannabis offense. That includes preventing the revocation of security clearances for federal employees.

End Of Federal Employment Drug Testing

Federal employment drug testing for cannabis would also be prohibited, with certain exceptions for sensitive positions such as law enforcement and those involving national security.

Medical Cannabis For Veterans

Physicians with the U.S. Department of Veterans Affairs (VA) would be authorized to issue recommendations for medical cannabis to veterans.

Limits On Retail Sales

There would be measures taken to prevent diversion, including the establishment of a track-and-trace regime. Further, retail cannabis sales would be limited to 10 ounces in a single retail transaction.

Government Studies On Cannabis

The Government Accountability Office (GAO) would be required to facilitate a number of studies into cannabis policy—for example evaluations of the societal impact of legalization in states with adult-use cannabis laws on the books, including information on impaired driving, violent crime and more. The Bureau of Labor Statistics (BLS) would need to compile demographic data on business owners and employees in the cannabis industry. The U.S. Department of Health and Human Services (HHS) would be required to work with the National Institutes of Health (NIH) on ways to promote research into cannabis impacts. There would be a specific requirement to study the diversity of marijuana products available for research purposes. The bill also calls for an increase in the quantity of cannabis that’s available for study purposes.

A Labor-Friendly Cannabis Industry

Employers with federal cannabis permits required under the legislation that violate certain federal labor laws could see their permits rescinded—a bold policy proposal that would make the cannabis industry uniquely labor friendly.

Traffic Safety

The Department of Transportation would be responsible for developing a standard for THC-impaired driving within three years of the bill’s enactment that states would be required to adopt, unless the secretary finds the department is unable to set such a scientific standard. The National Highway Traffic Safety Administration (NHTSA) would be tasked with collecting data on impaired driving, producing educational materials on the issue for states to distribute and carry out education campaigns.

Vape Bans

Vaping delivery system products that contain added natural or artificial flavors would be banned under the proposal.

What Are Cannabis Industry Leaders Saying About The CAOA?

Cannabis industry advocates have largely applauded the CAOA’s advancement to a final filing. Morgan Fox, Political Director for the National Organization for the Reform of Marijuana Laws (NORML), cited the bill as an example of “unprecedented leadership in the Senate and engagement with stakeholders across the political spectrum.” Justin Strekal of Better Organizing to Win Legalization (BOWL) called the CAOA “a tectonic advancement in the movement to end marijuana criminalization.”

The Cannabis Regulators of Color Coalition (CRCC), a coalition of government officials managing regulatory policy for legal cannabis markets across the United States, released a statement commending Schumer, Booker, and Wyden for “this historic step as the first comprehensive cannabis reform bill introduced in the Senate.”

“Senators Schumer, Booker, and Wyden listened to our concerns as regulators,” the statement continued, “and incorporated much-needed revisions to the draft such as prioritizing Minority Serving Institutions (MSI), including HBCUs, in the bill’s education infrastructure and adding several of CRCC’s proposed banking amendments, which will help close the gap on inequitable access to capital and other critical resources within the cannabis industry, particularly for historically-excluded and minority entrepreneurs. We look forward to working with them to bolster this draft and make additional improvements as committee discussions commence.”