Cannabis Administration and Opportunity Act Introduced

On Wednesday, July 14, 2021, Senators Schumer (NY), Booker (NJ), and Wyden (OR) introduced the Cannabis Administration and Opportunity Act (“CAOA”), a draft bill for the decriminalization and regulation of cannabis at the federal level.  The CAOA represents a comprehensive change to the federal government’s approach to cannabis, embracing state legalization and permitting shipping of cannabis across state lines.  As currently written, the bill is divided into the following six titles: 1) decriminalization of cannabis, public safety, and states’ rights; 2) research, training, and prevention; 3) restorative justice and opportunity; 4) taxation and establishment of trust fund; 5) public health, cannabis administration, and trade practices; and 6) miscellaneous.  Key components of the bill include:

  • Removes cannabis and THC from the Controlled Substances Act, any schedule under such act, and other laws and regulations related to the prohibition of controlled substances;
  • Transfers cannabis-related responsibilities from the federal Drug Enforcement Agency to the Bureau of Alcohol, Tobacco, Firearms, and Explosives (renamed the Bureau of Alcohol, Tobacco, Cannabis, Firearms, and Explosives), the Department of Health and Human Services, and the Department of the Treasury;
  • Permits states to continue to regulate cannabis use and possession, but prevents states from forbidding the shipping of cannabis through said state to a destination where cannabis has been legalized;
  • Authorizes federal studies by HHS on the impacts of cannabis on public health and its medicinal properties. Also authorizes studies by the Department of Transportation on cannabis-impaired driving and methods of detecting cannabis-impaired driving;
  • Establishes a Cannabis Justice Office in the Office of Justice Programs to administer the Community Reinvestment Grant Program. The Grant program shall administer services for those adversely affected by the war on drugs, including job training, reentry services, legal aid for civil and criminal cases, including expungement, literacy programs, youth recreation and mentoring programs, and health education;
  • Creates the Cannabis Opportunity Program to provide states and localities funds for issuing loans that would assist small businesses owned and controlled by economically disadvantaged individuals in the cannabis industry, as well as the Equitable License Grant Program to provide funds to states and localities with the goal of easing access to the industry for those adversely impacted by the war on drugs and to establish licensing boards that are reflective society and can serve as oversight of the equitable licensing programs;
  • Authorizes the Small Business Administration to make all programs available to cannabis-related businesses;
  • Expunges federal arrests and convictions for non-violent cannabis-related offenses and seals such records;
  • Prevents cannabis use, possession, or prior convictions from disqualifying individuals from federal benefits or from impacting one’s immigration status;
  • Taxes cannabis federally at 10% for the first two years after passage of the CAOA, 15% during the third year, 20% during the fourth year, and 25% during the fifth year, with the Department of Treasury performing studies to determine the applicable tax rate thereafter. Tax revenues would go to the Opportunity Trust Fund, 60% of which is appropriated to the Attorney General for use in connection to the Community Reinvestment Grant Program, and 40% to the Small Business Administration for the provision of services to cannabis-related businesses under the CAOA;
  • Establishes the Center for Cannabis Products under the FDA to regulate cannabis and CBD and ensure no adulteration or misbranding of cannabis products occurs;
  • Prohibits the selling of electronically delivered flavored cannabis products;
  • Establishes federal permitting of cannabis businesses granted state licenses;
  • Authorizes the Comptroller General to identify all instances of “marijuana” or “marihuana” in federal laws and regulations to be changed to “cannabis,” and to identify any further laws or regulations requiring amendment.

While the CAOA has the support of the Senate Majority Leader, and therefore can be placed on the docket for a vote, it is unclear if it will have the support necessary to be passed into law.  We will continue to monitor the CAOA and other attempts at federal legalization and will post updates as the bill progresses.

As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.

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