SENATE DEMOCRATS have introduced draft legislation aimed at decriminalizing cannabis at the federal level and addressing some of the issues that make it difficult for legal businesses to operate in the sector.
The bill, still in draft form, is being authored by Senate Finance Committee Chairman Ron Wyden,D-Ore., and Sen. Cory Booker,D-N.J. Its prospects for passage are unclear atthis time.
Here’s what the draft bill would do in terms of regulation:
- Remove cannabis from the Controlled Substances Act and direct the Attorney General to remove it from the list of controlled substances.
- Transfer primary agency jurisdiction over cannabis from the Drug Enforcement Agency to the Food and Drug Administration.
- Maintain the authority of states to set their own criminal marijuana laws,
- Set 21 as the minimum age required to purchase cannabis in jurisdictions where legal.
- Limit any retail sales transaction to no more than 10 ounces of cannabis or the equivalent amount of any cannabis derivative.
THROWING CANNABIS BUSINESSES A BONE
The draft bill would create a number of programs and rule changes specific to the cannabis industry, and that would be implemented by the Small Business Administration. These include:
The Cannabis Opportunity Program – This would provide funding to eligible states and localities to make loans to assist small businesses in the cannabis industry owned by socially and economically disadvantaged individuals.
The Equitable Licensing Grant Program – This would provide SBA grants to states and localities to implement licensing programs that minimize barriers for individuals adversely affected by the War on Drugs. To be eligible, states and localities must create a process to expunge criminal records for cannabis offenses and violations for individuals under criminal supervision for cannabis offenses.
Opening up SBA financing – The measure would authorize that SBA programs and services be made available to legitimate cannabis-related businesses and service providers.
Taxation and licensing
- The draft measure would create a taxation regimen and licensing and regulatory infrastructure for the cannabis industry:
- The measure would impose a 10% excise tax on cannabis products for the first year after the law takes effect. The tax rate would increase annually to 15%, 20% and 25% in the following years.
- Beginning in year five and thereafter, the tax would be levied on a per-ounce rate in the case of cannabis flower, or a per-milligram of THC rate in the case of cannabis extract. The rate would be equal to 25% of the price of cannabis sold in the U.S. in the year prior.
- In order to remove barriers to entry, small cannabis producers with less than $20 million in sales annually would be eligible for a 50% reduction in their tax rate, via a tax credit.
- Producers with more than $20 million in sales would be eligible for a tax credit on their first $20 million sold annually, with sales above that amount subject to tax at the full rate.
- Any person selling cannabis products at wholesale would have to obtain a permit from the Treasury Department.
Producers Would Have to Register with the FDA
- Any person producing taxable cannabis products must obtaina Treasury Department permit and register for tax purposes.
- Cannabis product makers would have to register with the FDA.
- The FDA would be recognized as the primary federal regulatory authority with respect to the manufacture and marketing of cannabis products, including requirements related to minimum national good manufacturing practice, product standards, registration and listing, and labeling information related toingredients and directions for use.
- Manufacturers of cannabis products would be authorized to make claims about the benefits of their products in the same manner that manufacturers of dietary supplements do today.
- A new Center for Cannabis Products would set rules related to product registration, product listing, good manufacturing practices, product standards, product labeling, product distribution and product recall.
- The measure would also help people who have been convicted of marijuana-related offenses, including:
- Expunging prior convictions,
- Allowing people to petition for resentencing, and
- Removing collateral consequences like immigration-related penalties for people who have been convicted.